DXY (US Dollar Index):

Potential Direction: Bearish
Overall momentum of the chart: Bearish

Price could potentially make a bearish reaction off pivot and drop to 1st support.

Pivot: 104.68
Supporting reasons: Identified as a pullback resistance level, specifically at the 38.20% Fibonacci Retracement, indicating a potential area where sellers could enter the market after a retracement.

1st support: 102.68
Supporting reasons: Identified as an overlap support level, specifically at the 161.80% Fibonacci Extension, suggesting a significant area where previous declines have found support.

1st resistance: 106.09
Supporting reasons: Identified as a multi-swing high resistance level, indicating a historical point where previous rallies have faced selling pressure or reversed.

EUR/USD:

Potential Direction: Bearish
Overall momentum of the chart: Bullish

Price could potentially make a bearish reaction off pivot and drop to 1st support.

Pivot: 1.0913
Supporting reasons: Identified as a pullback resistance level, specifically at the 50% Fibonacci Retracement, indicating a potential area where sellers could enter the market after a retracement.

1st support: 1.0844
Supporting reasons: Identified as a pullback support level, specifically at the 38.20% Fibonacci Retracement, suggesting a significant area where previous declines have found support.

1st resistance: 1.0948
Supporting reasons: Identified as a swing high resistance level, indicating a historical point where previous rallies have faced selling pressure or reversed.

EUR/JPY:

Potential Direction: Bearish
Overall momentum of the chart: Bearish

Factors contributing to the momentum: Price is below the bearish Ichimoku cloud

Price could potentially make a bearish continuation towards 1st support.

Pivot: 171.05
Supporting reasons: Identified as an overlap resistance level, specifically at the 50% Fibonacci Retracement, indicating a potential area where sellers could enter the market after a retracement.

1st support: 169.63
Supporting reasons: Identified as an overlap support level, specifically at the 127.20% Fibonacci Extension, suggesting a significant area where previous declines have found support.

1st resistance: 171.94
Supporting reasons: Identified as an overlap resistance level, indicating a historical point where previous rallies have faced selling pressure or reversed.

EUR/GBP:

Potential Direction: Bearish
Overall momentum of the chart: Bearish

Price could potentially make a bearish reaction off pivot and drop to 1st support.

Pivot: 0.8454
Supporting reasons: Identified as an overlap resistance level, indicating a potential area where sellers could enter the market after a retracement.

1st support: 0.8404
Supporting reasons: Identified as an overlap support level, suggesting a significant area where previous declines have found support.

1st resistance: 0.8458
Supporting reasons: Identified as an overlap resistance level, specifically at the 61.80% Fibonacci Retracement, indicating a historical point where previous rallies have faced selling pressure or reversed.

GBP/USD:

Potential Direction: Bearish
Overall momentum of the chart: Bearish

Price could potentially make a bearish reaction off pivot and drop to 1st support.

Pivot: 1.2943
Supporting reasons: Identified as an overlap resistance level, indicating a potential area where sellers could enter the market after a retracement.

1st support: 1.2859
Supporting reasons: Identified as a pullback support level, specifically at the 61.80% Fibonacci Projection and 161.80% Fibonacci Extension, indicating Fibonacci confluence and suggesting a significant area where previous declines have found support.

1st resistance: 1.3032
Supporting reasons: Identified as a swing high resistance level, indicating a historical point where previous rallies have faced selling pressure or reversed.

GBP/JPY:

Potential Direction: Bearish
Overall momentum of the chart: Bearish

Factors contributing to the momentum: Price is below the bearish Ichimoku cloud

Price could potentially make a bearish reaction off pivot and drop to 1st support.

Pivot: 203.86
Supporting reasons: Identified as an overlap resistance level, indicating a potential area where sellers could enter the market after a retracement.

1st support: 200.65
Supporting reasons: Identified as an overlap support level, specifically at the 161.80% Fibonacci Extension, suggesting a significant area where previous declines have found support.

1st resistance: 206.03
Supporting reasons: Identified as an overlap resistance level, indicating a historical point where previous rallies have faced selling pressure or reversed.

USD/CHF:

Potential Direction: Bearish
Overall momentum of the chart: Bearish

Price could potentially make a bearish reaction off pivot and drop to 1st support.

Pivot: 0.8916
Supporting reasons: Identified as a pullback resistance level, specifically at the 61.80% Fibonacci Retracement, indicating a potential area where sellers could enter the market after a retracement.

1st support: 0.8830
Supporting reasons: Identified as a multi-swing low support level, suggesting a significant area where previous declines have found support.

1st resistance: 0.8991
Supporting reasons: Identified as an overlap resistance level, indicating a historical point where previous rallies have faced selling pressure or reversed.

