• Eurostoxx +0.4%
• Germany DAX +0.5%
• France CAC 40 +0.5%
• UK FTSE +0.5%
• Spain IBEX +0.4%
• Italy FTSE MIB +0.7%

This comes as US futures are also holding up, with S&P 500 futures seen higher by 0.2%. Despite the early optimism, US trading is a different ball game though as we saw last week. Besides that, traders will also have to digest the events since the weekend with Joe Biden pulling out of the presidential race and China announcing a number of easing measures to start the week.

This article was written by Justin Low at www.forexlive.com.

The calendar for the FX market is light in terms of scheduled events on Monday and Tuesday. On Tuesday, traders will be monitoring the U.S. existing home sales data and the Richmond manufacturing index.

On Wednesday, the focus shifts to flash services PMI and flash manufacturing PMI for Australia, Japan, the eurozone, the U.K., and the U.S., as well as new home sales for the U.S. Later in the day, all eyes will be on the BoC monetary policy announcement.

On Thursday, we’ll get the advanced GDP q/q, unemployment claims, and durable goods orders m/m for the U.S. Additionally, the G20 meeting will take place on Thursday and Friday.

On Friday, for Japan, the Tokyo core CPI y/y will be released, and for the U.S., the core PCE price index m/m, personal income m/m, personal spending m/m, revised UoM consumer sentiment, and revised UoM inflation expectations.

The consensus for existing home sales in the U.S. is 3.99M compared to the prior 4.11M. The outlook is not very promising, with a 0.7% decline in last month’s print, mainly driven by a decline in single-family home purchases. Higher mortgage rates and rising prices continue to put pressure on the housing market, and a continuation of this trend is likely to be reflected in this week’s data.

New home sales have also been negatively impacted in recent months. For this week’s data, the consensus is 643K compared to the prior 619K. According to analysts from Wells Fargo, “a growing share of builders have offered monetary incentives like price cuts and mortgage rate buy-downs in recent months, but higher-for-longer rates appear to be hindering their efforts.”

The most anticipated event of the week will be the BoC monetary policy announcement. The market expects a 25 bps rate cut, which is more or less fully priced in according to analysts from Scotiabank. However, some analysts surveyed by Bloomberg expect the BoC to keep its monetary policy unchanged at 4.75%.

Since the last meeting, inflation has shown some signs of cooling down with headline inflation printing below expectations. At the last meeting, BoC Governor Tiff Macklem noted “sustained evidence” of inflation easing. The unemployment rate also rose to 6.4% from 6.2% in June which further supports the possibility of a rate cut. However, some core inflation components still run hot, which might be why some analysts believe the Bank will keep rates unchanged.

In terms of trading, a hold would be supportive for the CAD, while a cut would likely have little impact. Aside from the BoC meeting, there is nothing significant for Canada this week.

On Thursday in the U.S. the focus will be on the advance estimate GDP q/q, as the market expects to see an improvement in this week’s print. The consensus is 1.9% compared to the prior 1.4%. If realized, this will reflect better consumer spending, rising inventories, and slightly stronger investment readings, ING analysts said.

Despite that, the prospects for the U.S. economy are not very optimistic and weaker growth is expected in the second half of the year. The Fed is currently expected to cut rates at the September meeting.

In the U.S., the consensus for the core PCE price index is 0.2%, compared to the prior 0.1%. For personal income m/m, it is 0.4% compared to the prior 0.5%, and for personal spending m/m, it is 0.3% vs 0.2% prior.

Even though the core PCE price index is expected to come in at 0.2%, ING analysts highlight some risks it could print below that. Nevertheless, a 0.2% print would still be in line with the Fed’s 2% y/y inflation target and is unlikely to change its monetary policy plans. The market currently expects a first 25 bps rate cut in September.

This article was written by Gina Constantin at www.forexlive.com.

