DXY (US Dollar Index):

Potential Direction: Bearish
Overall momentum of the chart: Bearish

Price could rise towards the pivot and potentially reverse off this level to fall towards the 1st support.

Pivot: 101.48
Supporting reasons: Identified as a pullback resistance that aligns close to a 38.2% Fibonacci retracement, suggesting a potential area where selling pressures could intensify to resume the downtrend. The presence of the bearish Ichimoku Cloud adds further significance to the strength of this resistance zone.

1st support: 100.60
Supporting reasons: Identified as a pullback support indicating an area where price has found support recently. 

1st resistance: 102.30
Supporting reasons: Marked as pullback resistance that aligns close to a 61.8% Fibonacci retracement, suggesting an area that could halt further upward movement.

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: 1.1194
Supporting reasons: Identified as a pullback resistance, indicating a potential area where selling pressures could intensify.

1st support: 1.1101
Supporting reasons: Marked by a pullback support that aligns with a 38.2% Fibonacci retracement, suggesting a significant level where the price has found support recently. The presence of the bullish Ichimoku Cloud adds further significance to the strength of this support zone.

1st resistance: 1.1251
Supporting reasons: Identified as a swing-high resistance, indicating a historical point where previous rallies faced selling pressure or reversed.

EUR/JPY:

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 fall towards the 1st support.

Pivot: 164.05
Supporting reasons: Identified as an overlap resistance,  indicating a potential level where selling pressures could intensify. 

1st support: 159.37
Supporting reasons: Identified as an overlap support that aligns close to a 38.2% Fibonacci retracement, suggesting a significant area where previous declines have found support.

1st resistance: 167.49
Supporting reasons: Identified as a pullback resistance that aligns with a 61.8% Fibonacci retracement, indicating a potential area that could halt further upward movement.

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 fall towards the 1st support.

Pivot: 0.8496
Supporting reasons: Identified as a pullback resistance that aligns close to a 23.6% Fibonacci retracement, suggesting a level where selling pressures could intensify to resume the downtrend. The presence of the bearish Ichimoku Cloud adds further significance to the strength of this resistance zone.

1st support: 0.8454
Supporting reasons: Marked as an overlap support, indicating a significant area where the price may find support.

1st resistance: 0.8544
Supporting reasons: Identified as a pullback resistance that aligns close to a 50% Fibonacci retracement, indicating a potential area that could halt further upward movement.

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: 1.3279
Supporting reasons: Identified as a pullback resistance that aligns with a 161.8% Fibonacci extension, indicating a potential area where selling pressures could intensify.

1st support: 1.3135
Supporting reasons: Marked as an overlap support, suggesting a significant level where the price might find support. The presence of the bullish Ichimoku Cloud adds further significance to the strength of this support zone.

1st resistance: 1.3430
Supporting reasons: Identified as a pullback resistance, indicating a potential area that could halt further upward movement.

GBP/JPY:

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 fall towards the 1st support.

Pivot: 193.26
Supporting reasons: Identified as a pullback resistance that aligns close to a 61.8% Fibonacci retracement, indicating a potential area where selling pressures could intensify.

1st support: 189.33
Supporting reasons: Marked as an overlap support that aligns with a 23.6% Fibonacci retracement level, indicating an area where price has recently found support. The presence of the bullish Ichimoku Cloud adds further significance to the strength of this support zone.

1st resistance: 196.71
Supporting reasons: Identified as a pullback resistance, indicating a potential area that could halt further upward movement.

USD/CHF:

Potential Direction: Bullish
Overall momentum of the chart: Bearish

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

Pivot: 0.8444
Supporting reasons: Identified as a swing-low support, indicating a potential area where buying interests could pick up to stage a minor rebound.

1st support: 0.8367
Supporting reasons: Marked as a swing-low support, suggesting a significant level where previous declines found support.

1st resistance: 0.8552
Supporting reasons: Identified as pullback resistance that aligns close to a 38.2% Fibonacci retracement, indicating a potential area that could halt further upward movement. The presence of the bearish Ichimoku Cloud adds further significance to the strength of this resistance zone.

