Global Markets:

•  Asian Stock Markets : Nikkei down 0.32%, Shanghai Composite down 0.32%, Hang Seng up 0.02% ASX up 0.73%
• Commodities : Gold at $2469.5 (0.07%), Silver at $31.06 (-1.34%), Brent Oil at $83.13 (-0.17%), WTI Oil at $79.59 (-0.47%)
• Rates : US 10-year yield at 4.179, UK 10-year yield at 4.081, Germany 10-year yield at 2.424

News & Data:

• (CAD) CPI m/m -0.1% vs 0.1% expected
• (CAD) Core CPI m/m  -0.1% vs 0.6% expected
• (USD) Core Retail Sales m/m  0.4% vs 0.1% expected
• (USD) Retail Sales m/m  0.0% vs -0.3% expected

Markets Update:

Asia-Pacific markets showed mixed results on Wednesday, with Australia’s S&P/ASX 200 reaching a historic high. The index rose over 1%, driven by gains in gold miners Northern Star Resources and Bellevue Gold, up more than 4.55% and nearly 4%, respectively. Evolution Mining and Newmont Corporation also rose by over 2%.

In Japan, the Nikkei 225 fell by 0.32%, while the Topix gained 0.40%. The Reuters Tankan survey indicated rising business optimism among large Japanese manufacturers, with the manufacturing index climbing to +11 from +6. However, confidence among non-manufacturers dropped from +31 to +26. Japanese authorities likely intervened in the currency market last week, spending approximately 6 trillion yen ($37.9 billion), with the yen currently at 158.36 against the U.S. dollar.

The Taiwan Weighted Index fell by 0.77% following comments from U.S. Republican presidential candidate Donald Trump, who suggested Taiwan should pay the U.S. for its defense. Shares of Taiwanese chip manufacturer TSMC dropped by as much as 2.36%. In South Korea, the Kospi decreased by 0.39%, with the small-cap Kosdaq also declining by 0.31%. Hong Kong’s Hang Seng index saw a slight increase, while China’s CSI 300 rose by 0.09%.

HSBC Holdings announced the appointment of Georges Elhedery as group CEO, effective September 2. Elhedery, currently the company’s chief financial officer, will replace Noel Quinn. HSBC’s Hong Kong shares were marginally down. Singapore’s non-oil domestic exports fell more than expected in June, marking the fifth consecutive month of decline, dropping by 8.7% year-on-year. Overnight, Wall Street saw gains fueled by optimism over potential rate cuts, with the Dow Jones rising by 1.85% to a record 40,954.48, the S&P 500 increasing by 0.64%, and the Nasdaq Composite up by 0.20%.

Upcoming Events: 

• 12:30 PM GMT – CAD Foreign Securities Purchases
• 12:30 PM GMT – USD Building Permits
• 12:30 PM GMT – USD Housing Starts

The post Wednesday 17th July 2024: Volatile Day for Asian Markets as Australia Sets New Record first appeared on IC Markets | Official Blog.

The probability priced in for a rate cut in August is ~49%, according to the OIS market. Meanwhile, there’s roughly 50 bps of rate cuts priced in by year-end. It’s definitely a close call and if the BOE doesn’t move in August, traders are still expecting them to at least move in September. The odds of that is seen at ~89% currently.

Given the state of play, a notable miss on the inflation numbers later could very well see traders move to price in a move in August instead. But the opposite will also be a consideration if the inflation numbers prove to be much stickier than anticipated. The key numbers to watch will be the core figure and services inflation.

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

IC Markets Europe Fundamental Forecast | 17 July 2024

What happened in the Asia session?

New Zealand’s inflation rose 0.4% QoQ in the second quarter of this year – lower than the estimate of 0.5% – to mark the lowest reading since the second quarter of 2020 with categories such as housing and household utilities, miscellaneous goods and services, and communication being the main contributors. On an annualised basis, the inflation rate slowed to 3.3%, coming in lower than the estimate of 3.5% YoY. 

Despite inflation continuing to cool, the pace has been slow and the latest figures still remain above the RBNZ’s target of 1 to 3% YoY. The Kiwi initially fell from 0.6050 to as low as 0.6033 but it swiftly reversed to spike higher – this currency pair rose as high as 0.6079 this morning.

What does it mean for the Europe & US sessions?