USD/JPY:

Potential Direction: Bearish
Overall momentum of the chart: Bearish

Price could potentially make a bearish reaction off pivot and drop to 1st support.

Pivot: 157.70
Supporting reasons: Identified as an overlap resistance level, specifically at the 38.20% Fibonacci Retracement, indicating a potential area where sellers could enter the market after a retracement.

1st support: 154.71
Supporting reasons: Identified as a swing low support level, specifically at the 127.20% Fibonacci Extension, suggesting a significant area where previous declines have found support.

1st resistance: 159.87
Supporting reasons: Identified as a pullback resistance level, indicating a historical point where previous rallies have faced selling pressure or reversed.

USD/CAD:

Potential Direction: Bearish
Overall momentum of the chart: Bullish

Price is rising towards the pivot and could potentially make a bearish reversal off this level to pull back towards the 1st support.

Pivot:1.3779
Supporting reasons: Identified as a multi-swing-high resistance, suggesting a potential area where selling pressures could intensify.

1st support: 1.3752
Supporting reasons: Identified as a pullback support that aligns close to a 23.6% Fibonacci retracement level, indicating a potential area where price could find support.

1st resistance: 1.3828
Supporting reasons: Identified as a swing-high resistance, indicating a potential area that could halt any further upward movement.

AUD/USD:

Potential Direction: Bullish
Overall momentum of the chart: Bearish

Price is falling towards the pivot and could potentially make a bullish bounce off this level to rise towards the 1st resistance.

Pivot: 0.6623
Supporting reasons: Identified as a swing-low support, indicating a potential zone where buying interests could pick up to stage a minor rebound.

1st support: 0.6591
Supporting reasons: Identified as a swing-low support that aligns with a 127.2% Fibonacci extension level, suggesting a potential area where price could find strong support.

1st resistance: 0.6684
Supporting reasons: Identified as an overlap resistance, indicating a significant area that could halt further upward movement.

NZD/USD

Potential Direction: Bearish
Overall momentum of the chart: Bearish

Price has made a bearish break below the pivot and could potentially fall towards the 1st support.

Pivot: 0.5979
Supporting reasons: Identified as a potential breakout level where the bearish momentum has driven the price lower.

1st support: 0.5883
Supporting reasons: Identified as a multi-swing-low support, suggesting a significant area that could halt further downward momentum.

1st resistance: 0.6037
Supporting reasons: Identified as an overlap resistance, indicating a significant area that could halt further upward movement.

US30 (DJIA):

Potential Direction: Bullish

Overall Momentum of the Chart: Neutral

Price is trading close to the pivot and could potentially make a bullish bounce off this level to rise towards the 1st resistance.

Pivot: 40,270.30
Supporting reasons: Identified as a pullback support that aligns with a 50% Fibonacci retracement level, indicating a potential area where buying interests could pick up to resume the uptrend. The presence of a bullish Ichimoku Cloud adds further significance to this support zone.

1st Support: 39,607.55

Supporting Reasons: Identified as a pullback support that aligns with a 78.6% Fibonacci retracement level, suggesting a significant area where price could find strong support.

1st Resistance: 40,922.42

Supporting Reasons: Identified as a pullback resistance that aligns with a 61.8% Fibonacci retracement level, indicating a significant area that could halt further upward movement.

DE40 (DAX):

Potential Direction: Bullish

Overall Momentum of the Chart: Bullish

Price could fall towards the pivot and potentially make a bullish bounce off this level to rise towards the 1st resistance.

Pivot: 18,426.80
Supporting reasons: Identified as a pullback support that aligns with a 23.6% Fibonacci retracement level, indicating a potential area where buying interests could pick up to resume the uptrend.

1st Support: 18,323.60

Supporting Reasons: Identified as a pullback support that aligns with a 50% Fibonacci retracement, indicating a significant area where price could find strong support.

1st Resistance: 18,587.40

Supporting Reasons: Identified as a pullback resistance that aligns close to 78.6% Fibonacci projection, indicating a significant area that could halt further upward movement.

US500 (S&P 500): 

Potential Direction: Bearish

Overall momentum of the chart: Neutral

Price could rise towards the pivot and potentially make a bearish reversal off this level to pull back towards the 1st support.

Pivot: 5,607.78
Supporting reasons: Identified as a pullback resistance that aligns with a 61.8% Fibonacci retracement level, indicating a potential area where selling pressures could intensify.

1st support: 5,506.38

Supporting reasons: Identified as a pullback support that aligns close to a 38.2% Fibonacci retracement level, indicating a potential area where price could find strong support. 

1st resistance: 5,669.89

Supporting reasons: Identified as a pullback resistance that aligns close to the all-time high, suggesting a critical area that could halt further upward movement.

