• Minutes-Swedish C. Bank Statement: The uncertainty over the inflation outlook motivated a continued gradual adjustment of monetary policy
• Minutes-Swedish C. Bank’s Seim: Share in the assessment that the policy rate can be cut another two or three times this year.
• Minutes-Swedish C. Bank Statement: If the outlook for inflation stays the same, the policy rate can be cut two or three more times during the second half of the year, which is somewhat faster than was forecast in June
• Minutes-Swedish C. Bank Statement: Riksbank’s asset holdings will continue to decrease through maturities and the sales of government bonds decided on in January.
• Minutes-Swedish C. Bank’s Breman: I support the proposal to cut the policy rate and the forecast that the policy rate can be cut a further two or three times before the end of the year
• Minutes-Swedish C. Bank’s Breman: If the outlook for inflation changes, monetary policy will be adjusted
• Minutes-Swedish C. Bank’s Thedeen: I see it as more likely that we will be able to make three – rather than two – full rate cuts so that the policy rate amounts to 2.75 percent after the December meeting.
• Minutes-Swedish C.Bank’s Jansson: There is no doubt of the direction the interest rate needs to take going forward, but I still think that there are factors supporting a cautious approach.
• Minutes-Swedish C.Bank’s Bunge: If the inflation outlook still stands, we ought to be able to cut the policy rate 2-3 more times in the autumn.
• Minutes-Swedish C. Bank’s Breman: I have considered a cut of 0.5 percentage points at today’s meeting, but I feel confident that a 0.25 percentage points is a well-balanced monetary policy.

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

Fed Chair Powell’s Jackson Hole speech on Friday was enough to keep the hopes of a 50bp cut(s) alive.

We’ve seen the implied rate path push lower following Friday’s speech, with money markets pricing in close to 200bp of cuts by July next year.

Given the current state of US economic data this view seems too aggressive in my opinion.

Even talking about 50bp cuts when Q2 GDP is close to 3% doesn’t make much sense, but with all the focus turning to the labour market, the bets for whether we get any 50bp cuts this year will largely be based on the remaining NFP prints.

Throughout 2022-2023 markets were gauging how big the Fed hikes based on incoming CPI data, and now the market will gauge how big the Fed cuts based on incoming NFP data.

That means next job’s data will be the deciding factor for whether we get a 25bp or 50bp cut at the September meeting.

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

Swiss Non-Farm Payrolls Q2:5.499 vs 5.484M prior

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

• The bank suggests that EURUSD is overvalued, and that the pair has overshot its fundamentals

• Thinks near-term fair value is closer to 1.10 for EURUSD

• They expect better US data in coming months to push back on excessive rate cut expectations to support the USD

• Believes 100bp of cuts priced for the Fed by year-end is excessive

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

Global Markets:

•  Asian Stock Markets : Nikkei down 0.90%, Shanghai Composite down 0.3%, Hang Seng up 0.78% ASX up 0.63%
• Commodities : Gold at $2545.35 (0.39%), Silver at $30.23 (-0.271%), Brent Oil at $78.6 (0.69%), WTI Oil at $75.32 (0.68%)
• Rates : US 10-year yield at 3.784, UK 10-year yield at 3.914, Germany 10-year yield at 2.225

News & Data:

• (USD) Core Retail Sales m/m  0.3% vs -0.2% expected
• (USD) Retail Sales m/m  -0.3%  vs -0.3% expected

Markets Update:

Asia-Pacific markets were mixed on Monday amid growing tensions in the Middle East, where Israel and Hezbollah exchanged strikes. Over the weekend, Reuters reported that Israel’s Air Force targeted Hezbollah sites in Lebanon, just before the Iran-backed group launched over 320 rockets toward Israel. Hezbollah claimed the attack was in retaliation for the assassination of senior commander Fuad Shukr last month. Despite the escalation, Hezbollah indicated it was not planning further strikes, and Israel’s Foreign Minister emphasized that the country is not seeking a full-scale war.

In response to these developments, oil prices saw an uptick, with Brent crude rising 0.69% to $78.62 and U.S. West Texas Intermediate increasing 0.68% to $75.34. The situation in the Middle East added to the already volatile market conditions as investors also considered recent comments from U.S. Federal Reserve Chairman Jerome Powell.

