2023 Market Forecast by Solid ECN

UK Housing Market Sees Hope: Latest Trends in House Prices​

In recent months, the housing market in the United Kingdom has seen a notable shift. As of November 2023, the Nationwide House Price Index, a key indicator of house price trends, reported a year-on-year decrease of 2%. This figure is particularly interesting as it's the smallest drop in house prices we've seen in the past nine months, since February. What's more, this reduction is less than what experts had predicted, which was a decline of 2.3%.

Month-on-Month Changes and Economic Impacts
If we look at the month-to-month changes, there's a small but positive sign. House prices in November edged up by 0.2% compared to October, which itself had seen a 0.9% increase. This upward trend, albeit slight, is a change from the continuous decline observed over the past ten months.

The Role of Interest Rates​

A key factor in this scenario is the change in interest rate expectations. These expectations have recently gone down, leading to a decrease in longer-term interest rates. This is important because these rates heavily influence the pricing of fixed-rate mortgages, a common choice for homebuyers.

Robert Gardner, Nationwide's Chief Economist, commented on this development. He believes that if these trends continue, they could significantly ease the financial burden on potential homebuyers. This easing could, in turn, revive activity in the housing market, which has been somewhat subdued in recent times.

Economic Assessment: Beneficial or Detrimental?​

When assessing the economic implications of these developments, it's a mixed bag. On one hand, falling house prices can indicate a weakening economy and lower consumer confidence. On the other hand, a slower decline in prices, along with reduced interest rates, could encourage more people to enter the housing market, potentially stimulating economic activity. This could be beneficial for the economy, as a robust housing market often reflects and contributes to overall economic health.
 
France's Manufacturing Sector Faces Continued Challenges in 2023

In November 2023, the French manufacturing sector faced its tenth straight month of downturn, indicating persistent challenges in the industry. According to the S&P Global France Manufacturing PMI, the index saw a slight increase to 42.9, a marginal improvement from the preliminary estimate of 42.6 and a small step up from 42.8 recorded in the previous month. Despite this slight uptick, the situation remains concerning as this represents the most significant contraction since May 2020.


Factors Behind the Contraction

This continued decline can be attributed to a notable drop in demand. The new orders that factories received kept falling, mostly due to overall weaker market conditions. As a consequence, manufacturing output saw its sharpest decline since May 2020. This decline in production and orders has led to various repercussions within the manufacturing sector. Factories have been reducing their workforce, cutting down on purchasing activities, and experiencing significant drops in their stock of inputs, the largest since May 2020.


Price Trends and Future Outlook

On a somewhat positive note, the rate of input price inflation has stabilized, following a six-month trend of decreasing prices. However, looking forward, the mood among manufacturers remains overwhelmingly gloomy. With expectations of reduced orders, especially from the automotive and construction sectors, there's a strong sense of pessimism for the year ahead.


Economic Implications

The prolonged contraction in France's manufacturing sector is a concern for the economy. A healthy manufacturing sector is often a sign of a robust economy, as it creates jobs, stimulates trade, and contributes to GDP growth. The current downturn could lead to job losses, reduced consumer spending, and a slowdown in economic growth. However, the stabilization in input prices may provide some relief to manufacturers, potentially easing cost pressures.
 
Bitcoin Bulls Break Resistance, Eye $40,000 Next

The price of bitcoin climbed over the 38,250 level in the latest trading session, continuing its bullish trend. However, the bitcoin bulls are facing the middle line of the bullish flag as their next obstacle. The technical indicators show that the RSI still has some space to reach the overbought zone. At the same time, the awesome oscillator bars changed to green, indicating the strength of the upward movement.

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The middle line of the flag is unlikely to resist the buying force. As a result, analysts at FxNews predict that the BTCUSD price will go up and target the $40,000 mark, which matches the top line of the flag.

This analysis is valid as long as the pair is trading within the bullish flag.​
 
USDCAD Downtrend Continues, Fibonacci Levels in Focus

The downward trend of USDCAD has reached 1.352, which pushed the Stochastic oscillator into the oversold zone. At the same time, the RSI indicator is also approaching the oversold level, which suggests that the pair may enter a consolidation phase in the next week.

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In this case, the pair may face the %38.2 level of the fibonacci as a resistance. This level could attract more sellers to put more pressure on the pair and extend the downtrend to the %50 level Fibo and then the %61.8 level.​
 
Spain's Tourism Bounces Back to Pre-Pandemic Heights

In October 2023, Spain saw a significant surge in foreign tourist arrivals, marking a 13.9% increase compared to the previous year, with a total of 8.2 million visitors. This figure not only surpasses last year's statistics but also shows a 7.8% growth from the pre-pandemic levels of October 2019, highlighting a robust recovery in the tourism sector.

