• German DAX futures -0.3%
• French CAC 40 futures -0.5%
• UK FTSE futures -0.2%

This comes as bond yields are jumping higher as we look towards the session ahead. Treasuries were closed in Asia amid the holiday in Japan but 10-year yields are now marked up by 4.6 bps to 4.233% on the day. US futures are calmer though, with S&P 500 futures seen up 0.2%. So, that is making for a bit of a mixed mood to start European morning trade.

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

In case you missed the big news over the weekend in the US:

• Former Pres. Trump rushed off stage after apparent shots fired
• Statement from Former Pres. Trump after assassination attempt

Love him. Hate him. It is no excuse to want another person dead. Trump ended up just getting a graze on the ear by some wild fortune but we could’ve just as easily been putting up a different headline this morning.

So, how are markets taking to that, if at all? Well, for one the betting markets are now seeing his re-election odds soaring again. It’s a kneejerk reaction to the event of course. But he was already odds on to beat Biden anyway if the latter continues to stay in contention for the November election.

In major markets, I wouldn’t say the impact is too evident. The dollar is marginally higher to start the day but it’s nothing out of the ordinary. The greenback is looking to find some footing after the losses last week. USD/JPY remains a focus after Japan intervened, with the pair hugging close to the 158.00 level now.

In the equities space, S&P 500 futures are up 0.2% as stocks continue to hold up. Wall Street saw a late retreat on Friday but still ended higher. And major indices will be in the hunt for a third straight week of gains.

Looking to the session ahead, there won’t be much to cause a splash in markets. There will just be some light releases as traders and investors will be looking to settle into the thick of things, following quite a number of big sporting events over the weekend.

0630 GMT – Switzerland June producer and import prices0800 GMT – SNB total sight deposits w.e. 12 July0900 GMT – Eurozone May industrial production

Besides that, there is China’s third plenum meeting ongoing and a Eurogroup meeting today to discuss fiscal matters. The latter is one to perhaps stay abreast of especially after the French elections.

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.

4 – Spain’s victory over England in the final sees them clinch a record fourth Euro title. They previously lifted the trophy in 1964, 2008, and 2012. It’s not coming home.

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

The post Ex-Dividend 16/07/2024 first appeared on IC Markets | Official Blog.

DXY (US Dollar Index):

Potential Direction: Bullish
Overall momentum of the chart: Bearish

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

Pivot: 104.07
Supporting reasons: Identified as a pullback support that aligns with a 61.8% Fibonacci retracement level, indicating a potential area where buying interests could pick up to stage a minor rebound.

1st support: 103.24
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: 105.12
Supporting reasons: Identified as a pullback resistance that aligns with a 50% 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 drop towards the 1st support.

Pivot: 1.0922
Supporting reasons: Identified as a pullback resistance that aligns with a 78.6% Fibonacci projection level, indicating a significant area where selling pressures could intensify.

1st support: 1.0800
Supporting reasons: Identified as a pullback support level, suggesting a potential area that could halt further downward movement.

1st resistance: 1.0972
Supporting reasons: Identified as a pullback resistance that aligns with a confluence of Fibonacci levels i.e. the 100% projection and the 127.2% extension levels, indicating a potential area where previous rallies have faced selling pressure or reversed.

EUR/JPY:

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: 170.73
Supporting reasons: Identified as an overlap support that aligns with a 61.8% Fibonacci retracement level, indicating a potential area where buying interests could pick up to resume the uptrend.

1st support: 168.38
Supporting reasons: Identified as a pullback support, suggesting a significant area that could halt further downward movement.

1st resistance: 175.15
Supporting reasons: Identified as a pullback resistance, indicating a historical point where previous rallies have faced selling pressure or reversed.

EUR/GBP:

Potential Direction: Bearish
Overall momentum of the chart: Bearish

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

Pivot: 0.8457
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. The presence of a bearish Ichimoku cloud adds further significance to the bearish momentum.