Global Markets:

•  Asian Stock Markets : Nikkei down 1.28%, Shanghai Composite down 0.59%, Hang Seng up 1.25% ASX down 0.51%
• Commodities : Gold at $2406.5 (-0.27%), Silver at $29.21 (-0.44%), Brent Oil at $82.63 (0.37%), WTI Oil at $78.99 (0.21%)
• Rates : US 10-year yield at 4.211, UK 10-year yield at 4.1265, Germany 10-year yield at 2.448

News & Data:

• (CAD) Core Retail Sales m/m  -1.3% vs -0.5% expected
• (CAD) Retail Sales m/m  -0.8% vs -0.5% expected

Markets Update:

Asia-Pacific markets fell on Monday after U.S. President Joe Biden withdrew from the presidential race, endorsing Vice President Kamala Harris as the Democratic nominee. China’s central bank cut the short-term 7-day reverse repurchase rate to 1.7% from 1.8% and trimmed the one-year and five-year loan prime rates by 10 basis points each, to 3.35% and 3.85%. This move, surprising economists, also included reducing collateral requirements for the medium-term lending facility, currently at 2.5%. A Reuters survey had shown that 64% of respondents expected no changes to the LPR rates, which are benchmarks for corporate loans and mortgages.

Hong Kong’s Hang Seng index rose 1.2% following the PBOC’s announcement, while the mainland Chinese CSI 300 fell 0.72%. The offshore Chinese yuan weakened by 0.16% to 7.2952 against the U.S. dollar. Investors are also assessing the impact of a global IT outage caused by a glitch in a CrowdStrike update, which led to Microsoft Windows operating system crashes and an 11% drop in CrowdStrike’s shares. Microsoft reported that around 8.5 million Windows devices were affected.

This week, investors will focus on GDP data from South Korea and the U.S., and factory activity data from the region. Both countries will release second-quarter advance GDP figures on Thursday. Other key economic data include U.S. and Singapore inflation numbers on Friday and Tuesday, respectively. The Taiwan Weighted Index led regional losses, dropping 2.7%, followed by Japan’s Nikkei 225 and Topix, which fell 1.21% and 1%. South Korea’s Kospi declined by 1.44%, with the small-cap Kosdaq down 2.52%. Australia’s S&P/ASX 200 dropped 0.66%.

On Wall Street, all three major indexes retreated on Friday. The S&P 500 fell 0.71%, the Nasdaq Composite slid 0.81%, and the Dow Jones Industrial Average decreased by 377.49 points, or 0.93%, to 40,287.53.

The post Monday 22nd July 2024: Asia Markets React to Biden’s Exit and China Rate Cuts first appeared on IC Markets | Official Blog.

During election periods, financial markets are notoriously volatile and unpredictable as investors navigate potential policy changes and economic shifts.

The recent assassination attempt on Donald Trump has had a significant financial impact, with the U.S. markets demonstrating resilience, closing higher on Monday, July 15, 2024. The Dow Jones Industrial Average rose by 0.6%, reaching a new record high, driven by recent inflation data and Friday’s historic close above 40,000. Additionally, the S&P 500 gained 0.3%, while the Nasdaq Composite added 0.4%.

Looking ahead, the election is set to influence several key sectors, including financial, renewable energy, traditional fuels, and healthcare. Understanding these potential impacts can help investors better navigate their portfolios in the months ahead.

Financial Sector

Under a potential second Trump administration, UBS predicts a relaxation of capital and liquidity regulations. This regulatory easing is expected to benefit major banks like JPMorgan Chase, Bank of America, and Wells Fargo, and extend advantages to smaller lenders such as Discover Financial, KeyCorp, and Synchrony Financial.

Solar Stocks Outlook

Experts caution that Republican opposition to green initiatives, supported by Trump, could jeopardise $1 Trillion in low-carbon energy investments incentivised by the 2022 Inflation Reduction Act. Conversely, UBS expects a second Democratic administration to maintain these incentives, potentially benefiting solar manufacturers like First Solar, NextEra Energy, and Sunrun.