USD/JPY:

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 fall towards the 1st support.

Pivot: 146.93
Supporting reasons: Identified as a pullback resistance that aligns with a 61.8% Fibonacci retracement, indicating a potential area where selling pressures could intensify. The presence of the bearish Ichimoku Cloud adds further significance to the strength of this resistance zone.

1st support: 143.71
Supporting reasons: Identified as a pullback support that aligns with a 78.6% Fibonacci retracement, suggesting a key level where price has found support recently.

1st resistance: 149.38
Supporting reasons: Identified as a pullback resistance, indicating a significant level that could halt further upward movement.

USD/CAD:

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: 1.3458
Supporting reasons: Identified as a pullback support, indicating a potential area where buying interests could pick up to stage a minor rebound.

1st support: 1.3370
Supporting reasons: Identified as a pullback support that aligns with a 161.8% Fibonacci extension, indicating a potential area where price could find strong support.

1st resistance: 1.3561
Supporting reasons: Identified as a pullback resistance, indicating a potential area that could halt any further upward movement. The presence of the bearish Ichimoku Cloud adds further significance to the strength of this resistance zone.

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 pull back towards the 1st support.

Pivot: 0.6798
Supporting reasons: Identified as a swing-high resistance, indicating a potential area where selling pressures could intensify.

1st support: 0.6699
Supporting reasons: Identified as a pullback support that aligns close to a 23.6% Fibonacci retracement, suggesting a potential area where price has recently found support. The presence of the bullish Ichimoku Cloud adds further significance to the strength of this support zone.

1st resistance: 0.6859
Supporting reasons: Identified as a swing-high resistance, indicating a significant area that could halt further upward movement.

NZD/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: 0.6233
Supporting reasons: Identified as a pullback resistance that aligns with a 127.2% Fibonacci extension, indicating a potential area where selling pressures could intensify.

1st support: 0.6127
Supporting reasons: Identified as a pullback support that aligns close to a 23.6% Fibonacci retracement, suggesting a potential area where price has recently found support. The presence of the bullish Ichimoku Cloud adds further significance to the strength of this support zone.

1st resistance: 0.6270
Supporting reasons: Identified as a pullback resistance, indicating a significant area that could halt further upward movement.

US30 (DJIA):

Potential Direction: Bullish

Overall Momentum of the Chart: Bullish

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

Pivot: 41,156.81

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

1st Support: 40,602.31

Supporting Reasons: Identified as a pullback support that aligns close to a 23.6% Fibonacci retracement, suggesting an area where price has found support recently. The presence of the bullish Ichimoku Cloud adds further significance to the strength of this support zone.

1st Resistance: 42,014.15

Supporting Reasons: Identified as a resistance that aligns with a 127.2% Fibonacci extension, indicating a significant area that could halt further upward movement. 

DE40 (DAX):

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: 18,760.10

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

1st Support: 18,534.60

Supporting Reasons: Identified as an overlap support, indicating a potential area where price could find support. The presence of the bullish Ichimoku Cloud adds further significance to the strength of this support zone.

1st Resistance: 18,894.40

Supporting Reasons: Identified as a swing-high resistance that aligns close to the all-time high, 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: 5,669.89

Supporting reasons: Identified as a swing-high resistance that aligns close to a 127.2% Fibonacci extension, suggesting a potential area where selling pressures could intensify.

1st support: 5,561.63

Supporting reasons: Identified as an overlap support, suggesting a potential area where price could find support. The presence of the bullish Ichimoku Cloud adds further significance to the strength of this support zone.

1st resistance: 5,860.51

Supporting reasons: Identified as a resistance that aligns with a 161.8% Fibonacci extension, suggesting a critical area that could halt further upward movement.

BTC/USD (Bitcoin):

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: 61,687.65

Supporting reasons: Identified as a pullback support that aligns close to a 23.6% Fibonacci retracement, indicating a potential area where buying interests could pick up. The presence of the bullish Ichimoku Cloud adds further significance to the strength of this support zone.