The final inflation reading for the month of June is expected to show headline and core CPI both remaining unchanged at 2.5% and 2.9% respectively, YoY. Although inflation has moderated significantly lower over the past ten months, the pace of easing has slowed in recent months. Inflation in the Euro Area still remains above the ECB’s target of 2%. Should the final print surprise markets to the upside, it could function as a near-term bullish catalyst for the Euro.

Inflation in the U.K. has made good progress as it moderated lower over the last eight months with headline CPI slowing to 2% YoY in May while the core reading eased to 3.5% YoY. The forecasts for June points to further easing for both these metrics, albeit at a marginal decline. Should inflation cool more than anticipated, it could cause the Cable to come under strong overhead pressures before the start of the European trading hours.

The Dollar Index (DXY)

Key news events today

Industrial Production (1:15 pm GMT)

Fed Gov Waller Speaks (1:35 pm GMT)

What can we expect from DXY today?

After declining in March and April, industrial production rebounded strongly in May as it rose 0.7% MoM – this reading also marked the first annual increase in production output since last December. The estimate of a 0.3%-growth in June points to a second straight month of higher output for this sector which could provide some lift for the dollar.

Meanwhile, Federal Reserve Governor Christopher Waller will be speaking on the economic outlook for the U.S. at an event hosted by the Federal Reserve Bank of Kansas City where audience questions are expected – his remarks could create higher volatility for the dollar later today.

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

Industrial Production (1:15 pm GMT)

Fed Gov Waller Speaks (1:35 pm GMT)

What can we expect from Gold today?

After declining in March and April, industrial production rebounded strongly in May as it rose 0.7% MoM – this reading also marked the first annual increase in production output since last December. The estimate of a 0.3%-growth in June points to a second straight month of higher output for this sector which could provide some lift for the dollar and potentially put downward pressure on gold prices.

Meanwhile, Federal Reserve Governor Christopher Waller will be speaking on the economic outlook for the U.S. at an event hosted by the Federal Reserve Bank of Kansas City where audience questions are expected – his remarks could create higher volatility for this precious metal later today.

Next 24 Hours Bias

Weak Bullish

The Australian Dollar (AUD)

Key news events today

No major news events.

What can we expect from AUD today?

The Aussie fell to an overnight low of 0.6414 before stabilizing around this level to retrace higher. This currency pair was trading around 0.6740 as Asian markets came online and could edge higher as the day progresses – these are the support and resistance levels for today.

Support: 0.6715

Resistance: 0.6790

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

CPI (10:45 pm GMT 16th July)

What can we expect from NZD today?

New Zealand’s inflation rose 0.4% QoQ in the second quarter of this year – lower than the estimate of 0.5% – to mark the lowest reading since the second quarter of 2020 with categories such as housing and household utilities, miscellaneous goods and services, and communication being the main contributors. On an annualised basis, the inflation rate slowed to 3.3%, coming in lower than the estimate of 3.5% YoY. 

Despite inflation continuing to cool, the pace has been slow and the latest figures still remain above the RBNZ’s target of 1 to 3% YoY. The Kiwi initially fell from 0.6050 to as low as 0.6033 but it swiftly reversed to spike higher – this currency pair rose as high as 0.6079 this morning.

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

Strong Bullish

The Japanese Yen (JPY)

Key news events today

No major news events.

What can we expect from JPY today?

The recent intervention measures by the Bank of Japan (BoJ) toward the end of last week has strengthened the yen and kept currency traders on the edge, driving USD/JPY to a low of 157.16 on Monday. This currency pair has since retraced higher and was trading around 158.45 at the beginning of the Asia session – these are the support and resistance levels for today.

Support: 157.70

Resistance: 159.40

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

CPI (9:00 am GMT)

What can we expect from EUR today?

The final inflation reading for the month of June is expected to show headline and core CPI both remaining unchanged at 2.5% and 2.9% respectively, YoY. Although inflation has moderated significantly lower over the past ten months, the pace of easing has slowed in recent months. Inflation in the Euro Area still remains above the ECB’s target of 2%. Should the final print surprise markets to the upside, it could function as a near-term bullish catalyst for the Euro.