Clean Energy vs. Oil Companies

Under a Democratic administration, continued support for electrification and green hydrogen production could benefit companies like Eaton, Quanta Services, Tesla, and Air Products and Chemicals. Incentives would also favour manufacturers of energy-efficient products, such as Johnson Controls and Trane Technologies, and waste management firms with strong recycling infrastructure, like Waste Management and Republic Services.

Conversely, a Trump administration could stimulate the oil and natural gas sectors with increased investments, drilling activity, and higher natural gas exports, benefiting producers such as Exxon Mobil, Cheniere Energy, and ConocoPhillips.

Healthcare

Historically, healthcare stocks tend to underperform as investors anticipate reform. However, this year, they have kept pace with the broader market, returning 8.9% compared to the S&P 500 Index’s 10.6%. 

Total healthcare expenditure is expected to rise under both administrations, focusing on reducing medical inflation. A Democratic win could benefit the sector the most, with healthcare spending projected to reach 16.9% of US GDP by 2028. As a result, big pharma companies including Eli Lilly & Co, Thermo-Fisher Scientific Inc., Amgen Inc., Merck & Co, and Johnson & Johnson should continue to grow.

The post Could the Upcoming US Election Impact Your Portfolio? first appeared on IC Markets | Official Blog.

The pair had been holding steadier around 157.30-50 levels in Asia before easing slightly to 157.00 just about a half hour ago. The break under the figure level seems to be triggering some stops amid a quick fall to 156.50 on the day.

This cuts back some of the bounce last Thursday, with the pair having hit a low of 155.36 at the time. This suggests that sellers are also still interested, with dip buyers struggling to gain too much traction after Japan intervened. Here’s a look at the daily chart:

The broken trendline support now acts as somewhat of a resistance for buyers in the latest rebound last week.

This article was written by Justin Low at www.forexlive.com.

IC Markets Europe Fundamental Forecast | 22 July 2024

What happened in the Asia session?

It was a quiet morning as the dollar index (DXY) hovered around 104.30 while spot gold prices stabilized around above the $2,400/oz-threshold. Meanwhile, crude prices drifted higher as WTI oil climbed above $80.50 per barrel.

What does it mean for the Europe & US sessions?

It is practically an empty calendar on the first trading day of the week with no potential catalysts for financial markets. It could be a very subdued day of trading with the DXY initially falling towards the 104-threshold as markets re-opened this morning but demand for the dollar could pick up as the day progresses.

The Dollar Index (DXY)

Key news events today

No major news events.

What can we expect from DXY today?

The dollar index (DXY) gained 0.32% as it bucked a two-week decline to close at 104.36 last Friday. Following the large declines in the first half of July where the DXY tumbled over 1.6%, this index looks to have stabilized around 104 last week. The DXY initially fell towards the 104-threshold as markets re-opened this morning but demand for the dollar could pick up as the day progresses – these are the support and resistance levels for today.

Support: 103.70

Resistance: 105.10

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

No major news events.

What can we expect from Gold today?

After gaining nearly 4.5% since the end of June, gold finally stalled and reversed last week as it tumbled 0.89% with spot prices closing at $2,400.30/oz last Friday. Overhead pressures are likely to remain for this precious metal as the new trading week gets underway – these are the support and resistance levels for today.

Support: 2,350/oz

Resistance: 2,450/oz

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?

Following five weeks of strong gains, the Aussie stalled around 0.6800 last week to reverse and fall 1.5% to close at 0.6680. This currency pair was trading around 0.6690 as Asian markets came online – these are the support and resistance levels for today.

Support: 0.6630

Resistance: 0.6750

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 has shed nearly 2.3% over the last couple of weeks as it closed at 0.6008 on Friday. This currency pair was hovering above the 0.6000-threshold at the beginning of the Asia session – these are the support and resistance levels for today.