1st support: 58,430.85

Supporting reasons: Identified as a pullback support that aligns close to a 38.2% Fibonacci retracement indicating a significant area where price has found support in the past.

1st resistance: 65,515.58

Supporting reasons: Identified as an overlap resistance that aligns with a 78.6% Fibonacci retracement, indicating a potential barrier that could halt further upward movement.

ETH/USD (Ethereum):

Potential Direction: Bullish

Overall momentum of the chart: Neutral

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

Pivot: 2,671.88

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

1st Support: 2,523.64

Supporting Reasons: Identified as an overlap support that aligns with a 38.2% Fibonacci retracement, indicating a potential area where price could find support.

1st Resistance: 2,913.11

Supporting Reasons: Identified as a pullback resistance that aligns close to a 61.8% Fibonacci retracement, indicating a historical barrier where that could halt further upward movement.

WTI/USD (Oil):

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: 77.32

Supporting Reasons: Identified as a pullback support that aligns close to a 23.6% Fibonacci retracement, suggesting a potential area where buying interests could pick up to resume the uptrend.

1st Support: 75.33

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

1st Resistance: 79.35

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

XAU/USD (GOLD):

Potential Direction: Bullish
Overall momentum of the chart: Neutral

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

Pivot: 2,481.30
Supporting reasons: Identified as an overlap support that aligns close to a 38.2% Fibonacci retracement, indicating a potential area where buying interests could pick up. The presence of the bullish Ichimoku Cloud adds further significance to the strength of this support zone.

1st support: 2,441.55
Supporting reasons: Marked as a pullback support that aligns close to a 61.8% Fibonacci retracement, suggesting an area where the price may find support.

1st resistance: 2,529.88
Supporting reasons: Identified as a pullback resistance that aligns close to the all-time high, indicating a potential level where the price may face resistance if it attempts a rally.

The accuracy, completeness and timeliness of the information contained on this site cannot be guaranteed. IC Markets does not warranty, guarantee or make any representations, or assume any liability regarding financial results based on the use of the information in the site.

News, views, opinions, recommendations and other information obtained from sources outside of www.icmarkets.com, used in this site are believed to be reliable, but we cannot guarantee their accuracy or completeness. All such information is subject to change at any time without notice. IC Markets assumes no responsibility for the content of any linked site.

The fact that such links may exist does not indicate approval or endorsement of any material contained on any linked site. IC Markets is not liable for any harm caused by the transmission, through accessing the services or information on this site, of a computer virus, or other computer code or programming device that might be used to access, delete, damage, disable, disrupt or otherwise impede in any manner, the operation of the site or of any user’s software, hardware, data or property. 

The post Tuesday 27th August 2024: Technical Outlook and Review first appeared on IC Markets | Official Blog.

Fed officials continue to keep the possibility of a 50bp on the table.

Yesterday’s comments from Daly sounded similar to that of Powell that they don’t want to see further weakening of the economy and labour market from here.

Even though she said it’s reasonable to adjust policy at the normal cadence (25bp cuts), she also added that if more weakness should happen, she anticipates the Fed would ‘need to be more aggressive’ (50bp cuts).

How the markets take that first cut will be dependent on the incoming labour data, but how markets view the cut will be important for how markets react to it.

Will they view a 50bp as a bigger insurance cut (which could be good for equities), or as emergency cuts (which could be bad for equities). I personally think 50bp cuts will send the wrong message, but time time will tell.

This article was written by Arno V Venter at www.forexlive.com.