Central Bank Notes:

• The Governing Council today decided to lower the three key ECB interest rates by 25 basis points after nine months of holding rates steady.
• Accordingly, the interest rate on the main refinancing operations and the interest rates on the marginal lending facility and the deposit facility will be decreased to 4.25%, 4.50% and 3.75% respectively, with effect from 12 June 2024.
• Since September 2023, inflation has fallen by more than 2.5% and the inflation outlook has improved markedly while underlying inflation has also eased, reinforcing the signs that price pressures have weakened, and inflation expectations have declined at all horizons.
• At the same time, despite the progress over recent quarters, domestic price pressures remain strong as wage growth is elevated, and inflation is likely to stay above target well into next year – the latest Eurosystem staff projections for both headline and core inflation have been revised up for 2024 and 2025 compared with the March projections.
• Projections now show headline inflation averaging 2.5% in 2024, 2.2% in 2025 and 1.9% in 2026 while economic growth is expected to pick up to 0.9% in 2024, 1.4% in 2025 and 1.6% in 2026.
• The Council also confirmed that it will reduce the Eurosystem’s holdings of securities under the pandemic emergency purchase programme (PEPP) by €7.5 billion per month on average over the second half of the year.
• 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 18 July 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?

Demand for the dollar waned overnight as USD/CHF fell under 0.8950. This currency pair was trading around 0.8940 as Asian markets came online and could drift lower as the day progresses – these are the support and resistance levels for today.

Support: 0.8920

Resistance: 0.8970

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

CPI (6:00 am GMT)

What can we expect from GBP today?

Inflation in the U.K. has made good progress as it moderated lower over the last eight months with headline CPI slowing to 2% YoY in May while the core reading eased to 3.5% YoY. The forecasts for June points to further easing for both these metrics, albeit at a marginal decline. Should inflation cool more than anticipated, it could cause the Cable to come under strong overhead pressures before the start of the European trading hours.

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?

Demand for the dollar waned overnight as USD/CAD fell under 1.3670. This currency pair retraced higher towards 1.3680 at the beginning of the Asia session but could resume the downtrend once more – these are the support and resistance levels for today.

Support: 1.3660

Resistance: 1.3710

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

EIA Crude Oil Inventories (2:30 pm GMT)

What can we expect from Oil today?

API crude oil stocks declined for the third consecutive week as 4.4M barrels of crude were drawn from storage. Despite the high drawdown in inventory levels – which signals higher demand in the U.S. – oil prices remain under pressure as demand concerns from China overshadow the recent drawdowns. WTI oil shed 1.4% overnight as it fell under $80.50 per barrel. This benchmark stabilized around this level this morning and was rising towards the $81-mark.

Next 24 Hours Bias

Medium Bearish

The post IC Markets Europe Fundamental Forecast | 17 July 2024 first appeared on IC Markets | Official Blog.

The post Ex-Dividend 18/07/2024 first appeared on IC Markets | Official Blog.

Going into the report, traders were pricing in a relative coin flip for the BOE meeting in August. And with the headline, core, and services estimates all coming in unchanged, it’s hard to see a meaningful shift in the odds in the aftermath.

The disinflation process is gradually playing out and central banks are now referring to these stalling numbers as “bumps in the road”. So, are they confident enough to act on that and walk the talk? It remains to be seen. In the case of the BOE, they have made emphasis that they would like the stickier parts i.e. services inflation to ease a little more.

So, it’s still a bit of a guessing game in figuring out what they might want to do next month. For the pound, that means the landscape has not changed in a significant way compared to before the UK CPI report today.

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

• German DAX futures -0.2%
• UK FTSE futures +0.3%

French stocks were the laggard yesterday as the mood music in Europe remains a more cautious one. But for today, tech shares are also lagging with Nasdaq futures marked down by 0.5% currently. S&P 500 futures are also down 0.3% as such as we look to the session ahead.

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

• Prior +2.0%
• Core CPI +3.5% vs +3.5% y/y expected
• Prior +3.5%

Both the headline and core annual estimates are unchanged compared to May. This comes as services inflation remains sticky, seen at 5.7%, also unchanged on the month. The pound has nudged up from 1.2970 to 1.2985 on the back of this. The report isn’t one to really compel the BOE to move in August, so that will continue to keep markets guessing for now.

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

The UK release will be the main one to watch, especially since an August rate cut by the BOE remains a near 50-50 call. Headline annual inflation is estimated to ease to 1.9% but core annual inflation is estimated to hold at 3.5%. Services inflation remains sticky and policymakers would like to see more progress on that. It is estimated to ease marginally to 5.6% from 5.7% in May.