BTC/USD (Bitcoin):

Potential Direction: Bullish

Overall momentum of the chart: Bullish

Price could fall towards the pivot and potentially make a bullish bounce off this level to rise towards the 1st resistance.

Pivot: 66,130.15

Supporting reasons: Identified as an overlap support, indicating a potential area where buying interests could pick up to resume the uptrend.

1st support: 63,507.86

Supporting reasons: Identified as a pullback support that aligns close to a 38.2% Fibonacci retracement level, indicating a significant area that could halt further downward movement.

1st resistance: 70,045.45

Supporting reasons: Identified as a pullback resistance that aligns with a 161.8% Fibonacci extension level, indicating a potential barrier that could halt further upward movement.

ETH/USD (Ethereum):

Potential Direction: Bearish

Overall momentum of the chart: Bullish

Price is rising towards the pivot and could potentially make a bearish reversal off this level to pull back towards the 1st support.

Pivot: 3,545.05

Supporting reasons: Identified as a pullback resistance, indicating a potential area where selling pressures could intensify.

1st Support: 3,377.15

Supporting Reasons: Identified as a pullback support that aligns with a 23.6% Fibonacci retracement level, indicating a significant area that could halt further downward movement.

1st Resistance: 3,704.12

Supporting Reasons: Identified as a pullback resistance that aligns close to a 127.2% Fibonacci extension level, indicating a historical barrier where selling pressures could intensify.

WTI/USD (Oil):

Potential Direction: Bearish

Overall Momentum of the Chart: Bearish

Price could rise towards the pivot and potentially make a bearish reversal off this level to fall towards the 1st support.

Pivot: 80.68

Supporting Reasons: Identified as an overlap resistance that aligns close to a 38.2% Fibonacci retracement level, indicating a potential area where selling pressures could intensify to resume the downtrend.

1st Support: 79.10

Supporting Reasons: Identified as an overlap support that aligns close to a 50% Fibonacci retracement level, indicating a significant area where price could find strong support.

1st Resistance: 82.03

Supporting Reasons: Identified as a pullback resistance that aligns with a 61.8% Fibonacci retracement level, indicating a potential barrier that could halt further upward movement.

XAU/USD (GOLD):

Potential Direction: Bullish
Overall momentum of the chart: Bullish

Price could potentially make a bullish bounce off pivot and head towards 1st resistance.

Pivot: 2389.12
Supporting reasons: Identified as a pullback support level, specifically at the 50% Fibonacci Retracement, indicating a potential area where buyers could enter the market after a retracement.

1st support: 2335.64
Supporting reasons: Identified as a pullback support level, suggesting a significant area where previous declines have found support.

1st resistance: 2448.97
Supporting reasons: Identified as a pullback resistance level, specifically at the 61.80% Fibonacci Retracement, indicating a historical point where previous rallies have faced selling pressure or reversed.

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The post Tuesday 23rd July 2024: Technical Outlook and Review first appeared on IC Markets | Official Blog.

IC Markets Asia Fundamental Forecast | 23 July 2024

What happened in the U.S. session?

With no major news events overnight, the dollar index (DXY) was steady around 104.30 while spot prices for gold were also relatively unchanged at $2,390/oz. Oil prices resumed their downward slide that began last Thursday as WTI oil fell 1% overnight, tumbling towards $79 per barrel. The prospect of swelling oil supplies and weak demand has increased the overhead pressures on this commodity in recent weeks.

What does it mean for the Asia Session?

With a barren news calendar during the Asia and European trading hours, markets could be subdued once more and continue to tread sideways for most parts of today.

The Dollar Index (DXY)

Key news events today

Existing Home Sales (2:00 pm GMT)

Richmond Manufacturing Index (2:00 pm GMT)

What can we expect from DXY today?

Existing home sales have been poor throughout 2023 and the trend is no different this year – the latest estimate points to an annual sales rate of 3.99M homes in June, edging lower from 4.11M in the previous month. Meanwhile, the Richmond Manufacturing Index has deteriorated since mid-2022 and has remained weak ever since. Manufacturing activity slowed in June with the index coming in at -10 and July’s forecast of -7 points to a minor improvement in output levels. However, this sector remains hampered and is likely to signal depressed activity levels once more – a result that could potentially place the dollar under some pressure.