• Goldman cuts Brent forecast and eyes $70-85 range for 2025
• Russia on the attack: Third round of explosions heard in the Ukraine capital of Kyiv
• Japan’s FM Suzuki: FX rates determined by various factors, not just monetary policies
• China’s January – July industrial profits rise 3.6% YoY
• Geopolitics: Taiwan reports 15 Chinese military aircraft detected over last 24 hours
• Japan service PPI for July 2.8% versus 2.9% expected
• The CAD is ending the NA day as the strongest of the major currencies. The NZD is weakest
• Forexlive Americas FX news wrap: US dollar rebounds, Daly highlights Fed put
• US equity close: Nasdaq struggles ahead of Nvidia earnings. Dow closes at record high

What technical levels are key for the major currency pairs. Find out in the posts/videos below:

• USDCAD stretches down to the swing area target as sellers remain in full control
• USDJPY trades to a new session high. Traders start to look toward 100 hour MA.
• AUDUSD traders patiently wait for the next break. Are you doing the same too?
• USDCHF continues consolidation but remains below key moving average levels
• What are the technicals telling traders in the EURUSD, USDJPY and GBPUSD pairs

The economic calendar was light once again. As a result, the price action was limited in some of the major currency pairs vs the USD.

• For the EURUSD, the range was only 11 pips.
• For the GBPUSD it was only 16 pips.
• The USDCAD had a low to high range of 10 pips.

The USDJPY was again the biggest mover. It stretched to 74 pips – continuing the modest run higher from yesterday. The move has the pair stretching toward the fall 100 hour MA at 145.17 but with a high of 144.97, it is still another 20 pips of upside before it tests that MA level. Nevertheless, it remains a key target as the new day progresses.

The AUDUSD was stuck in a less than 10 pip trading range for the first 4-5 hours of trading in the new day today, but then broke lower (higher USD) on the USDJPYs run to the upside. However, the next key target at 0.6760 could not be broken and sellers turned to buyers erasing the move lower. The pair remains between support at 0.6760 and resistance near 0.6800 and waiting for that next shove.

Overall, the AUD and the NZD are starting the day as the strongest of the majors. The JPY is the weakest. The USD is smack dab in the middle.

Although there little in the way of economic data, there was some geopolitical risk as Russia went on the offensive with drone strikes in Kyiv, Ukraine.

This article was written by Greg Michalowski at www.forexlive.com.

It’s another relatively quiet day on the economic calendar for today.

EU session:

During the EU session the main highlight will be German GDP and consumer confidence data expected at 07:00 BST. It’s unlikely that these will move the needle as they are usually brushed aside. Also, given the steady amount of downside surprises in economic data in recent months another miss probably won’t surprise.

I think it’s interesting that markets are so much more optimistic about the ECB’s rate path compared to the Fed, especially when data in the Eurozone is looking far worse compared to the US.

US session:

In the US session, we get US Consumer Confidence, as well as the Richmond and Dallas Fed PMIs. All of these could be interesting for markets but with so much focus on next week’s NFP report I’m not sure whether markets will pay as much attention to these.

Confidence is expected to see a small uptick to 100.7 from the prior of 100.3, in line with the small tick higher in the University Michigan Consumer Sentiment data for August.

This article was written by Arno V Venter at www.forexlive.com.

The JPY is being raked over the coals this morning and losing ground against all its peers. Catalysts for the move has been light.

However, following recent policy actions, we have seen the more traditional inverse correlation between the JPY and yields come back into focus. The small upside in major benchmark yields (below in orange) is coinciding with the more lower in the JPY (geometric index in white).

Apart from that, Antipodeans (AUD and NZD) are leading the majors as the outperformers so far.

This article was written by Arno V Venter at www.forexlive.com.

IC Markets Asia Fundamental Forecast | 27 August 2024

What happened in the U.S. session?

After plunging 6.9% MoM in June, orders for durable goods rebounded strongly to surge 9.9% MoM in July, beating the market forecast of a 4%-increase by a wide margin. The rise in orders was led by categories such as transportation equipment; fabricated metal products; and defence aircraft and parts. This stronger-than-anticipated data point kept the dollar index (DXY) supported as it retraced higher overnight to hit a high of 100.92.

What does it mean for the Asia Session?

The Bank of Japan (BoJ) will release its core CPI reading for the month of July which is expected to remain unchanged at 2.1% YoY from the previous month. Despite the ultra-loose monetary policy throughout the last couple of years, inflationary pressures have not picked up in a significant way. Should the latest core CPI continue to remain muted, it could function as a near-term bearish catalyst for the yen and potentially lift USD/JPY.