As such, the pound will be a potential mover on the headlines later.

Besides that, there is the Eurozone final estimate for June but that shouldn’t be of much impact. The ECB is setting up for a move in September and aren’t going to pull any surprises tomorrow. In any case, this is the final estimate so the release tends to be a more muted one in general.

Given all that, we might be in for a slower on in Europe today. But if anything else, do keep an eye out on the risk mood. US futures are down slightly but could start to pick up again later in the day. Meanwhile, gold is holding at fresh record highs and with sights of $2,500 potentially next.

0600 GMT – UK June CPI figures0900 GMT – Eurozone June final CPI figures1100 GMT – US MBA mortgage applications w.e. 12 July

That’s all for the session ahead. I wish you all the best of days to come and good luck with your trading! Stay safe out there.

🌍📅 On this day in 2014, World Emoji Day was created and celebrated based on the way the calendar emoji is shown on iPhones. 🥳🤪🙃😆

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

DXY (US Dollar Index):

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: 104.04
Supporting reasons: Identified as a pullback support that aligns close to a 61.8% Fibonacci retracement level, indicating a potential area where buying interests could pick up to stage a minor rebound.

1st support: 103.21
Supporting reasons: Identified as a pullback support that aligns with a 78.6% Fibonacci retracement level, suggesting a significant area that could halt further downward movement.

1st resistance: 104.52
Supporting reasons: Identified as a pullback resistance that aligns with a 23.6% Fibonacci retracement level, indicating a potential area where selling pressures could intensify.

EUR/USD:

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: 1.0913
Supporting reasons: Identified as a pullback resistance, indicating a potential area where selling pressures could intensify. 

1st support: 1.0859
Supporting reasons: Identified as a pullback support level that aligns with a 23.6% Fibonacci retracement level, suggesting a potential area that could halt further downward movement. The presence of an ascending trendline and the bullish Ichimoku cloud adds further significance to the bullish momentum.

1st resistance: 1.0933
Supporting reasons: Identified as a swing-high resistance, indicating a potential area where previous rallies have faced selling pressure or reversed.

EUR/JPY:

Potential Direction: Bearish
Overall momentum of the chart: Neutral

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

Pivot: 173.23
Supporting reasons: Identified as an overlap resistance that aligns close to a 50% Fibonacci retracement level, indicating a potential area where selling pressures could intensify.

1st support: 171.80
Supporting reasons: Identified as a pullback support that aligns close to a 50% Fibonacci retracement level, suggesting a significant area that could halt further downward movement.

1st resistance: 175.18
Supporting reasons: Identified as a pullback resistance, indicating a significant point where previous rallies have faced selling pressure or reversed.

EUR/GBP:

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 drop to the 1st support.

Pivot: 0.8435
Supporting reasons: Identified as a pullback resistance that aligns close to a 38.2% Fibonacci retracement level, indicating a potential area where selling pressures could intensify. The presence of a descending trendline and the bearish Ichimoku cloud adds further significance to the bearish momentum.

1st support: 0.8387
Supporting reasons: Identified as a pullback support, suggesting a significant area where previous declines have found support.

1st resistance: 0.8455
Supporting reasons: Identified as an overlap resistance that aligns with a 61.8% Fibonacci retracement level, indicating a historical point where previous rallies have faced selling pressure or reversed.

GBP/USD:

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: 1.2990
Supporting reasons: Identified as a pullback resistance, indicating a potential area where selling pressures could intensify. 

1st support: 1.2906
Supporting reasons: Identified as a pullback support that aligns with a 23.6% Fibonacci retracement level, suggesting a potential area that could halt further downward movement. The presence of an uptrend channel and the bullish Ichimoku cloud adds further significance to the bullish momentum.

1st resistance: 1.3064
Supporting reasons: Identified as a pullback resistance, indicating a significant point that could halt further upward movement.

GBP/JPY:

Potential Direction: Bearish
Overall momentum of the chart: Neutral

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

Pivot: 205.97
Supporting reasons: Identified as a pullback resistance that aligns with a 50% Fibonacci retracement level, indicating a potential area where selling pressures could intensify.

1st support: 204.07
Supporting reasons: Identified as a pullback support aligns close to a 38.2% Fibonacci retracement level, suggesting a significant area where previous declines have found support.