The majority of these tourists came from the United Kingdom, accounting for 1.7 million visitors (12.2% increase), followed by Germany with 1.1 million visitors (8% increase), and France with 990,000 visitors (9% increase). Additionally, there was a significant rise in visitors from the United States (25.7% increase), the Netherlands (19.6% increase), and Ireland (15.1% increase), indicating a growing global interest in Spanish destinations.

Catalonia emerged as the most popular region, attracting 20.4% of the total tourists. Reflecting on the first nine months of 2023, Spain welcomed 74.7 million international visitors, which is 18.2% more than in 2022 and marginally higher (0.2%) than the pre-pandemic figures of 2019. These numbers signify a strong recovery and a positive outlook for Spain's tourism industry, re-establishing its position as a top global destination.​
 
EURUSD at a Crossroads: Resistance Clash and Trend Predictions

The EURUSD pair is approaching a critical point, the 23.6% resistance level, which interestingly aligns with the Ichimoku cloud. Currently, the technical indicators are hinting at a potential sell-off. If the price manages to remain under the cloud, there's a strong chance we'll see a further downward trend, potentially reaching the 38.2% level, and maybe even the 50% mark.

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However, there's another side to consider. Should the EURUSD pair successfully break through the 23.6% resistance and maintain its position above this level, it would suggest a shift in momentum. In such a scenario, the current bearish outlook would no longer be valid, indicating a possible change in trend.​
 
Latest on GBPUSD: Bullish Flag & Ichimoku Insights

The GBPUSD currency pair is trading inside the bullish flag and above the Ichimoku cloud, indicating a bullish trend. However, the ADX indicator is approaching the 20 level, which suggests that the trend is weakening, and the pair is losing momentum. We expect the value of GBPUSD to rise again and target the upper band of the bullish flag, which is a continuation pattern of the previous uptrend.

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On the other hand, the bullish scenario would be invalidated if the GBPUSD price falls below the cloud, which would signal a bearish reversal.​
 
EURJPY Dips Below Key Level: A Closer Look

We've noticed a significant drop. Recently, it slipped under the important support mark of 159.37.

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Looking at the Relative Strength Index (RSI), it's clear that there's a downward trend in momentum. This hints that we might see this decline continue. We're expecting the pair to keep dropping, possibly reaching the next support point at 158.32. Interestingly, this level is right where the lower edge of the bearish flag pattern lies. This pattern often signals that the current downward trend could keep going.​
 
USDJPY's Bullish Stance Meets Resistance

Currently, the USDJPY pair is positioned within a bullish flag formation. Yet, there's been a notable change - the price has fallen below the Ichimoku cloud, hinting at a potential shift in the market's direction. As of now, the pair is undergoing a test at the lower boundary of this flag, and the ADX indicator is suggesting that we may see significant fluctuations ahead.

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If the price drops past this crucial point, it's likely we'll see a further slide down to the 144.5 support level. This would be a key movement to watch for.

On the other hand, if the bulls succeed in keeping the price stable above 146.2, it could signal a continuation of the upward trend. In such a scenario, the pair might target the 23.6% mark on the Fibonacci retracement scale, possibly even stretching to the 38.2% level.​
 
Canadian Stocks Dip Slightly on Commodity Price Declines

On Monday, Canadian stocks saw a slight downturn. The S&P/TSX Composite Index dropped a bit, staying close to the 20,500 level. This mild decline comes after reaching a ten-week high in the previous session. The fall can be attributed mainly to a significant drop in commodity prices at the start of the week. This decline particularly affected the index, which is heavily influenced by commodities.

Major energy companies felt the impact of falling metal and oil prices. Canadian Natural Resources saw a 1.6% decrease, Suncor Energy went down by 1.1%, Cenovus Energy also dropped by 1.6%, and Imperial Oil experienced a slight 0.2% loss. In the basic materials sector, there were noticeable declines as well. Wheaton Precious Metals led the way with a 1.9% fall, followed by Agnico Eagle Mines with a 1.5% drop, and Barrick Gold losing 0.8%.

However, the banking sector provided some stability. Royal Bank stood out with a 0.3% gain, TD Bank followed with a 0.4% increase, and Bank of Montreal rose by 0.9%, helping to offset further losses in the market.​
 
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