1st support: 0.8344
Supporting reasons: Identified as a swing-low support, suggesting a significant area where previous declines have found support.

1st resistance: 0.8490
Supporting reasons: Identified as an overlap resistance, indicating a historical point where previous rallies have faced selling pressure or reversed.

GBP/USD:

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: 1.2893
Supporting reasons: Identified as a pullback support level, indicating a potential area where buying interests could pick up to resume the uptrend.

1st support: 1.2777
Supporting reasons: Identified as a pullback support, suggesting a significant area where previous declines have found support.

1st resistance: 1.3135
Supporting reasons: Identified as a swing-high resistance that aligns close to a 100% Fibonacci projection 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 fall towards the pivot and potentially make a bullish bounce off this level to rise towards the 1st resistance.

Pivot: 200.5
Supporting reasons: Identified as an overlap support that aligns close to a 23.6% Fibonacci retracement level, indicating a potential area where buying interests could pick up to resume the uptrend.

1st support: 197.49
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: 207.73
Supporting reasons: Identified as a pullback resistance, indicating a historical point where previous rallies have faced selling pressure or reversed.

USD/CHF:

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: 0.9039
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. The presence of a bearish Ichimoku cloud adds further significance to the bearish momentum.

1st support: 0.8841
Supporting reasons: Identified as a pullback support, suggesting a significant area where previous declines have found support.

1st resistance: 0.9157
Supporting reasons: Identified as a pullback resistance, indicating a potential zone where previous rallies have faced selling pressure or reversed.

USD/JPY:

Potential Direction: Bullish
Overall momentum of the chart: Bullish

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

Pivot: 157.71
Supporting reasons: Identified as a pullback resistance level, indicating a potential area where sellers could enter the market after a retracement.

1st support: 154.75
Supporting reasons: Identified as a pullback support that aligns close to 38.2% Fibonacci retracement level, suggesting a significant area where buying interests could pick up. The presence of a bullish Ichimoku cloud adds further significance to the bullish momentum.

1st resistance: 161.72
Supporting reasons: Identified as a pullback resistance, indicating a significant zone where previous rallies have faced selling pressure or reversed.

USD/CAD:

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 fall towards the 1st support.

Pivot:1.3735
Supporting reasons: Identified as a pullback resistance that aligns with a 100% Fibonacci projection level, suggesting a potential area where selling pressures could intensify. 

1st support: 1.3594
Supporting reasons: Identified as a pullback support that aligns with a 38.2% Fibonacci retracement level, suggesting a potential area that could halt further downward movement.

1st resistance: 1.3777
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: Bullish

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

Pivot: 0.6846
Supporting reasons: Identified as a swing-high resistance, indicating a significant zone where selling pressures could intensify.

1st support: 0.6705
Supporting reasons: Identified as a pullback support that aligns close to a 38.2% Fibonacci retracement level, suggesting a potential area where price could find strong support.

1st resistance: 0.6892
Supporting reasons: Identified as a multi-swing-high resistance, indicating a significant area that could halt further upward movement.

NZD/USD

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 higher towards the 1st resistance.

Pivot: 0.6059
Supporting reasons: Identified as an overlap support that aligns close to a 38.2% Fibonacci retracement level, indicating a potential area where buying interests could pick up to stage a minor rebound.

1st support: 0.5995
Supporting reasons: Identified as a pullback support that aligns with a 61.8% Fibonacci retracement level, suggesting a significant area that could halt further downward momentum.

1st resistance: 0.6144
Supporting reasons: Identified as a pullback resistance that aligns close to a 61.8% Fibonacci retracement level, indicating a significant area that could halt further upward movement.

US30 (DJIA):

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: 40,670.59
Supporting reasons: Identified as a resistance that aligns with a 127.2% Fibonacci extension level, indicating a potential area where selling pressures could intensify.