Support: 0.5980

Resistance: 0.6065

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 has strengthened in recent weeks causing USD/JPY to reverse off the 162-level and dip under 156 before retracing higher to close at 157.44 last Friday. This currency pair was trading around 157.50 as Asian markets came online – these are the support and resistance levels for today.

Support: 154.70

Resistance: 159.00

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 Bullish

The Euro (EUR)

Key news events today

No major news events.

What can we expect from EUR today?

After hitting a high of 1.0948 last week, the Euro pulled back to close at 1.0891 last Friday. This currency pair was trading around 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 weakened towards the end of last week as USD/CHF retraced higher to close at 0.8884 last Friday. This currency pair was edging higher towards 0.8900 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?

After hitting a high of 1.3048 last week, Cable retreated away from this level to close at 1.2912 last Friday. This currency pair was drifting lower towards 1.2900 at the beginning of the Asia session – these are the support and resistance levels for today.

Support: 1.2860

Resistance: 1.3050

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?

The Loonie has lost ground against the dollar last week as USD/CAD climbed higher to close at 1.3730 last Friday. This currency pair remained elevated to hover around 1.3725 as Asian markets came online – these are the support and resistance levels for today.

Support: 1.3660

Resistance: 1.3750

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

Weak Bullish

Oil

Key news events today

No major news events.

What can we expect from Oil today?

Prices for crude oil dropped nearly 4.5% over the last couple of weeks with WTI oil falling sharply on Thursday and Friday to close at $80.29 per barrel. Overhead pressures remain strong for this commodity and oil prices could slide lower as the day progresses.

Next 24 Hours Bias

Medium Bearish

The post IC Markets Europe Fundamental Forecast | 22 July 2024 first appeared on IC Markets | Official Blog.

,

This article was written by Justin Low at www.forexlive.com.

• German DAX futures +0.2%
• UK FTSE futures +0.2%

It’s still early in the day and on the week itself, European indices will be eyeing earnings from the big banks. Spain’s Santander and France’s BNP Paribas will be reporting on Wednesday, alongside Germany’s Deutsche Bank and Italy’s UniCredit. US futures are also calmer, with S&P 500 futures seen up 0.2% so far on the day.

This article was written by Justin Low at www.forexlive.com.

The report cites three sources familiar with the matter. And it pertains to Nvidia’s “Blackwell” chip series, which was unveiled during March. The chip is due to be mass produced later this year with the sources saying Nvidia will work with Inspur, who is one of the firm’s major distributors in China, on the launch and distribution of the chip. It is currently tentatively named the “B20” chip.

For some context, this should mirror the “B2000” chip within the “Blackwell” series – which is believed to be 30 times faster than the series before it when delivering on tasks such as serving up answers from chatbots.

The move by Nvidia here comes as the US has tightened export controls of cutting-edge semiconductors to China since last year

This article was written by Justin Low at www.forexlive.com.

In case you missed it:

• It’s finally Joever
• PBoC announces cut to 7-day reverse repo rate to 1.70% from 1.80%
• China cuts 1 and 5 year loan prime rates by 10 basis points each
• PBOC to lower collateral for Medium-term Lending Facility (MLF) loans

Joe Biden officially drops out of the presidential race and has endorsed Kamala Harris to take over the mantle in challenging Trump in November. Now, her candidacy is not set in stone just yet. Other Democrats still have the opportunity to challenge her at the DNC next month. But it will be an extremely tough one now after Biden’s endorsement of course.

Then, earlier today we have China announcing more easing measures to try and bolster economic activity. After the Third Plenum pledges last week, they are taking quick action to try and shore up market confidence – which has been lacking amid the absence of specific details since.

That has put more pressure on the Chinese yuan and even with the stronger fix today, USD/CNY is pushing up to 4.27 levels. The trend this year has been rather one-sided, as Beijing is mostly just managing the yuan depreciation to be gradual and smoother.

Amid a softer yuan, the aussie and kiwi are also down slightly on the day. Both AUD/USD and NZD/USD are down 0.2% to 0.6670 and 0.5995 respectively now.