Central Bank Notes:

• The Federal Funds Rate target range remained unchanged at 5.25% to 5.50% for the seventh meeting in a row.
• The Committee seeks to achieve maximum employment and inflation at the rate of 2% over the longer run and judges that the risks to achieving its employment and inflation goals have moved toward better balance over the past year.
• The economic outlook is uncertain, and the Committee remains highly attentive to inflation risks. Inflation has eased over the past year but remains elevated and in recent months, there has been modest further progress toward the Committee’s 2% inflation objective.
• Recent indicators suggest that economic activity has continued to expand at a solid pace while job gains have remained strong, and the unemployment rate has remained low.
• In considering any adjustments to the target range for the federal funds rate, the Committee will carefully assess incoming data, the evolving outlook, and the balance of risks and does not expect it will be appropriate to reduce the target range until it has gained greater confidence that inflation is moving sustainably toward 2%.
• In assessing the appropriate stance of monetary policy, the Committee will continue to monitor the implications of incoming information for the economic outlook and would be prepared to adjust the stance of monetary policy as appropriate if risks emerge that could impede the attainment of the Committee’s goals.
• In addition, the Committee will continue reducing its holdings of Treasury securities and agency debt and agency mortgage-backed securities. Beginning in June, the Committee will slow the pace of decline of its securities holdings by reducing the monthly redemption cap on Treasury securities from $60 billion to $25 billion.
• The Committee will maintain the monthly redemption cap on agency debt and agency mortgage-backed securities at $35 billion and will reinvest any principal payments in excess of this cap into Treasury securities.
• Next meeting runs from 30 to 31 July 2024.

Next 24 Hours Bias

Weak Bullish

Gold (XAU)

Key news events today

Existing Home Sales (2:00 pm GMT)

Richmond Manufacturing Index (2:00 pm GMT)

What can we expect from Gold today?

Existing home sales have been poor throughout 2023 and the trend is no different this year – the latest estimate points to an annual sales rate of 3.99M homes in June, edging lower from 4.11M in the previous month. Meanwhile, the Richmond Manufacturing Index has deteriorated since mid-2022 and has remained weak ever since. Manufacturing activity slowed in June with the index coming in at -10 and July’s forecast of -7 points to a minor improvement in output levels. However, this sector remains hampered and is likely to signal depressed activity levels once more – a result that could potentially place the dollar under some pressure and lift gold prices.

Next 24 Hours Bias

Weak Bearish

The Australian Dollar (AUD)

Key news events today

No major news events.

What can we expect from AUD today?

The Aussie fell under 0.6650 overnight to mark the sixth consecutive day of decline. This currency pair was trading around 0.6640 as Asian markets came online – these are the support and resistance levels for today.

Support: 0.6630

Resistance: 0.6715

Central Bank Notes:

• The RBA kept the cash rate target unchanged at 4.35%, marking the ninth pause out of the last ten board meetings.
• Over the year to April, the monthly CPI indicator rose by 3.6% in headline terms, and by 4.1% excluding volatile items and holiday travel, which was similar to its pace in December 2023.
• The central forecasts published in May were for inflation to return to the target range of 2–3% in the second half of 2025 and to the midpoint in 2026 while there have been indications that momentum in economic activity is weak, including slow growth in GDP, a rise in the unemployment rate and slower-than-expected wages growth.
• Inflation is easing but has been doing so more slowly than previously expected and it remains high and the Board expects that it will be some time yet before inflation is sustainably in the target range.
• The path of interest rates that will best ensure that inflation returns to target in a reasonable timeframe remains uncertain and the Board is not ruling anything in or out.
• Next meeting is on 6 August 2024.

Next 24 Hours Bias

Weak Bearish

The Kiwi Dollar (NZD)

Key news events today

No major news events.

What can we expect from NZD today?

The Kiwi slid under 0.5980 overnight to mark the third consecutive day of decline. This currency pair was hovering around 0.5970 at the beginning of the Asia session – these are the support and resistance levels for today.

Support: 0.5870

Resistance: 0.6000

Central Bank Notes:

• The Monetary Policy Committee kept the OCR unchanged at 5.50% for the eighth meeting in a row and agreed that restrictive monetary policy is reducing domestic demand and consumer price inflation.
• The Committee is confident that inflation will return to within its 1-3% target range over the second half of 2024.
• The decline in inflation reflects receding domestic pricing pressures, as well as lower inflation for goods and services imported into New Zealand while recent monthly Selected Price Indexes suggest weakening in some of the more volatile inflation components, while survey measures of cost pressures and pricing intentions have continued to decline.
• Non-performing bank loans and corporate insolvencies have increased from low levels in line with declining economic activity while bank credit growth also remains very subdued, in line with weakness in the domestic economy and low business and consumer confidence.
• Next meeting is on 14 August 2024.

Next 24 Hours Bias

Weak Bearish

The Japanese Yen (JPY)

Key news events today

No major news events.

What can we expect from JPY today?

The yen’s continued strength in recent weeks has now caused USD/JPY to fall under 157 overnight. This currency pair was trading around 156.70 as Asian markets came online – these are the support and resistance levels for today.