1st Support: 40,056.05

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

1st Resistance: 41,383.39

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: Bearish

Overall Momentum of the Chart: Neutral

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

Pivot: 18,873.20
Supporting reasons: Identified as a swing-high resistance that aligns close to the all-time high, indicating a potential area where selling pressures could intensify.

1st Support: 18,250.70

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

1st Resistance: 19,175.09

Supporting Reasons: Identified as a resistance that aligns with a 78.6% Fibonacci projection level, 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: 5,730.18
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: 5,449.89

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

1st resistance: 5,925.19

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: Neutral

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

Pivot: 65,247.06

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

1st support: 55,708.48

Supporting reasons: Identified as a pullback support, 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: Bearish

Overall momentum of the chart: Neutral

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

Pivot: 3,460.22

Supporting reasons: Identified as an overlap resistance that aligns close to a 61.8% Fibonacci retracement level, indicating a potential area where selling pressures could intensify.

1st Support: 2,869.13

Supporting Reasons: Identified as a pullback 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 pullback resistance, 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: 81.12

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

1st Support: 78.00

Supporting Reasons: Identified as a pullback support that aligns with a 61.85 Fibonacci retracement level, indicating a significant area where price could find strong support.

1st Resistance: 84.98

Supporting Reasons: Identified as a pullback resistance that aligns close to a 78.6% Fibonacci retracement level, indicating a potential barrier that could halt further upward movement.

XAU/USD (GOLD):

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: 2,431.52
Supporting reasons: Identified as a multi-swing-high resistance that aligns with a 78.6% Fibonacci projection level, indicating a significant area where selling pressures could intensify.

1st support: 2,357.39
Supporting reasons: Identified as a pullback support that aligns with a 50% Fibonacci retracement level, suggesting a significant area where previous declines have found support.

1st resistance: 2,459.15
Supporting reasons: Identified as a resistance that aligns with a 100% Fibonacci projection level, indicating a historical point where previous rallies have faced selling pressure or reversed.

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The post Monday 15th July 2024: Technical Outlook and Review first appeared on IC Markets | Official Blog.

On Monday, the Empire State manufacturing index for the U.S. will be released, and the focus will then shift to Fed Chair Powell, who will speak at the Economic Club of Washington DC, with audience questions expected.

Tuesday will bring inflation data for Canada and retail sales data for the U.S. while Wednesday’s focus will be on inflation data from New Zealand and the U.K., as well as industrial production data for the U.S.

On Thursday, Australia will release the employment change and unemployment rate data. The U.K. will publish the claimant count change, the average earnings index 3m/y and the unemployment rate. The eurozone will have the ECB monetary policy announcement, and the U.S. will release unemployment claims.

Friday will feature Japan’s national core CPI y/y data and retail sales data for the U.K. and Canada. Throughout the week, some FOMC members are expected to deliver their remarks.

Last week, during his testimony to Congress, Fed Chair Jerome Powell emphasized that the Fed’s concerns extend beyond inflation to include the potential softening of the economy. He noted that there is a risk that inflation could stall or even reverse progress if policy restraint is reduced too soon or too much. Conversely, he mentioned that reducing policy restraint too late or too little will put pressure on economic activity and employment. Although the markets have started to price in two rate cuts this year, with the first potentially in September, this will remain data-dependent.

The inflation data in Canada is highly anticipated to determine if the BoC will cut rates again at its July meeting, which is next week. Overall, Canada has made some progress on inflation, but the May data came in above expectations, causing the BoC to pause further rate cuts. There are still concerns, particularly regarding services inflation and wage growth, which continue to run hot.

The consensus for the y/y headline inflation is a drop to 2.8%, with core inflation also expected to decline slightly. If this week’s data exceeds expectations, it is likely that the BoC will hold off on delivering another rate cut. However, if the data falls significantly below the consensus, it will increase expectations for a 25 bps rate cut.

The consensus for U.S. retail sales is -0.2%, compared to the previous 0.1%, and for core retail sales m/m, it is 0.1% vs. -0.1% prior. Some softening is expected in retail sales data as markets anticipate a moderation in consumer activity. If realized this would suggest that demand is weakening, taking off pressure from services prices and increasing the likelihood of rate cuts later this year.