Meanwhile, the dollar itself is keeping mostly steadier across the board. There’s no big reaction to Biden bowing out as Trump remains the strong favourite to take the November election still. 10-year yields in the US are down 1.6 bps to 4.223% though. So, that’s one spot to watch in the session ahead.

In the equities space, the mood music is also calmer with S&P 500 futures seen up 0.1%. It’s still early in the day though and one has to keep in mind the heavy selling from last week. Wall Street limped into the finish line, so is this the time where stocks bounce back again to maintain the July hot streak?

This article was written by Justin Low at www.forexlive.com.

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, 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: Bullish
Overall momentum of the chart: Bullish

Factors contributing to the momentum: Price is above the bullish Ichimoku cloud

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

Pivot: 1.0707
Supporting reasons: Identified as an overlap support level, specifically at the 50% Fibonacci Retracement, indicating a potential area where buyers could enter the market after a retracement.

1st support: 1.0672
Supporting reasons: Identified as an overlap support level, suggesting a significant area where previous declines have found support.

1st resistance: 1.0949
Supporting reasons: Identified as a multi-swing high resistance level, indicating a historical point where previous rallies have faced selling pressure or reversed.

EUR/JPY:

Potential Direction: Bullish
Overall momentum of the chart: Bullish

Price could potentially make a bullish continuation towards 1st resistance.

Pivot: 170.73
Supporting reasons: Identified as an overlap support level, specifically at the 61.80% Fibonacci Retracement, indicating a potential area where buyers could enter the market after a retracement.

1st support: 168.35
Supporting reasons: Identified as a multi-swing low support level, suggesting a significant area where previous declines have found support.

1st resistance: 174.43
Supporting reasons: Identified as a pullback 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

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: 0.8454
Supporting reasons: Identified as an overlap resistance level, specifically at the 61.80% Fibonacci Retracement, indicating a potential area where sellers could enter the market after a retracement.

1st support: 0.8385
Supporting reasons: Identified as a swing low support level, suggesting a significant area where previous declines have found support.

1st resistance: 0.8498
Supporting reasons: Identified as an overlap resistance level, indicating a historical point where previous rallies have faced selling pressure or reversed.

GBP/USD:

Potential Direction: Bullish
Overall momentum of the chart: Bullish

Factors contributing to the momentum: Price is above the bullish Ichimoku cloud

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

Pivot: 1.2859
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: 1.2619
Supporting reasons: Identified as a multi-swing low support level, suggesting a significant area where previous declines have found support.

1st resistance: 1.3047
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: Bullish
Overall momentum of the chart: Bullish

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

Pivot: 200.58
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: 193.64
Supporting reasons: Identified as a pullback support level, suggesting a significant area where previous declines have found support.

1st resistance: 204.80
Supporting reasons: Identified as a pullback 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

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: 0.8902
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: 0.8705
Supporting reasons: Identified as a pullback support level, specifically at the 161.80% Fibonacci Extension, suggesting a significant area where previous declines have found support.

1st resistance: 0.9044
Supporting reasons: Identified as a multi-swing high 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: 158.50
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: 151.98
Supporting reasons: Identified as an overlap support level, specifically at the 50% Fibonacci Retracement, suggesting a significant area where previous declines have found support.

1st resistance: 162.00
Supporting reasons: Identified as a multi-swing high 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 fall towards the 1st support.

Pivot:1.3777
Supporting reasons: Identified as a pullback resistance, suggesting a potential area where selling pressures could intensify.

1st support: 1.3665
Supporting reasons: Identified as a pullback support that aligns with a 50% Fibonacci retracement level, indicating a significant area where price has found support recently.

1st resistance: 1.3831
Supporting reasons: Identified as a multi-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: 0.6631
Supporting reasons: Identified as a pullback support that aligns with a 38.2% Fibonacci retracement level, indicating a potential zone where buying interests could pick up to stage a minor rebound. The presence of a bullish Ichimoku clouds adds further significance to the pivot as a potential support zone.

