COMMODITIES: Crude Rebounds, Precious Metals Extend Decline

As for the new macroeconomic projections, there’s likely to be a slight upgrade to GDP forecasts with some downshifting of PCE inflation in 2025/2026. 

• There is some risk that the unemployment rate forecast shifts up slightly for 2025 but anything above 4.5% would be a major surprise.

• RES 4: 158.87 High Jan 10 and a key resistance
• RES 3: 158.29 2.618 projection of the Sep 17 - 26 - Oct 1 price swing
• RES 2: 158.00 Round number resistance 
• RES 1: 157.89 High Nov 20 and bull trigger 
• PRICE: 156.87 @ 16:47 GMT Dec 9
• SUP 1: 154.35 Low Dec 5 
• SUP 2: 153.58 50-day EMA  
• SUP 3: 152.82 Low Nov 7 
• SUP 4: 151.54 Low Oct 29 

Recent weakness in USDJPY is considered corrective and the deeper retracement has allowed an overbought condition to unwind. Key short-term support to watch lies at the 50-day EMA at 153.58. A clear breach of the average would signal scope for a deeper retracement. Moving average studies remain in a bull-mode position, highlighting a dominant medium-term uptrend. A resumption of the uptrend would open 158.00.

The lack of major data since the September projections round portends only limited changes to the macro and rate forecasts in the December edition out Wednesday.

• None of the rate dot medians are expected to change, with 2025 confirmed at 3.6% (though with an unusual amount of disagreement in the dot distribution for an end-year SEP in a form of "soft dissent" against the cut), 2026 at 3.4% (implying one 25bp cut), with 2027 at 3.1% (another 25bp cut).
• In short, we expect most of the attention to be on the rate distribution. For 2026, the September dots were closely poised between 3.4% and 3.1% (10 above 3.25% vs 9 below 3.25%). We don’t see much change here but if anything the risks to the median skew to the downside. For example, if one member who put their dot at 3.4% in September also saw rates ending 2025 at 3.9%, they might mark-to-market the rate view one notch lower.
• We’ll also be watching for any dots implying a 2026 hike (we would expect at least one seeing rates higher than 3.6%) with the solidity of a 2026 “hold” also in focus.
• The longer-run dot is broadly expected to remain at 3.0%. But once again with 10 at 3.00% or below and 9 above that level, it would only take 1 moving from 3.00% or below to above 3.00% to move the median higher, likely to 3.1%. That shift will happen at some point and it wouldn’t be a shock to see it come this week.