According to ING, lower gasoline prices and falling auto sales also point to a monthly decline in retail sales, while weaker consumer confidence suggests downside risks. That said, more data will be needed to accurately assess retail sales softening.

The consensus for the CPI q/q in New Zealand is 0.5%, compared to the previous 0.6%. Annual inflation is expected to drop from 4.0% to 3.5% in the March quarter. Inflation remains high, but there are some signs that it will start to drop in the near future like the softness in tradables prices. Another component to watch for is the services sector, which had been rising but is now showing signs of cooling down.

In the U.K. inflation dropped more than expected lately, to under 2% in June, but analysts believe this is likely the bottom for the near future. Some analysts expect inflation will be between 2-2.5% in the second half of the year. The BoE will pay special attention to services inflation which has proved to be more stubborn lately.

The consensus for the U.S. industrial production m/m is 0.4% vs prior 0.9%. Over the past decade, manufacturing production, which accounts for around 3/4 of all industrial production has seen a decrease of 1.3%. Heavy investments are currently being made in high-tech manufacturing capacity and this will show their effects down the road, analysts from Wells Fargo noted.

In Australia, the consensus for the employment change is 20.2K, compared to the previous 39.7K, and the unemployment rate is likely to rise from 4.0% to 4.1%.

In May, the participation rate was at 66.8% and is expected to remain at the same level for this week’s data. The rise in the labor force helped the unemployment rate print at 4.0%. The RBA will closely monitor the labor market data, particularly focusing on underemployment and youth employment.

At this week’s ECB meeting, the focus will be on whether the Bank will provide more clues about future rate cuts. As a reminder, at the last meeting, the ECB delivered a 25 bps rate cut, and the market is expecting another one at the September meeting. For this week’s meeting, however, the ECB is likely to keep its monetary policy unchanged and take a cautious stance towards future rate cuts.

There has been progress regarding inflation data, but there are some risks, especially with services inflation and wage growth, which printed at 5% y/y in Q1-2024 and could put further pressure. The Bank is likely to wait until September to see some cooling in wage data and a sustained progress in dropping inflation.

Wish you a profitable trading week.

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

• Eurostoxx -0.6%
• Germany DAX -0.4%
• France CAC 40 -0.9%
• UK FTSE -0.8%
• Spain IBEX -0.6%
• Italy FTSE MIB -0.5%

For French stocks, it is getting checked back at short-term resistance (as seen below) after the rebound last week. The Eurogroup will be discussing fiscal issues to start the week, so that is perhaps keeping regional investors more guarded. It’s a mixed showing for equities in general though, with US stocks holding higher. S&P 500 futures are up 0.3% currently.

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

IC Markets Europe Fundamental Forecast | 15 July 2024

What happened in the Asia session?

The dollar index (DXY) rebounded off the 104-level to rise as high as 104.31 before pulling back slightly while prices for gold slid lower towards $2,400/oz. Meanwhile, crude oil remains under pressure with WTI oil briefly dipping under $82 per barrel.

What does it mean for the Europe & US sessions?

Industrial production in the Euro area has been mixed over the past five months with April’s reading showing a drop of 0.1% MoM. The estimate of -0.9% for June points to a second consecutive month of decline and could potentially add further downward pressure on the Euro.

The Empire State Manufacturing Index improved modestly but remained under zero with a reading of -6 as manufacturing conditions remained weak, employment continued contracting, and capital spending plans remained flat in the state of New York in June. The estimate of -5.5 for July points to an eighth straight month of weak business conditions.

Federal Reserve Chairman Jerome Powell will be speaking at the Economic Club of Washington DC where audience questions are expected. Following last week’s mixed inflation data, Powell may communicate a more neutral tone which could provide further lift for the dollar later today.