The Dollar Index (DXY)

Key news events today

CB Consumer Confidence (2:00 pm GMT)

What can we expect from DXY today?

The Conference Board (CB) will release its consumer confidence survey for the month of August where sentiment is expected to remain unchanged from the prior month. Overall confidence ticked up in July but consumers were more weary about their present situation. Should we see this index drift lower in the latest survey, it could add further downward pressure on the greenback later today.

Central Bank Notes:

• The Federal Funds Rate target range remained unchanged at 5.25% to 5.50% for the eighth 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 continue to move into better balance.
• The economic outlook is uncertain, and the Committee is attentive to the risks to both sides of its dual mandate.
• Recent indicators suggest that economic activity has continued to expand at a solid pace while job gains have moderated, and the unemployment rate has moved up but remains 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 slowed 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 17 to 18 September 2024.

Next 24 Hours Bias

Medium Bullish

Gold (XAU)

Key news events today

CB Consumer Confidence (2:00 pm GMT)

What can we expect from Gold today?

The Conference Board (CB) will release its consumer confidence survey for the month of August where sentiment is expected to remain unchanged from the prior month. Overall confidence ticked up in July but consumers were more weary about their present situation. Should we see this index drift lower in the latest survey, it could add further downward pressure on the greenback which could act as a tailwind for gold later today.

Next 24 Hours Bias

Weak Bearish

The Australian Dollar (AUD)

Key news events today

No major news events.

What can we expect from AUD today?

A combination of higher demand for the greenback and a surge in durable goods orders reined in the Aussie yesterday. This currency pair rose as high as 0.6797 before reversing to drop lower and settle around 0.6770 as Asian markets came online – these are the support and resistance levels for today.

Support: 0.6700

Resistance: 0.6800

Central Bank Notes:

• The RBA kept the cash rate target unchanged at 4.35%, marking the sixth consecutive pause.
• Inflation has fallen substantially since its peak in 2022, as higher interest rates have been working to bring aggregate demand and supply closer towards balance but it still remains above the midpoint of the 2 to 3% target range.
• The CPI rose by 3.9% over the year to the June quarter, demonstrating that inflation is proving persistent. In year-ended terms, underlying inflation has now been above the midpoint of the target for 11 consecutive quarters while quarterly underlying CPI inflation has fallen very little over the past year.
• The central forecasts set out in the latest SMP are for inflation to return to the target range of 2 to 3% in late 2025 and approach the midpoint in 2026. This represents a slightly slower return to target than forecast in May, based on estimates that the gap between aggregate demand and supply in the economy is larger than previously thought.
• Momentum in economic activity has been weak, as evidenced by slow growth in GDP, a rise in the unemployment rate and reports that many businesses are under pressure. In addition, there is a risk that household consumption picks up more slowly than expected, resulting in continued subdued output growth and a noticeable deterioration in the labour market.
• Inflation in underlying terms remains too high, and the latest projections show that it will be some time yet before inflation is sustainably in the target range while recent data have reinforced the need to remain vigilant to upside risks to inflation and the Board is not ruling anything in or out.
• Policy will need to be sufficiently restrictive until the Board is confident that inflation is moving sustainably towards the target range and will rely upon the incoming data and the evolving assessment of risks to guide its decisions.
• Next meeting is on 5 November 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?

The Kiwi retreated from yesterday’s high of 0.6232 as increased demand for the dollar and better-than-expected U.S. macroeconomic data weighed it down. This currency pair pulled back towards the 0.6200-level at the beginning of the Asia session – these are the support and resistance levels for today.

