COMMODITIES: Precious Metals Extend Gains Amid Weak US Dollar, Crude Falls

• Stocks are drifting near late Tuesday highs, shrugging off this morning's stronger economic data (Q3 GDP +4.3%) that tempered rate cut expectations through mid-2026 (June '26 now the first FOMC date to price in a 25bp cut).
• Currently, the DJIA trades up 101.37 points (0.21%) at 48462.41, S&P E-Mini Futures up 30 points (0.43%) at 6959.5, Nasdaq up 110.2 points (0.5%) at 23536.97.
• Information Technology and Communication Services sector shares continued to lead advances in the second half, chip makers buoyed after the Trump administration announced a tariff delay on China until 2027.
• "A filing from the trade office said the government would impose an initial tariff of zero percent on Chinese semiconductors exports before increasing it in June 2027 by an undetermined amount," the NY Times reported.
  • NVIDIA +2.66%, Broadcom +2.19%, Jabil +1.86%, Motorola Solutions +1.49% and Dell Technologies +1.47%.
  • Meanwhile, Live Nation Ent +1.71%, Alphabet +1.58%, Warner Bros Discovery +1.25%, T-Mobile US +0.81% and AT&T +0.78%.
• Conversely, Health Care, Consumer Staples and Industrials sector shares continued to underperform in late trade:
  • Moderna -6.76%, IDEXX Laboratories -2.81%, Insulet -1.88%, Align Technology -1.77% and Cooper Cos -1.37%.
  • Brown-Forman -4.95%, Campbell's Company -2.64%, Lamb Weston Holdings -2.52%, Dollar General -2.16% and Dollar Tree -2.06%.
  • United Airlines -2.47%, Delta Air Lines -2.23%, Axon Enterprise -1.86%, Southwest Airlines -1.85% and Verisk Analytics -1.15%.

• 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: 156.27 @ 15:43 GMT Dec 23
• SUP 1: 155.84/154.40 20- and 50-day EMA values
• SUP 2: 153.62 Low Nov 14  
• SUP 3: 152.82 Low Nov 7 
• SUP 4: 151.54 Low Oct 29 

The trend structure in USDJPY is bullish and the latest pullback is considered corrective - for now. Note that MA studies are in a bull-mode position, highlighting a dominant uptrend. Sights are on 157.89, the Nov 20 high and a bull trigger. A break of this hurdle would confirm a resumption of the uptrend. Support to watch lies at 154.40, the 50-day EMA. A clear breach of it would undermine the bull theme and signal scope for a deeper corrective pullback. 

The deliberations to the Bank of Canada's December meeting portrayed a Governing Council that was uncertain on the direction of its next move beyond the currently-signaled indefinite rate hold (link here)

• The key paragraph here mentioned that they discussed "whether it was more likely that their next move would be to raise or lower the policy interest rate. Given the high level of uncertainty, members agreed that while the current policy rate was at about the right level in the current situation, it was difficult to predict when and in which direction the next change in the policy rate would be."
• This was a little less subtle of a steer about the optionality being considered by Governing Council than Gov Macklem in the press conference, who didn't exactly dismiss the possibility of hikes next year, noting that BOC will be assessing data in a "symmetric way" in looking for material changes to the outlook in "either direction".
• Markets continue to pencil in a little under one 25bp rate hike through end-2026, unchanged vs before the Deliberations release.
• The messaging on the economy was basically in line with what we already heard in the policy statement and Gov Macklem's press conference.
• Indeed despite encouraging labor market and GDP readings, Governing Council was circumspect on the outlook. One of the key areas of uncertainty was on trade: "members agreed the Canadian economy was showing signs of resilience after a year of trade upheaval, but uncertainty remained high. They would remain cautious in interpreting incoming data given recent volatility and would be prepared to react if their outlook changed materially."
• In particular they discussed the upcoming trade renegotiations with the US and Mexico: "the upcoming review of the Canada-United States-Mexico Agreement (CUSMA) was a significant risk. The uncertainty leading up to and during negotiations would likely weigh on business investment. Members shared that business leaders they had met across the country saw the future of CUSMA as a significant strategic risk to their businesses. A worst-case scenario involving the dissolution of CUSMA and higher tariffs would be very damaging to the Canadian economy. Alternatively, a resolution of CUSMA negotiations that provided some stability in North American trade policy could spur on business investment."