The Dollar Index (DXY)

Key news events today

Empire State Manufacturing Index (12:30 pm GMT)

Fed Chair Powell Speaks (4:00 pm GMT)

What can we expect from DXY today?

The Empire State Manufacturing Index improved modestly but remained under zero with a reading of -6 as manufacturing conditions remained weak, employment continued contracting, and capital spending plans remained flat in the state of New York in June. The estimate of -5.5 for July points to an eighth straight month of weak business conditions.

Federal Reserve Chairman Jerome Powell will be speaking at the Economic Club of Washington DC where audience questions are expected. Following last week’s mixed inflation data, Powell may communicate a more neutral tone which could provide further lift 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

Medium Bullish

Gold (XAU)

Key news events today

Empire State Manufacturing Index (12:30 pm GMT)

Fed Chair Powell Speaks (4:00 pm GMT)

What can we expect from Gold today?

The Empire State Manufacturing Index improved modestly but remained under zero with a reading of -6 as manufacturing conditions remained weak, employment continued contracting, and capital spending plans remained flat in the state of New York in June. The estimate of -5.5 for July points to an eighth straight month of weak business conditions.

Federal Reserve Chairman Jerome Powell will be speaking at the Economic Club of Washington DC where audience questions are expected. Following last week’s mixed inflation data, Powell may communicate a more neutral tone which could provide further lift for the dollar later today.

Next 24 Hours Bias

Medium Bearish

The Australian Dollar (AUD)

Key news events today

No major news events.

What can we expect from AUD today?

The Aussie registered its fifth straight weekly gain as it closed at 0.6783 last Friday. This currency pair gapped lower at the open and was trading around 0.6770 as Asian markets came online – these are the support and resistance levels for today.

Support: 0.6750

Resistance: 0.6825

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

Medium Bearish

The Kiwi Dollar (NZD)

Key news events today

No major news events.

What can we expect from NZD today?

Following last week’s dovish RBNZ statement, the Kiwi shed nearly 0.5% as it closed at 0.6117 last Friday. This currency pair gapped lower at the open and was trading around 0.6100 at the beginning of the Asia session – these are the support and resistance levels for today.

Support: 0.6070

Resistance: 0.6130

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

Medium Bearish

The Japanese Yen (JPY)

Key news events today

No major news events.

What can we expect from JPY today?

The Bank of Japan (BoJ) spent $22B in an intervention action last Thursday as it attempted to prop up the yen which has been the weakest G7 currency this year. Despite the intervention measures, the yen still declined nearly 1.8% as USD/JPY wrapped up Friday’s session to close at 157.89. This currency pair gapped slightly higher at the open and was trading around 158.10 as Asian markets came online – these are the support and resistance levels for today.

Support: 157.35

Resistance: 159.80

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

Industrial Production (9:00 am GMT)

What can we expect from EUR today?

Industrial production in the Euro area has been mixed over the past five months with April’s reading showing a drop of 0.1% MoM. The estimate of -0.9% for June points to a second consecutive month of decline and could potentially add further downward pressure on 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 Bullish

The Swiss Franc (CHF)

Key news events today

No major news events.

What can we expect from CHF today?

As demand for the greenback dropped last week, USD/CHF fell for the second week in a row as it closed at 0.8940 last Friday. This currency pair gapped higher at the open and raced higher towards 0.8980 as Asian markets came online – these are the support and resistance levels for today.

Support: 0.8900

Resistance: 0.9000

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

Medium Bullish

The Pound (GBP)

Key news events today

No major news events.

What can we expect from GBP today?

Cable rose almost 1.5% last week as it closed at 1.2992 last Friday. This currency pair gapped lower at the open and was falling towards 1.2960 at the beginning of the Asia session – these are the support and resistance levels for today.

Support: 1.2895

Resistance: 1.3000

Central Bank Notes:

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

Next 24 Hours Bias

Medium Bearish

The Canadian Dollar (CAD)

Key news events today

No major news events.

What can we expect from CAD today?