Support: 0.6125

Resistance: 0.6250

Central Bank Notes:

• The Monetary Policy Committee agreed to reduce the OCR by 25 basis points, bringing it down to 5.25% in August as inflation converges on target.
• The Committee is confident that inflation is returning to within its 1-3% target band as surveyed inflation expectations, firms’ pricing behaviour, headline inflation, and a variety of core inflation measures are moving consistent with low and stable inflation.
• Economic growth remains below trend and inflation is declining across advanced economies – imported inflation into New Zealand has declined to be more consistent with pre-pandemic levels.
• Services inflation remains elevated but is also expected to continue to decline, both at home and abroad, in line with increased spare economic capacity.
• Consumer price inflation in New Zealand is expected to remain near the target mid-point over the foreseeable future.
• A broad range of high-frequency indicators point to a material weakening in domestic economic activity in recent months – these include various survey measures of business activity, electronic card transactions, vehicle traffic, house sales, filled jobs, and job vacancies; these indicators collectively provide a consistent signal that the economy contracted in recent months.
• The pace of further easing will depend on the Committee’s confidence that pricing behaviour remains consistent with a low inflation environment, and that inflation expectations are anchored around the 2% target.
• Next meeting is on 9 October 2024.

Next 24 Hours Bias

Weak Bearish

The Japanese Yen (JPY)

Key news events today

BoJ Core CPI (5:00 am GMT)

What can we expect from JPY today?

The Bank of Japan (BoJ) will release its core CPI reading for the month of July which is expected to remain unchanged at 2.1% YoY from the previous month. Despite the ultra-loose monetary policy throughout the last couple of years, inflationary pressures have not picked up in a significant way. Should the latest core CPI continue to remain muted, it could function as a near-term bearish catalyst for the yen and potentially lift USD/JPY.

Central Bank Notes:

• The Policy Board of the Bank of Japan decided, by a 7-2 majority vote, to set the following guideline for money market operations for the intermeeting period and decided on the following measures:
  1. The Bank will encourage the uncollateralized overnight call rate to remain at around 0.25% while reducing its purchase amount of Japanese government bonds (JGB) by a unanimous vote.
  2. The Bank decided, by a unanimous vote, on a plan to reduce the amount of its monthly outright purchases of JGBs so that it will be about 3 trillion yen in January-March 2026; the amount will be cut down by about 400 billion yen each calendar quarter in principle.
• The year-on-year rate of increase in the CPI (all items less fresh food) is likely to be at around 2.5% for fiscal 2024 and then be at around 2% for fiscal 2025 and 2026.
• Meanwhile, 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, it is likely to be at a level that is generally consistent with the price stability target of 2%.
• Japan’s economy 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 20 September 2024.

Next 24 Hours Bias

Weak Bullish

The Euro (EUR)

Key news events today

No major news events.

What can we expect from EUR today?

Business sentiment in Germany continues to worsen as it dropped from 87.0 in July down to 86.6 in August, which was slightly better than the forecast of 86.0. Bleak sentiment continues to be driven by increased pessimism among companies and a worsened assessment of their current situation. The manufacturing sector fared the worst along with the services sector while trade and construction were somewhat unchanged. The Euro reversed from yesterday’s high of 1.1201 to slide lower towards 1.1150 during the U.S. session and was trading around 1.1160 as Asian markets came online – these are the support and resistance levels for today.

Support: 1.1100

Resistance: 1.1245

Central Bank Notes:

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

Next 24 Hours Bias

Weak Bearish

The Swiss Franc (CHF)

Key news events today

No major news events.

What can we expect from CHF today?

Improved demand for the greenback supported USD/CHF as it stabilized around 0.8460 yesterday before edging up to hit an overnight high of 0.8485. This currency pair was trading around 0.8470 at the beginning of the Asia session – these are the support and resistance levels for today.

Support: 0.8435

Resistance: 0.8530

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?

U.K. financial markets will reopen today after Monday’s bank holiday and we can expect higher trading volume during the European trading hours. After rising strongly over the last couple of weeks, the Pound finally lost some steam yesterday as Cable pulled back towards 1.3180 overnight. This currency pair was trading around 1.3190 as Asian markets came online – these are the support and resistance levels for today.