1st resistance: 207.97
Supporting reasons: Identified as a pullback resistance, indicating a significant point where previous rallies have faced selling pressures or reversed.

USD/CHF:

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: 0.8918
Supporting reasons: Identified as a pullback support that aligns close to a 61.8% Fibonacci retracement level, indicating a potential area where buying interests could pick up to stage a minor rebound.

1st support: 0.8837
Supporting reasons: Identified as a swing-low support, suggesting a significant area that could halt further downward movement.

1st resistance: 0.8997
Supporting reasons: Identified as an overlap resistance that aligns with a 61.8% Fibonacci retracement level, indicating a potential zone where previous rallies have faced selling pressures or reversed.

USD/JPY:

Potential Direction: Bearish
Overall momentum of the chart: Neutral

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

Pivot: 159.39
Supporting reasons: Identified as an overlap resistance that aligns close to a 50% Fibonacci retracement level, indicating a potential area where selling pressures could intensify.

1st support: 157.68
Supporting reasons: Identified as a pullback support, suggesting a significant area where price has found strong support recently.

1st resistance: 160.51
Supporting reasons: Identified as a pullback resistance, indicating a potential zone that could halt further upward movement.

USD/CAD:

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:1.3634
Supporting reasons: Identified as a pullback support that aligns with a 61.8% Fibonacci retracement level, suggesting a potential area where buying interests could pick up to stage a minor rebound.

1st support: 1.3602
Supporting reasons: Identified as a multi-swing-low support, suggesting a potential area that could halt further downward movement.

1st resistance: 1.3699
Supporting reasons: Identified as a pullback resistance, indicating a potential area that could halt any further upward movement.

AUD/USD:

Potential Direction: Bearish
Overall momentum of the chart: Neutral

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

Pivot: 0.6752
Supporting reasons: Identified as an overlap resistance that aligns with a 50% Fibonacci retracement level, indicating a potential zone where selling pressures could intensify.

1st support: 0.6701
Supporting reasons: Identified as an overlap support that aligns close to a 50% Fibonacci retracement level, suggesting a potential area where price could find strong support.

1st resistance: 0.6792
Supporting reasons: Identified as a pullback resistance, indicating a significant area that could halt further upward movement.

NZD/USD

Potential Direction: Bearish
Overall momentum of the chart: Neutral

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

Pivot: 0.6080
Supporting reasons: Identified as an overlap resistance that aligns with a 50% Fibonacci retracement level, indicating a potential area where selling pressures could intensify.

1st support: 0.6037
Supporting reasons: Identified as an overlap support, suggesting a significant area that could halt further downward momentum.

1st resistance: 0.6106
Supporting reasons: Identified as a pullback resistance that aligns with a 78.6% Fibonacci retracement level, indicating a significant area that could halt further upward movement.

US30 (DJIA):

Potential Direction: Bullish

Overall Momentum of the Chart: Bullish

Price has made a bullish break above the pivot and could potentially rise towards the 1st resistance.

Pivot: 40,660.41
Supporting reasons: Previously Identified as a resistance that aligned with a 127.2% Fibonacci extension level, where strong bullish momentum has now pushed price through it to signal a bullish breakout.

1st Support: 40,056.05

Supporting Reasons: Identified as an overlap support, suggesting a significant area where price could find strong support.

1st Resistance: 41,378.74

Supporting Reasons: Identified as a resistance that aligns with 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: 18,499.40
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.

1st Support: 18,436.90

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: 18,760.10

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

US500 (S&P 500): 

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: 5,702.70
Supporting reasons: Identified as a resistance that aligns with a 61.8% Fibonacci projection level, indicating a potential area where selling pressures could intensify.

1st support: 5,575.74

Supporting reasons: Identified as a pullback support that aligns with a 23.6% Fibonacci retracement level, indicating a potential area where price could find strong support. The presence of the bullish Ichimoku clouds adds further significance to the bullish momentum.

1st resistance: 5,737.88

Supporting reasons: Identified as a resistance that aligns with a 78.6% Fibonacci projection level, suggesting a critical area that could halt further upward movement.

BTC/USD (Bitcoin):

Potential Direction: Bearish

Overall momentum of the chart: Bullish

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

Pivot: 66,971.73

Supporting reasons: Identified as a pullback resistance that aligns with a 127.2% Fibonacci extension level, indicating a potential area where selling pressures could intensify.