Weak demand for the Loonie caused USD/CAD to register a fifth consecutive week of decline last Friday as it closed at 1.3631. This currency pair gapped higher at the open and was rising towards 1.3660 as Asian markets came online – these are the support and resistance levels for today.

Support: 1.3600

Resistance: 1.3670

Central Bank Notes:

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

Next 24 Hours Bias

Medium Bullish

Oil

Key news events today

No major news events.

What can we expect from Oil today?

After rising for four straight weeks, crude prices declined last week with WTI oil shedding almost 1.2% to close at $82.50 per barrel. Prices remained steady this morning as edged higher towards $82.60 – these are the support and resistance levels for today.

Support: 80.95

Resistance: 84.80

Next 24 Hours Bias

Medium Bearish

The post IC Markets Europe Fundamental Forecast | 15 July 2024 first appeared on IC Markets | Official Blog.

Looking at the breakdown for the month, producer prices were up 0.1% but import prices were marked down by 0.2%. In particular, there were lower prices for petroleum
products, petroleum and natural gas, as well as for motor vehicles. This was offset by higher prices in non-ferrous metals and products made
therefrom, green coffee, leather and related products and footwear.

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

Global Markets:

•  Asian Stock Markets : Nikkei down 2.46%, Shanghai Composite up 0.02%, Hang Seng down 1.48% ASX up 0.74%
• Commodities : Gold at $2413.5 (0.47%), Silver at $31.02 (0.34%), Brent Oil at $85.03 (0.07%), WTI Oil at $81.01 (0.07%)
• Rates : US 10-year yield at 4.234, UK 10-year yield at 4.156, Germany 10-year yield at 2.488

News & Data:

• (USD) Core PPI m/m  0.4% vs 0.2% expected
• (USD) PPI m/m  0.2% vs 0.1% expected
• (CAD) Building Permits m/m  -12.2% vs -5.0% expected

Markets Update:

Asia-Pacific markets mostly declined on Monday as China’s GDP data fell short of expectations, while investors evaluated the impact of an assassination attempt on former U.S. President Donald Trump during a weekend rally. David Roche, president of Quantum Strategy, stated in a Sunday note that Trump is likely to win the presidency, with an increased chance of a Republican sweep in both the House of Representatives and the Senate.

China’s statistics bureau reported a 4.7% growth in its economy for the second quarter, missing the 5.1% expansion forecast by a Reuters poll and falling short of the 5.3% growth seen in the first quarter. Retail sales for June also disappointed, increasing by 2% year on year compared to the 3.3% growth expected by economists polled by Reuters. Sales had risen by 3.7% in May. Hong Kong’s Hang Seng index dropped 1.42%, led by declines in consumer non-cyclical and real estate stocks, while mainland China’s CSI 300 slipped by 0.09% following the disappointing economic data.

Separately, China’s top leaders are set to meet this week for the highly anticipated Third Plenum. Analysts expect the gathering to focus on issues such as high local government debt levels and a push for advanced manufacturing, rather than the country’s real estate sector. Japan’s markets are closed for a public holiday, and South Korea’s Kospi and the small-cap Kosdaq were nearly flat.

Australia’s S&P/ASX 200 extended its gains for the third consecutive day, rising by 0.74% and approaching a new closing high, making it the only major Asian benchmark to finish in positive territory. U.S. market futures showed marginal gains late Sunday night, with Dow Jones Industrial Average futures up by 0.11%, and S&P 500 and Nasdaq futures each increasing by about 0.1%.

Upcoming Events: 

• 12:30 PM GMT – CAD Manufacturing Sales m/m
• 12:30 PM GMT – CAD Wholesale Sales m/m
• 12:30 PM GMT – USD Empire State Manufacturing Index
• 4:00 PM GMT – USD Fed Chair Powell Speaks

The post Monday 15th July 2024: Asia-Pacific Markets Fall Amid China’s GDP Miss and Trump Incident first appeared on IC Markets | Official Blog.