Support: 1.3135

Resistance: 1.3260

Central Bank Notes:

• The Bank of England’s Monetary Policy Committee (MPC) voted by a majority of 5-to-4 to reduce its Official Bank Rate by 25 basis points to 5.00% on 1st August 2024.
• Five members preferred to reduce the Bank Rate by 25 basis points to 5%, an increase of two from the previous meeting while four members preferred to maintain the Bank Rate at 5.25%.
• Twelve-month CPI inflation was at the MPC’s 2% target in both May and June but it is expected to increase to around 2.75% in the second half of this year as declines in energy prices last year fall out of the annual comparison, revealing more clearly the prevailing persistence of domestic inflationary pressures. Private sector regular average weekly earnings growth has fallen to 5.6% in the three months to May, and services consumer price inflation has declined to 5.7% in June.
• GDP has picked up quite sharply so far this year, but underlying momentum appears weaker. GDP had grown by 0.7% in 2024 Q1, with that strength appearing to have continued into Q2. Growth in the first half of the year had been stronger than expected at the time of the May Report. 
• Business surveys had continued to point to underlying growth of around 0.3% per quarter, somewhat weaker than headline GDP growth. A margin of slack should emerge in the economy as GDP falls below potential and the labour market eases further.
• The Committee noted that it is now appropriate to reduce slightly the degree of policy restrictiveness but monetary policy will need to continue to remain restrictive for sufficiently long until the risks to inflation returning sustainably to the 2% target in the medium term have dissipated further.
• The Committee continues to monitor closely the risks of inflation persistence and will decide the appropriate degree of monetary policy restrictiveness at each meeting.
• Next meeting is on 19 September 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?

Demand for the Loonie remains elevated as crude oil sees a strong bid. The stronger Loonie drove USD/CAD under the threshold of 1.3500 yesterday to hit an overnight low of 1.3463. This currency pair was trading 1.3480 at the beginning of the Asia session – these are the support and resistance levels for today.

Support: 1.3435

Resistance: 1.3560

Central Bank Notes:

• The Bank of Canada reduced its target for the overnight rate by 25 basis points to 4.50% while continuing its policy of balance sheet normalization.
• Canada’s economic growth likely picked up to about 1.5% through the first half of this year and is forecasted to increase in the second half of 2024 and through 2025.
• Overall, the Bank forecasts GDP growth of 1.2% in 2024, 2.1% in 2025, and 2.4% in 2026, reflecting stronger exports and a recovery in household spending and business investment as borrowing costs ease.
• CPI inflation moderated to 2.7% in June after increasing in May as broad inflationary pressures eased.
• The Bank’s preferred measures of core inflation have been below 3% for several months and the breadth of price increases across components of the CPI is now near its historical norm but shelter price inflation remains high, driven by rent and mortgage interest costs, and is still the biggest contributor to total inflation.
• These preferred measures of core inflation are expected to slow to about 2.5% in the second half of 2024 and ease gradually through 2025 and CPI inflation is expected to come down below core inflation in the second half of this year, largely because of base year effects on gasoline prices.
• There are signs of slack in the labour market with the unemployment rate rising to 6.4%, as employment continues to grow more slowly than the labour force and job seekers taking longer to find work. Wage growth is showing some signs of moderation, but remains elevated.
• The Governing Council’s future monetary policy decisions will be guided by incoming information and assessment of their implications for the inflation outlook.
• 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 4 September 2024.

Next 24 Hours Bias

Weak Bullish

Oil

Key news events today

API Crude Oil Stock (8:30 pm GMT)

What can we expect from Oil today?

Increased tensions and supply concerns in the Middle East drove crude oil prices higher overnight as WTI oil surged more than 2% to climb above the $78-mark. This benchmark pulled back at the onset of the Asian trading hours to dip under $78 per barrel. Moving over to U.S. inventories, the API stockpiles have been mixed over the past four weeks, alternating between inventory drawdowns and builds. Should the API stockpiles register a higher-than-anticipated drawdown, it is likely to function as an additional bullish catalyst for this commodity.

Next 24 Hours Bias

Medium Bullish

The post IC Markets Asia Fundamental Forecast | 27 August 2024 first appeared on IC Markets | Official Blog.

Goldman has cut it’s average 2025 Brent forecast by $5.

I think yesterday’s developments in oil markets shows how futile price targets are when it comes to volatile assets like oil (for all assets to be fair).