Support: 154.70

Resistance: 158.50

Central Bank Notes:

• The Bank considers that the policy framework of Quantitative and Qualitative Monetary Easing (QQE) with Yield Curve Control and the negative interest rate policy to date have fulfilled their roles. With the price stability target of 2%, it will conduct monetary policy as appropriate, guiding the short-term interest rate as a primary policy tool.
• The Bank of Japan decided on the following measures:
  1. The Bank will encourage the uncollateralized overnight call rate to remain at around 0 to 0.1% while continuing its Japanese government bonds (JGB) purchases in accordance with the decisions made at the March 2024 MPM.
  2. The Bank decided, by an 8-1 majority vote, that it would reduce its purchase amount of JGBs thereafter to ensure that long-term interest rates would be formed more freely in financial markets.
• Underlying CPI inflation is expected to increase gradually, since it is projected that the output gap will improve and that medium- to long-term inflation expectations will rise with a virtuous cycle between wages and prices continuing to intensify.
• In the second half of the projection period of the April 2024 Outlook for Economic Activity and Prices (Outlook Report), it is likely to be at a level that is generally consistent with the price stability target of 2%.
• The year-on-year rate of increase in the CPI (all items less fresh food), has been in the range of 2.0-2.5% recently, as services prices have continued to rise moderately, reflecting factors such as wage increases, although the effects of a pass-through to consumer prices of cost increases led by the past rise in import prices have waned. Inflation expectations have risen moderately.
• Japan’s economy has recovered moderately, although some weakness has been seen in part while is likely to keep growing at a pace above its potential growth rate, with overseas economies continuing to grow moderately and as a virtuous cycle from income to spending gradually intensifies against the background of factors such as accommodative financial conditions.
• Next meeting is on 31 July 2024.

Next 24 Hours Bias

Weak Bearish

The Euro (EUR)

Key news events today

No major news events.

What can we expect from EUR today?

The Euro hovered above 1.0880 overnight and was edging higher towards 1.0890 at the beginning of the Asia session – these are the support and resistance levels for today.

Support: 1.0850

Resistance: 1.0950

Central Bank Notes:

• The Governing Council today decided to keep the three key ECB interest rates unchanged in July, following a 25 basis points cut in June.
• Accordingly, the interest rate on the main refinancing operations and the interest rates on the marginal lending facility and the deposit facility will remain unchanged at 4.25%, 4.50% and 3.75% respectively.
• Monetary policy is keeping financing conditions restrictive but at the same time, domestic price pressures are still high, services inflation is elevated and headline inflation is likely to remain above the target well into next year.
• While some measures of underlying inflation ticked up in May owing to one-off factors, most measures were either stable or edged down in June.
• The incoming information indicates that the euro area economy grew in the second quarter, but likely at a slower pace than in the first quarter.
• Services continue to lead the recovery, while industrial production and goods exports have been weak – investment indicators point to muted growth in 2024, amid heightened uncertainty.
• The Eurosystem no longer reinvests all of the principal payments from maturing securities purchased under the pandemic emergency purchase programme (PEPP), reducing the PEPP portfolio by €7.5 billion per month on average and the Governing Council intends to discontinue reinvestments under the PEPP at the end of 2024.
• The Council is determined to ensure that inflation returns to its 2% medium-term target in a timely manner and will keep policy rates sufficiently restrictive for as long as necessary to achieve this aim and is not pre-committing to a particular rate path.
• Next meeting is on 12 September 2024.

Next 24 Hours Bias

Weak Bearish

The Swiss Franc (CHF)

Key news events today

No major news events.

What can we expect from CHF today?

The franc remained weak as USD/CHF climbed higher towards 0.8900. This currency pair was trading around 0.8895 as Asian markets came online – these are the support and resistance levels for today.

Support: 0.8820

Resistance: 0.8900

Central Bank Notes:

• The SNB eased monetary policy by lowering its key policy rate by 25 basis points for the second consecutive meeting, going from 1.50% to 1.25% in June.
• The underlying inflationary pressure has decreased again compared to the previous quarter but inflation had risen slightly since the last monetary policy assessment, and stood at 1.4% in May.
• The inflation forecast puts average annual inflation at 1.3% for 2024, 1.1% for 2025 and 1.0% for 2026, based on the assumption that the SNB policy rate is 1.25% over the entire forecast horizon.
• Swiss GDP growth was moderate in the first quarter of 2024 with the services sector continuing to expand, while manufacturing stagnated.
• Growth is likely to remain moderate in Switzerland in the coming quarters as the SNB anticipates GDP growth of around 1% this year while currently expecting growth of around 1.5% for 2025.
• Next meeting is on 26 September 2024.