1st support: 0.6572
Supporting reasons: Identified as a pullback support that aligns close to a 50% Fibonacci retracement level, suggesting a potential area where price could find strong support.

1st resistance: 0.6784
Supporting reasons: Identified as a swing-high resistance that aligns close to a 161.8% Fibonacci extension level, indicating a significant area that could halt further upward movement.

NZD/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: 0.5997
Supporting reasons: Identified as a pullback support that aligns with a confluence of Fibonacci levels i.e. the 61.8% retracement and the 61.8% projection, indicating a potential area where buying interests could pick up to stage a minor rebound.

1st support: 0.5872
Supporting reasons: Identified as a multi-swing-low support, suggesting a significant area that could halt further downward momentum.

1st resistance: 0.6144
Supporting reasons: Identified as a pullback resistance, indicating a significant area that could halt further upward movement.

US30 (DJIA):

Potential Direction: Bullish

Overall Momentum of the Chart: Bullish

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

Pivot: 40,023.54
Supporting reasons: Identified as a pullback support that aligns with a 38.2% Fibonacci retracement level, indicating a potential area where buying interests could pick up to resume the uptrend.

1st Support: 38,019.61

Supporting Reasons: Identified as a pullback support that aligns with a 38.2% Fibonacci retracement level, suggesting a significant area where price could find strong support.

1st Resistance: 41,277.57

Supporting Reasons: Identified as a pullback resistance that aligns with the all-time high and a 161.8% Fibonacci extension level, indicating a significant area that could halt further upward movement.

DE40 (DAX):

Potential Direction: Bullish

Overall Momentum of the Chart: Neutral

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

Pivot: 18,003.90
Supporting reasons: Identified as a pullback support that aligns close to a 23.6% Fibonacci retracement level, indicating a potential area where buying interests could pick up to stage a rebound.

1st Support: 17,664.30

Supporting Reasons: Identified as a pullback support that aligns close to a 100% Fibonacci projection, indicating a significant area where price could find strong support.

1st Resistance: 18,701.20

Supporting Reasons: Identified as a pullback resistance, indicating a significant area that could halt further upward movement.

US500 (S&P 500): 

Potential Direction: Bullish

Overall momentum of the chart: Neutral

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

Pivot: 5,326.24
Supporting reasons: Identified as an overlap support that aligns with a confluence of Fibonacci levels i.e. the 23.6% and the 50% retracements, indicating a potential area where buying interests could pick up to stage a rebound. The presence of a bullish Ichimoku clouds adds further significance to the pivot as a potential support zone.

1st support: 4,956.50

Supporting reasons: Identified as a pullback support that aligns close to a 50% Fibonacci retracement level, indicating a potential area where price could find strong support. 

1st resistance: 5,673.33

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: 63,843.77

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

1st support: 55,708.48

Supporting reasons: Identified as a swing-low support that aligns close to a 50% Fibonacci retracement level, indicating a significant area that could halt further downward movement.

1st resistance: 71,810.70

Supporting reasons: Identified as a pullback resistance, indicating a potential barrier that could halt further upward movement.

ETH/USD (Ethereum):

Potential Direction: Bullish

Overall momentum of the chart: Bullish

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

Pivot: 3,386.40

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

1st Support: 2,863.34

Supporting Reasons: Identified as a multi-swing-low support that aligns close to a 61.8% Fibonacci retracement level, indicating a significant area that could halt further downward movement.

1st Resistance: 3,889.27

Supporting Reasons: Identified as a swing-high resistance that aligns close to a 100% Fibonacci projection level, indicating a historical barrier where selling pressures could intensify.

WTI/USD (Oil):

Potential Direction: Bearish

Overall Momentum of the Chart: Bearish

Price could fall towards the pivot and potentially make a bearish break through this level to fall towards the 1st support.