In Asia, investors focused on China’s central bank’s medium-term lending rates and Singapore’s July manufacturing data. Japan’s Nikkei 225 fell by 0.9%, while the Topix lost 1.13%. The Japanese yen strengthened by 0.33% to 143.9, its highest level since the August 5 stock sell-off. South Korea’s Kospi declined by 0.24%, and the Kosdaq slipped 0.96%. In contrast, Australia’s S&P/ASX 200 gained 0.68%, and Hong Kong’s Hang Seng index rose by 0.79%, though the mainland Chinese CSI 300 index edged down 0.15%.

On Friday, U.S. markets ended the week on a positive note following Powell’s remarks at Jackson Hole, Wyoming. The Dow Jones rose 1.14%, the Nasdaq advanced 1.47%, and the S&P 500 gained 1.15%. Powell hinted at potential rate cuts, although he did not specify the timing or magnitude, stating that the central bank’s decisions will depend on incoming data and the evolving economic outlook.

Upcoming Events: 

• 12:30 PM GMT – USD Core Durable Goods Orders m/m
• 12:30 PM GMT – USD Durable Goods Orders m/m

The post Monday 26th August 2024: Asia-Pacific Markets Mixed Amid Middle East Tensions and Powell’s Comments first appeared on IC Markets | Official Blog.

Japan Leading Indicator Revised: -2.1 vs -2.6 prior

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

• Mixed Signals: Stocks are riding high on economic optimism, but bonds are telling a story of slower economic growth. This split view could lead to overall bearish surprises for equities should the bond market prove to be correct.

• Rate Cuts on the Horizon?: The Fed is currently expected to cut rates by more than the ECB. Bond markets see the Fed cutting a lot in the next year, signaling some unease about the economic outlook, but seems strange when compared to EU growth and expected cuts from the ECB.

• USD: The weak Dollar seems out of sync unless the US economy really starts to slow materially.

• Market Moods: With stocks near peaks and bonds betting on a downturn, any further good news for equities might be hard to come by without clear economic gains.

  • Stocks: Might be too pricey unless the economy kicks up a notch.
  • Bonds: Could be overly gloomy unless the data starts to really deteriorate from here.
  • USD: Without a material economic downturn the Dollar’s recent downside looks overdone. Interest rate differentials have already priced in a fair amount as well

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

DXY (US Dollar Index):

Potential Direction: Bearish
Overall momentum of the chart: Bearish

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

Pivot: 100.83
Supporting reasons: Previously identified as swing-low support which now has been broken due to the strong bearish momentum.

1st support: 99.77
Supporting reasons: Identified as a swing-low support that aligns close to a 161.8% Fibonacci extension level. 

1st resistance: 101.51
Supporting reasons: Marked as pullback resistance, suggesting an area where the price might encounter selling pressures.

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: 1.1244
Supporting reasons: Identified as a swing-high resistance, indicating a potential area where the price may face selling pressure and reverse.

1st support: 1.1106
Supporting reasons: Marked by an overlap support, suggesting a significant level where the price has found support recently.

1st resistance: 1.1373
Supporting reasons: Identified as a pullback resistance, indicating a historical point where previous rallies faced selling pressure or reversed.

EUR/JPY:

Potential Direction: Bullish
Overall momentum of the chart: Bearish

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

Pivot: 160.01
Supporting reasons: Identified as a pullback support that aligns close to a 38.2% Fibonacci retracement, indicating a potential level where buyers may enter the market.

1st support: 157.73
Supporting reasons: Identified as a swing-low support, suggesting a significant area where previous declines have found support.

1st resistance: 164.05
Supporting reasons: Identified as an overlap resistance that aligns close to a 50% Fibonacci retracement, indicating a historical point where previous rallies have faced selling pressure or reversed.

EUR/GBP:

Potential Direction: Bearish
Overall momentum of the chart: Bearish

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

Pivot: 0.8491
Supporting reasons: Identified as an overlap resistance that aligns close to a 23.6% Fibonacci retracement, suggesting a level where the price may face selling pressure after a minor upward move.

1st support: 0.8409
Supporting reasons: Marked as pullback support, indicating a significant area where the price may find support.

1st resistance: 0.8540
Supporting reasons: Identified as a pullback resistance that aligns with a 50% Fibonacci retracement, indicating a potential area where the price may reverse after a bullish move.

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: 1.3262
Supporting reasons: Identified as a pullback resistance that aligns close to a 161.8% Fibonacci extension, indicating a potential area where the price may face selling pressure and reverse.