Next 24 Hours Bias

Weak Bullish

The Pound (GBP)

Key news events today

No major news events.

What can we expect from GBP today?

Cable was relatively unchanged as it hovered above 1.2900 overnight. This currency pair was drifting higher towards 1.2930 at the beginning of the Asia session – these are the support and resistance levels for today.

Support: 1.2860

Resistance: 1.3000

Central Bank Notes:

• The Bank of England’s Monetary Policy Committee (MPC) voted by a majority of 7-to-2 to maintain its Official Bank Rate at 5.25% for the seventh consecutive meeting.
• Two members preferred to reduce the Bank Rate by 25 basis points to 5%, an increase of one from the previous meeting.
• Twelve-month CPI inflation fell to 2.0% in May from 3.2% in March, close to the May Monetary Policy Report projection. CPI inflation is expected to rise slightly in the second half of this year, as declines in energy prices last year fall out of the annual comparison.
• Reflecting a margin of slack in the economy, CPI inflation had been projected to be 1.9% in two years’ time and 1.6% in three years.
• UK GDP appears to have grown more strongly than expected during the first half of this year. Business surveys, however, remain consistent with a slower pace of underlying growth, of around 0.25% per quarter.
• UK real GDP had increased by 0.6% in 2024 Q1, 0.2% stronger than had been expected in the May Monetary Policy Report and Bank staff now expect GDP growth of 0.5% in 2024 Q2 as a whole, stronger than the 0.2% rate that had been incorporated in the May Report.
• The MPC remains prepared to adjust monetary policy as warranted by economic data to return inflation to the 2% target sustainably. It will therefore continue to monitor closely indications of persistent inflationary pressures and resilience in the economy as a whole, including a range of measures of the underlying tightness of labour market conditions, wage growth and services price inflation.
• Next meeting is on 1 August 2024.

Next 24 Hours Bias

Weak Bearish

The Canadian Dollar (CAD)

Key news events today

No major news events.

What can we expect from CAD today?

Weakness in the Loonie drove USD/CAD above 1.3750 overnight. This currency pair remained elevated to hover around 1.3760 as Asian markets came online – these are the support and resistance levels for today.

Support: 1.3720

Resistance: 1.3780

Central Bank Notes:

• The Bank of Canada reduced its target for the overnight rate by 25 basis points to 4.75% while continuing its policy of balance sheet normalization.
• Canada’s economic growth resumed in the first quarter of 2024 after stalling in the second half of last year. At 1.7%, first-quarter GDP growth was slower than forecast in the MPR but consumption growth was solid at about 3%, and business investment and housing activity also increased.
• Inflation remains above the 2% target and shelter price inflation is high but total CPI inflation has declined consistently over the course of this year, and indicators of underlying inflation increasingly point to a sustained easing.
• CPI inflation has eased from 3.4% in December to 2.7% in April while the preferred measures of core inflation have come down from about 3.5% last December to about 2.75% in April and the 3-month rate of core inflation slowed from about 3.5% in December to under 2% in March and April.
• In the labour market, businesses are continuing to hire workers as employment has been growing, but at a slower pace than the working-age population while elevated wage pressures look to be moderating gradually.
• The Governing Council is closely watching the evolution of core inflation and remains particularly focused on the balance between demand and supply in the economy, inflation expectations, wage growth, and corporate pricing behaviour.
• Recent data has increased the council’s confidence that inflation will continue to move towards the 2% target. Nonetheless, risks to the inflation outlook remain.
• Next meeting is on 24 July 2024.

Next 24 Hours Bias

Medium Bullish

Oil

Key news events today

API Crude Oil Stock (8:30 pm GMT)

What can we expect from Oil today?

Oil prices resumed their downward slide that began last Thursday as WTI oil fell 1% overnight, tumbling towards $79 per barrel. The prospect of swelling oil supplies and weak demand has increased the overhead pressures on this commodity in recent weeks. Looking at U.S. inventory levels, the API stockpile has reduced strongly over the past three weeks to signal higher demand for crude oil stateside. With the latest forecast pointing to another decline of 2.5M barrels, a fourth consecutive week of higher drawdowns could potentially aid oil prices in finding a floor this week.

Next 24 Hours Bias

Medium Bearish

The post IC Markets Asia Fundamental Forecast | 23 July 2024 first appeared on IC Markets | Official Blog.

0700 GMT / 0300 US Eastern time, European Central Bank chief economist and board member Philip Lane will be giving opening remarks at a joint conference of the European Central Bank, International Monetary Fund, and IMF Economic Review

• “Global Challenges and Channels for Fiscal and Monetary Policy”
• in Frankfurt, Germany

This article was written by Eamonn Sheridan at www.forexlive.com.