Pivot: 80.11

Supporting Reasons: Identified as a potential breakout level where the bearish momentum could drive price lower.

1st Support: 77.41

Supporting Reasons: Identified as a pullback support that aligns with a 61.8% Fibonacci retracement level, indicating a significant area where price could find strong support.

1st Resistance: 83.16

Supporting Reasons: Identified as a pullback resistance, 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: 2292.92
Supporting reasons: Identified as a multi-swing low support level, suggesting a significant area where previous declines have found support.

1st resistance: 2468.92
Supporting reasons: Identified as a swing high resistance level, indicating a historical point where previous rallies have faced selling pressure or reversed.

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The post Monday 22nd July 2024: Technical Outlook and Review first appeared on IC Markets | Official Blog.

• Bank of England Executive Director, Markets, speak Monday on its balance sheet
• The money taps have been turned on again for the Democrats since Biden’s announcement
• PBOC sets USD/ CNY reference rate for today at 7.1335 (vs. estimate at 7.2624)
• China cuts 1 and 5 year loan prime rates by 10 basis points each
• PBOC cut 7-day rates, eased requirements for 1 year MLF loans. LPS ahead – a cut looming?
• PBOC to lower collateral for Medium-term Lending Facility (MLF) loans
• PBoC announces cut to 7-day reverse repo rate to 1.70% from 1.80%
• Federal Open Market Committee (FOMC) blackout period began on the weekend
• Unnamed sources say that all 50 Democratic US State Chairs back Harris
• Trouble for China hedge funds? Reuters: Brace for upheaval from tough new rules
• New Zealand trade balance for June is a 699mn NZD surplus (prior +54mn)
• Updated US Presidential election odds: Trump 61%, Harris 31%
• The days ahead could bring some unwind of the ‘Trump ‘ trade
• Early Monday FX rates – 22 July 2024 – US dollar little changed after Biden pulls out
• Trade ideas thread – Monday, 22 July, insightful charts, technical analysis, ideas
• Monday morning open levels, indicative FX rates 22July2024, little change from late Friday
• It’s finally Joever
• Newsquawk Week Ahead: Highlights include US PCE, BoC, PBoC LPR, PMI’s and Tokyo CPI
• Weekly Market Outlook (22-26 July)
• How would the bond and FX markets react to Biden dropping out of the race?
• Buying FTSE China A50 index (XIN9) on the monthly chart
• Heads up for China rate setting coming up on Monday

Politics
was the bombshell news to open the week. US President Biden pulled
out of the 2024 contest early on Sunday afternoon, US time, well
prior to Asian markets opening. Very early pricing was not overly
volatile, early NZ saw the US dollar drop a little. EUR, AUD, NZD,
GBP, CAD and even JPY gained a few tics or so. As more Asian centres
came towards being online, Australia, Japan, then Hong Kong and
Singapore (these final two are in the same time zone) the losses for
the USD extended further, but the moves were not large, not at all.
US equity index markets opened (Globex on the CME) with ES and NQ up
also.

Over
the course of the morning the USD bottomed out and all those
currencies just mentioned gave back their gains. The biggest loser of
the lot was the AUD, which dropped 35+ points from its early high.

The
next item of any note to hit was a series of easings from the
People’s Bank of China:

• the
  PBOC cut the rate on its 7-day reverse report from 1.8% to 1.7%, the
  first cut since August last year
• at
  the same time the PBOC promised support for the CNY, saying it’d
  strengthen the counter-cyclical adjustment to “better support
  the real economy”
• the
  PBOC then announced it was lowering collateral requirements for
  medium term lending facility loans, the move is aiming to increase
  the size of tradable bonds in the market
• the
  PBOC followed up with a 10bp cut to each of the one- and five-year
  loan prime rates

On
the LPRs, the
one-year rate has been cut to 3.35%

• prior
  3.45%

The
five-year rate has been cut to 3.85%

• prior
  3.95%

USD/CNH
traded higher, but again its not a huge move.

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