WTI futures are currently trading close to $77 per barrel after yesterday’s solid push higher, which got within reach of the 200DMA sitting at around $77.77.

This article was written by Arno V Venter at www.forexlive.com.

Stocks Drop to Kick off the Week – Nasdaq Down 0.8%

US stock markets fell in trading yesterday as investors continued to assess last week’s developments and rising geopolitical risks in the Middle East. The Dow closed marginally higher, up just 0.07%, while tech stocks retreated, dragging the S&P down 0.30% and the Nasdaq down 0.79%. US Treasury yields held steady after Friday’s decline, with the 2-year yield gaining 1 basis point to 3.923% and the 10-year yield adding just 0.3 basis points to close at 3.810%. The dollar edged higher as major currencies remained near recent highs, with the DXY gaining 0.18% on the day to reach 100.84. The biggest moves were in oil, with Brent climbing 2.70% to $81.15 and WTI jumping 3.18% to $77.21. Gold remained near recent historic highs, closing the day up 0.14% at $2,514 an ounce.

Dollar Remains Under Pressure as Traders Eye Rate Cuts

The US dollar continues to trade near annual lows on the index and against most major currencies, as FX markets anticipate aggressive easing from the Federal Reserve in the coming months. The market is currently pricing in a 25-basis point cut at the September meeting. However, further weak data from the US could shift expectations towards a 50-basis point cut, which could drive the dollar into new ranges against the majors. Key data releases over the next couple of weeks include the PCE Price Index, Non-Farm Payrolls, and the CPI update. Some traders believe that the Fed would need to see at least two, if not all three, of these data points come in weaker than expected to justify a 50-basis point cut.

Another Quiet Calendar Day – Investors Eye Middle East Tensions

Today is another quiet trading day, with very little scheduled to move the markets during the first two sessions. Yen traders will be watching the Bank of Japan’s Core CPI data release late in the Asian session, but sentiment is likely to dominate flows. There is nothing of note in the European session, though traders will be closely monitoring news wires for any updates on the conflict in the Middle East. The New York session brings the first tier 1 data update from the US for the week, with the CB Consumer Confidence data released alongside the Richmond Manufacturing Index figures. Once again, Fed rate cut expectations are expected to remain at the forefront of market focus.

The post General Market Analysis – 27/08/24 first appeared on IC Markets | Official Blog.

Russia is fighting back from the recent Ukraine offensive. Witnesses are reporting that the third round of explosions have been heard in the Ukraine capital of Kyiv.

Earlier this reported that Russia launched drone attack on Kyiv. According to the Ukraine military, air defense systems were reportedly operating in the region to fight back against the offensive.

This article was written by Greg Michalowski at www.forexlive.com.

Japan’s finance minister Suzuki is speaking and says:

• FX rate determined by various factors
• Not just monetary policies and interest-rate differentials
• Also by geopolitical risks, market sentiment and others.
• Hard to tell how those factors would impact FX rates
• Will monitor how changes in US monetary policies would affect through various channel

US Federal Reserve Chairman Powell signaled that it is time to start to cut rates. Meanwhile , the Bank of Japan has started to tighten rates. That should weaken the USDJPY (strengthen the JPY), but as Suzuki says, it may not be so one way.

Looking at the daily chart of the USDJPY, the pair has retraced 50% of the move up from the January 2023 low. That level comes in at 144.58.The current price is trading just above that level at 144.68.

This article was written by Greg Michalowski at www.forexlive.com.

• China’s January – July industrial profits +3.6% year on year
• China’s July industrial profits +4.1%.

This article was written by Greg Michalowski at www.forexlive.com.

Taiwan Defense Ministry is saying:

• In the past 24 hours 15 Chinese military aircraft around Taiwan

in a separate report, China spent $15 billion or 7% of its defense budget on exercises in the Western Pacific in 2023 according to previously unpublished Taiwanese estimates.

A wildcard geopolitically is if China were to make advances into Taiwan. China claims Taiwan as its own and is never denied the use of force to bring the island under its control.

This article was written by Greg Michalowski at www.forexlive.com.