• China’s loan collateral tweak will ease ‘asset famine’
• US Q2 GDP data is due Thursday – Goldman Sachs expect +2.3%
• The AUD and the easing from China – given more a nudge lower
• US Vice President Harris has just passed 1,976 Delegates.
• PBOC sets USD/ CNY central rate at 7.1334 (vs. estimate at 7.2746)
• Deutsche Bank expect further losses still to come for large cap tech stocks
• Westpac on AUD/USD – look to dips into the 0.6625-35 zone as buying opportunities
• Australian Consumer Confidence Index, weekly survey, hits its highest in 6 months
• South Korean June PPI +2.5% y/y, seventh straight month of higher
• JP Morgan is Leaning Towards a Hold at This Week’s BoC Meeting
• Japan senior government member says BOJ policy should be made clearer
• Macquarie analysts reiterate that “Trump 2.0 will be a more inflationary policy regime”
• A warning not to get too complacent on politics from PIMCO: Still 3.5 months to go!”
• Watch the EUR data this week for ECB implications
• Vice President Harris speaking – presenting policy position
• UBS says PBOC 0.1% rate cut on Monday maybe just a ‘down payment’ on more to come
• US SEC approves first spot ether ETFs to start trading Tuesday (July 23, 2024)
• Forexlive Americas FX news wrap 22 Jul: Markets digest the Biden exit & Harris entrance
• TD on gold, wary of downside risks from many directions, including an “Asian buyer strike”
• Analyst says the “forces underway for inflation to fall like a rock are in place”
• The closing bell rings and the tech sector/small cap stocks lead the way in tandem
• Trade ideas thread – Tuesday, 23 July, insightful charts, technical analysis, ideas

News
and data flow was fairly light. A data point that pretty much goes by
unnoticed each week is the ANZ-Roy Morgan Australian Consumer
Confidence weekly survey. To be fair it went by unnoticed again
today, but it was interesting. It jumped to its highest in six
months, with that jump being the biggest since April 2021. Cited as
reasons include:

• the
  boost to households from tax cuts

• and
  a further boost yet to come from various ‘cost of living’
  support measures

AUD
(and NZD) remained heavy on the session. AUD is barely off its recent
low while NZD/USD dipped to it lowest since May.

On
the fluid US politics front, the news was that Vice President Harris
has secured enough delegates, more than 1,976, to now be the
Democratic Party’s Presumptive Nominee for November’s
Presidential Election. While the formalities of a vote are yet to
take place, these are, well, formalities. What it means for markets
is a measure of certainty in the race, locking in Harris v. Trump.

USD/JPY
was the only real mover. Its dropped 50 or so points from its session
high without any news nor data catalyst. The only thing we really got
was, Toshimitsu Motegi, the Secretary-General of Japan’s ruling party Liberal Democratic Party (LDP), saying he thinks Bank of Japan
policy should be made clearer. Hard to read too much into that.

This article was written by Eamonn Sheridan at www.forexlive.com.

Goldman Sachs have been concerned about the US economy drifting along in H1 but have been encouraged by recent retail sales and industrial production data.

GS now expect Q2 GDP growth at 2.3% (annualised)

• “Our estimate implies that GDP grew at a 1.9% annualized pace in 2024H1 and domestic final sales grew at a 2.3% pace, easily beating gloomy consensus expectations at the start of the year and falling only a touch short of our own initial forecast”
• Goldman forecasts consumer spending is set to grow by about 1.8% in the first half of 2024, only slightly below the year’s initial forecast.

• Investment, including residential, business, and inventory investment, exceeded expectations, although housing activity slowed in Q2 following a Q1 surge prompted by lower mortgage rates.

• Net exports fell short due to ongoing weaknesses in goods exports

Further out, GS expect:

• 2.6 %GDP growth in Q3 2024
• 2.4% in Q4 2024

This article was written by Eamonn Sheridan at www.forexlive.com.

The Australian and New Zealand dollars have been on the soft side. Yesterday’s easings from the People’s Bank of China not bolstering them either.

The summary of the PBOC is here ICYMI:

• ForexLive Asia-Pacific FX news wrap: A series of easings from the People’s Bank of China

NAB comments via Reuters report:

• “For the Aussie and the kiwi, they tend to be reflecting a more liquid and free expression in terms of the realities currently facing the Chinese economy,” said Rodrigo Catril, senior FX strategist at National Australia Bank (NAB). “The easing coming from the PBOC yesterday is not huge in terms of magnitude, but it does signal that willingness for the PBOC to support the economy alongside the fiscal side, and that probably plays to the view that there will be some tolerance for a little bit of weakness in CNY.”