1st support: 62,395.17

Supporting reasons: Identified as an overlap support, 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 could rise towards the pivot and potentially make a bearish reversal off this level to fall towards the 1st support.

Pivot: 3,533.10

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: 3,343.77

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

1st Resistance: 3,717.11

Supporting Reasons: Identified as an overlap resistance that aligns with a 78.6% Fibonacci retracement level, indicating a historical barrier where selling pressures could intensify.

WTI/USD (Oil):

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: 79.85

Supporting Reasons: Identified as a pullback support that aligns with a confluence of Fibonacci levels i.e. the 38.2% retracement and the 100% projection levels, indicating a potential area where buying interests could pick up.

1st Support: 77.44

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: 81.12

Supporting Reasons: Identified as an overlap resistance, indicating a potential barrier that could halt further upward movement.

XAU/USD (GOLD):

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: 2,449.62
Supporting reasons: Identified as a pullback support, indicating a significant area where buying interests could pick up to stage a minor rebound.

1st support: 2,415.35
Supporting reasons: Identified as an overlap support that aligns close to a 38.2% Fibonacci retracement level, suggesting a significant area that could halt further downward movement.

1st resistance: 2,479.53
Supporting reasons: Identified as a pullback resistance that aligns with the all-time high, indicating a historical point where previous rallies have faced selling pressure or reversed.

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The post Wednesday 17th July 2024: Technical Outlook and Review first appeared on IC Markets | Official Blog.

The greenback nudged slightly higher after the more upbeat US retail sales report here. But it gave back those gains late in the day, as stocks continue to rip higher in Wall Street. It’s been a stellar month for equities already, with the S&P 500 up over 3.8% and the Dow up some 4.7% in July. The hot summer streak looks set to continue with investors set to spin the narrative however they see fit.

FX is little changed overall today, with major currencies not really up to much. EUR/USD and USD/JPY are flattish with the former near 1.0900 and the latter seen at 158.35 on the day.

The kiwi is the only decent mover, with NZD/USD up 0.4% to 0.6070 following inflation numbers earlier from New Zealand. The data continues to point to further disinflation, so it is surprising to see the reaction in the kiwi. The technicals might be saying something though, with NZD/USD finding a bounce off its 50.0 Fib retracement level:

But the pair is now facing key resistance from its 200-day moving average (blue line) at 0.6075. So, that’s a key level to watch in keeping the downside momentum for now.

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

• RBNZ’s own preferred inflation model 3.6% y/y (prior 4.2%) for Q2 2024
• Federal Reserve speakers on Wednesday include Barkin, Waller and Schmid
• Heads up for RBA’s John Simon to speak on Wednesday
• Australian June leading index – economy improving but to remain below trend into 2025
• Financial Times: Donald Trump warns US Fed chair not to cut rates before the election
• PBOC sets USD/ CNY mid-point today at 7.1318 (vs. estimate at 7.2630)
• NZD/USD remains higher after the lower than expected NZ inflaiton data
• ANZ forecast an RBNZ interest rate cut in November (previously forecasting February 2025)
• Singapore Non-oil Domestic Exports (NODX) June 2024: -0.4% m/m vs. +4.1% expected
• Despite the US data on Tuesday a September cut remains priced in
• ICYMI – IMF says the Bank of Japan is facing challenges ensuring price stability
• Japan data – Reuters Tankan for July: Manufacturers Index +11 (prior +6)
• New Zealand Q2 CPI 0.4% q/q (expected 0.5%) & 3.3% y/y (expected 3.4%)
• Trump wants 60% tariff on China, China can respond by letting the yuan fall
• Société Générale on US stocks – point to broadening profit cycle, improving breadth
• Trump disagrees with a September Federal Reserve rate cut – wants rates higher for longer
• Trump says he has no plans to fire Federal Reserve Chair Powell
• Forexlive Americas FX news wrap 16 Jul. The shift into the Russell 2000 and Dow continues
• Oil – private survey of inventory shows a headline crude oil draw vs build expected
• IMF expect only one Fed rate cut this year
• Dow and S&P close at records
• Trade ideas thread – Wednesday, 17 July, insightful charts, technical analysis, ideas

New
Zealand was the focus of the session, with Q2 inflation data from both StatsNZ and the Reserve Bank of New Zealand. The official
CPI data for the quarter from StatsNZ came in a little under the
median expectation, a welcome development. At 3.3% its still, of
course, above the upper end of the 2–3% RBNZ target band.

NZD/USD
rose on the day despite the lower CPI result. ANZ shifted their
forecast for the first RBNZ rate cut from February 2025 to November
2024.

Later
in the day we had the Reserve Bank of New Zealand’s own inflation
measure, their “sectoral factor model” for Q2. This came in at
3.6% y/y, well down from Q1’s 4.2% but, of course, well above the
top of the target band still.

US
politics remained centre stage. While the Trump convention continued
Bloomberg TV had an interview with him. Of note for those interested
in economic developments were Trump once again pledging sharply
higher tariffs. Of note for traders more specifically were Trump’s
remarks on not wanting any Federal Reserve interest rate cut until
after the election. The Financial Times headlined this with “Donald
Trump warns US Fed chair not to cut rates before the election”.
Trump says he does not want a boost given to the economy or Biden ahead of
the election. Will Federal Reserve Chair Powell succumb to the
threat? I don’t know.

Apart
from the NZD move today major FX rates were fairly subdued.

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

IC Markets Asia Fundamental Forecast | 17 July 2024

What happened in the U.S. session?

After coming in mixed over the past three months, retail sales were unchanged in June as total sales remained at $704.3B, with categories such as non-store retailers, building materials and garden equipment, and health and personal care stores taking the lead. Although sales were flat, the result was higher than the forecasts which had called for a decline of 0.3%. In addition, sales growth in May was revised higher from 0.1% to 0.3% MoM.

In short, this marked a period of steady sales growth in the second quarter of 2024. The dollar index (DXY) jumped from 104.21 to as high as 104.51 following the better-than-anticipated sales figures but the upward momentum was short-lived as this index retreated from its overnight highs to slide lower towards 104.20 by the end of this session.

What does it mean for the Asia Session?

New Zealand’s inflation rose 0.4% QoQ in the second quarter of this year – lower than the estimate of 0.5% – to mark the lowest reading since the second quarter of 2020 with categories such as housing and household utilities, miscellaneous goods and services, and communication being the main contributors. On an annualised basis, the inflation rate slowed to 3.3%, coming in lower than the estimate of 3.5% YoY. 

Despite inflation continuing to cool, the pace has been slow and the latest figures still remain above the RBNZ’s target of 1 to 3% YoY. The Kiwi initially fell from 0.6050 to as low as 0.6033 but it swiftly reversed to spike higher – this currency pair rose as high as 0.6079 this morning.

The Dollar Index (DXY)

Key news events today

Industrial Production (1:15 pm GMT)

Fed Gov Waller Speaks (1:35 pm GMT)

What can we expect from DXY today?

After declining in March and April, industrial production rebounded strongly in May as it rose 0.7% MoM – this reading also marked the first annual increase in production output since last December. The estimate of a 0.3%-growth in June points to a second straight month of higher output for this sector which could provide some lift for the dollar.

Meanwhile, Federal Reserve Governor Christopher Waller will be speaking on the economic outlook for the U.S. at an event hosted by the Federal Reserve Bank of Kansas City where audience questions are expected – his remarks could create higher volatility for the dollar later today.

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

Industrial Production (1:15 pm GMT)

Fed Gov Waller Speaks (1:35 pm GMT)

What can we expect from Gold today?

After declining in March and April, industrial production rebounded strongly in May as it rose 0.7% MoM – this reading also marked the first annual increase in production output since last December. The estimate of a 0.3%-growth in June points to a second straight month of higher output for this sector which could provide some lift for the dollar and potentially put downward pressure on gold prices.

Meanwhile, Federal Reserve Governor Christopher Waller will be speaking on the economic outlook for the U.S. at an event hosted by the Federal Reserve Bank of Kansas City where audience questions are expected – his remarks could create higher volatility for this precious metal later today.

Next 24 Hours Bias

Weak Bullish

The Australian Dollar (AUD)

Key news events today

No major news events.

What can we expect from AUD today?

The Aussie fell to an overnight low of 0.6414 before stabilizing around this level to retrace higher. This currency pair was trading around 0.6740 as Asian markets came online and could edge higher as the day progresses – these are the support and resistance levels for today.

Support: 0.6715

Resistance: 0.6790

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

CPI (10:45 pm GMT 16th July)

What can we expect from NZD today?