And, as an aside, on politics:

• “I think certainly the U.S. politics, as we get closer to the November election, will become a greater source of volatility for markets,” said NAB’s Catril. “There’s still a lot of water to go through in terms of what the candidates have to offer and also how the polling may change as well. And then of course, getting a bit more clarity in terms of what the key policies will be and priorities will be, will be very important for markets.” In cryptocurrencies, bitcoin fell

Meanwhile, Commonwealth Bank of Australia more forthright in the expression disappointment:

• “AUD/USD … lower following the People’s Bank of China’s unexpected decision to reduce its key policy interest rate. The interest rate cut and the outcomes of the Third Plenum are too modest to convince market participants of a significant acceleration in the Chinese economy is in prospect”

—

We probably shouldn’t;t be too disappointed with the tiny cuts from the People’s Bank of China, we should probably be accustomed to such restrained actions by now. But still more would be nice.

UBS earlier:

• UBS says PBOC 0.1% rate cut on Monday maybe just a ‘down payment’ on more to come

AUD, and NZD, have been heavy since later last week

This article was written by Eamonn Sheridan at www.forexlive.com.

Media reports that US Vice President Harris has just passed 1,976 Delegates.

That’s a magic number, it means she is the Democratic Party’s Presumptive Nominee for November’s Presidential Election.

The formalities of a vote are yet to take place of course, but with that number of delegates she appears to have it locked in.

This article was written by Eamonn Sheridan at www.forexlive.com.

Via CNBC, thoughts from Deutsche Bank on further losses still to come for large cap tech stocks:

• rotation away from big tech into small caps that happened will be more than a short-term blip
• market is still pricing in too much optimism about the growth areas of the market that have led most of the bull rally

• overall equity positioning remains elevated

• sharp rotations in positioning and flows away from (megacap growth) and tech and into other sectors and small caps, these have plenty of legs to run medium term.
• “MCG & Tech positioning is still aligned with a continuation of extremely strong earnings growth and upgrades while we see a slowing as growth catches back down to the trend rate in place for the last 2 decades”

This article was written by Eamonn Sheridan at www.forexlive.com.

People’s Bank of China USD/CNY reference rate is due around 0115 GMT.

The People’s Bank of China (PBOC), China’s central bank, is responsible for setting the daily midpoint of the yuan (also known as renminbi or RMB). The PBOC follows a managed floating exchange rate system that allows the value of the yuan to fluctuate within a certain range, called a “band,” around a central reference rate, or “midpoint.” It’s currently at +/- 2%.

How the process works:

• Daily midpoint setting: Each morning, the PBOC sets a midpoint for the yuan against a basket of currencies, primarily the US dollar. The central bank takes into account factors such as market supply and demand, economic indicators, and international currency market fluctuations. The midpoint serves as a reference point for that day’s trading.
• The trading band: The PBOC allows the yuan to move within a specified range around the midpoint. The trading band is set at +/- 2%, meaning the yuan could appreciate or depreciate by a maximum of 2% from the midpoint during a single trading day. This range is subject to change by the PBOC based on economic conditions and policy objectives.
• Intervention: If the yuan’s value approaches the limit of the trading band or experiences excessive volatility, the PBOC may intervene in the foreign exchange market by buying or selling the yuan to stabilize its value. This helps maintain a controlled and gradual adjustment of the currency’s value.

This article was written by Eamonn Sheridan at www.forexlive.com.

A snippet from WPAC on the Australian dollar, in brief for the week ahead:

• AUD might find support from a likely very benign US June PCE this week, reinforcing September Fed rate cut pricing, while Biden dropping out of the US presidential race likely stymies the rush to bullish-USD Trump trades for the time being.
• But the coast is not completely clear for AUD either – the tech sector rotation is creating ongoing upheaval, while China’s Plenum contained very little for markets beyond fiscal reform and the known ongoing transition to new growth sources. Once again there are no “all-out” stimulus plans.
• look to dips into the 0.6625-35 zone as buying opportunities

This article was written by Eamonn Sheridan at www.forexlive.com.

A better showing for this indicator of consumer sentiment in Australia.

Comes in this week at 84.4

• a 6 month high
• prior 78.5

The 5.9 point rise is the largest rise in a week since April 2021

ANZ says:

• Each of the subindices rose by at least 5pts

AUD/USD is little changed around 0.6643

This article was written by Eamonn Sheridan at www.forexlive.com.

South Korean Producer Price Index for June 2024:

-0.1% m/m

• prior +0.1%

+2.5% y/y

• prior +2.3%

The Bank of Korea is eyeing rising inflation but there are signs it’ll begin to fall from August.

SK’s finance minister is thinking the same – says inflation may temporarily rebound higher in Julyu, it should stabilise from Augsyt.

This article was written by Eamonn Sheridan at www.forexlive.com.