New Zealand’s inflation rose 0.4% QoQ in the second quarter of this year – lower than the estimate of 0.5% – to mark the lowest reading since the second quarter of 2020 with categories such as housing and household utilities, miscellaneous goods and services, and communication being the main contributors. On an annualised basis, the inflation rate slowed to 3.3%, coming in lower than the estimate of 3.5% YoY. 

Despite inflation continuing to cool, the pace has been slow and the latest figures still remain above the RBNZ’s target of 1 to 3% YoY. The Kiwi initially fell from 0.6050 to as low as 0.6033 but it swiftly reversed to spike higher – this currency pair rose as high as 0.6079 this morning.

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

Strong Bullish

The Japanese Yen (JPY)

Key news events today

No major news events.

What can we expect from JPY today?

The recent intervention measures by the Bank of Japan (BoJ) toward the end of last week has strengthened the yen and kept currency traders on the edge, driving USD/JPY to a low of 157.16 on Monday. This currency pair has since retraced higher and was trading around 158.45 at the beginning of the Asia session – these are the support and resistance levels for today.

Support: 157.70

Resistance: 159.40

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

CPI (9:00 am GMT)

What can we expect from EUR today?

The final inflation reading for the month of June is expected to show headline and core CPI both remaining unchanged at 2.5% and 2.9% respectively, YoY. Although inflation has moderated significantly lower over the past ten months, the pace of easing has slowed in recent months. Inflation in the Euro Area still remains above the ECB’s target of 2%. Should the final print surprise markets to the upside, it could function as a near-term bullish catalyst for the Euro.

Central Bank Notes:

• The Governing Council today decided to lower the three key ECB interest rates by 25 basis points after nine months of holding rates steady.
• Accordingly, the interest rate on the main refinancing operations and the interest rates on the marginal lending facility and the deposit facility will be decreased to 4.25%, 4.50% and 3.75% respectively, with effect from 12 June 2024.
• Since September 2023, inflation has fallen by more than 2.5% and the inflation outlook has improved markedly while underlying inflation has also eased, reinforcing the signs that price pressures have weakened, and inflation expectations have declined at all horizons.
• At the same time, despite the progress over recent quarters, domestic price pressures remain strong as wage growth is elevated, and inflation is likely to stay above target well into next year – the latest Eurosystem staff projections for both headline and core inflation have been revised up for 2024 and 2025 compared with the March projections.
• Projections now show headline inflation averaging 2.5% in 2024, 2.2% in 2025 and 1.9% in 2026 while economic growth is expected to pick up to 0.9% in 2024, 1.4% in 2025 and 1.6% in 2026.
• The Council also confirmed that it will reduce the Eurosystem’s holdings of securities under the pandemic emergency purchase programme (PEPP) by €7.5 billion per month on average over the second half of the year.
• 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 18 July 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?

Demand for the dollar waned overnight as USD/CHF fell under 0.8950. This currency pair was trading around 0.8940 as Asian markets came online and could drift lower as the day progresses – these are the support and resistance levels for today.

Support: 0.8920

Resistance: 0.8970

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

CPI (6:00 am GMT)

What can we expect from GBP today?

Inflation in the U.K. has made good progress as it moderated lower over the last eight months with headline CPI slowing to 2% YoY in May while the core reading eased to 3.5% YoY. The forecasts for June points to further easing for both these metrics, albeit at a marginal decline. Should inflation cool more than anticipated, it could cause the Cable to come under strong overhead pressures before the start of the European trading hours.

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?

Demand for the dollar waned overnight as USD/CAD fell under 1.3670. This currency pair retraced higher towards 1.3680 at the beginning of the Asia session but could resume the downtrend once more – these are the support and resistance levels for today.

Support: 1.3660

Resistance: 1.3710

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

EIA Crude Oil Inventories (2:30 pm GMT)

What can we expect from Oil today?

API crude oil stocks declined for the third consecutive week as 4.4M barrels of crude were drawn from storage. Despite the high drawdown in inventory levels – which signals higher demand in the U.S. – oil prices remain under pressure as demand concerns from China overshadow the recent drawdowns. WTI oil shed 1.4% overnight as it fell under $80.50 per barrel. This benchmark stabilized around this level this morning and was rising towards the $81-mark.

Next 24 Hours Bias

Medium Bearish

The post IC Markets Asia Fundamental Forecast | 17 July 2024 first appeared on IC Markets | Official Blog.