1st support: 1.3135
Supporting reasons: Marked as a pullback support level, suggesting a significant level where the price might find support after a bearish move.

1st resistance: 1.3404
Supporting reasons: Identified as a pullback resistance, indicating a historical point where previous rallies faced selling pressure or reversed.

GBP/JPY:

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: 187.96
Supporting reasons: Identified as an overlap support that aligns with a 38.2% Fibonacci retracement, indicating a level where the price may find strong buyers.

1st support: 183.04
Supporting reasons: Marked as a swing-low support, suggesting an area where the price may find support after a decline.

1st resistance: 191.86
Supporting reasons: Identified as an overlap resistance, indicating a potential level where the price may face resistance after a bullish correction.

USD/CHF:

Potential Direction: Bullish
Overall momentum of the chart: Bearish

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

Pivot: 0.8395
Supporting reasons: Identified as a swing-low support that aligns close to a 127.2% Fibonacci extension, indicating a potential area where the price may find support and reverse upwards.

1st support: 0.8210
Supporting reasons: Marked as a swing-low support that aligns close to a 161.8% Fibonacci extension, suggesting a significant level where previous declines found support.

1st resistance: 0.8550
Supporting reasons: Identified as pullback resistance, indicating a potential area where the price may face selling pressure after a bullish move.

USD/JPY:

Potential Direction: Bearish
Overall momentum of the chart: Bearish

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

Pivot: 144.11
Supporting reasons: Previously identified as swing-low support which now has been broken due to the strong bearish momentum.

1st support: 140.80
Supporting reasons: Identified as a pullback support that aligns with a 61.8% Fibonacci projection, suggesting a key level where the price might find strong buying interest.

1st resistance: 146.30
Supporting reasons: Identified as a pullback resistance, indicating a significant level where the price might encounter selling pressure.

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: 1.3451
Supporting reasons: Identified as a pullback support, indicating a potential area where buying interests could pick up to stage a minor rebound.

1st support: 1.3386
Supporting reasons: Identified as a pullback support that aligns close to a 161.8% Fibonacci extension, indicating a potential area where price could find strong support.

1st resistance: 1.3616
Supporting reasons: Identified as a pullback resistance, indicating a potential area that could halt any further upward movement.

AUD/USD:

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: 0.6784
Supporting reasons: Previously identified as a swing-high resistance which now has been broken due to the strong bullish momentum.

1st support: 0.6697
Supporting reasons: Identified as a pullback support, suggesting a potential area where price could find support.

1st resistance: 0.6846
Supporting reasons: Identified as a swing-high resistance that aligns close to a 127.2% Fibonacci extension, indicating a significant area that could halt further upward movement.

NZD/USD

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: 0.6202
Supporting reasons: Previously identified as a multi-swing-high resistance which now has been broken due to the strong bullish momentum.

1st support: 0.6127
Supporting reasons: Identified as a pullback support, suggesting a potential area where price could find strong support.

1st resistance: 0.6339
Supporting reasons: Identified as a swing-high resistance that aligns with a 161.8% Fibonacci extension, 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: 41,275.32

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

1st Support: 40,753.96

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

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: 18,710.60

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

1st Support: 18,344.20

Supporting Reasons: Identified as a pullback support, indicating a potential area where price could find support.

1st Resistance: 18,873.20

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: 5,564.72

Supporting reasons: Identified as an overlap support, suggesting a potential area where price could find support.

1st resistance: 5,860.51

Supporting reasons: Identified as a resistance that aligns close to a confluence of Fibonacci levels i.e. the 100% projection and the 161.8% extension, 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: 68,173.09

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

1st support: 58,410.50

Supporting reasons: Identified as a pullback support, indicating a significant area where price has found support in the past.

1st resistance: 73,176.19

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: 2,928.97

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

1st Support: 2,553.98

Supporting Reasons: Identified as a pullback support, indicating a potential area where price could find support.

1st Resistance: 3,316.28

Supporting Reasons: Identified as a pullback resistance, indicating a historical barrier where that could halt further upward movement.

WTI/USD (Oil):

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: 77.50

Supporting Reasons: Identified as a pullback resistance that aligns with a confluence of Fibonacci levels i.e. the 61.8% retracement and the 61.8% projection, suggesting a potential area where selling pressures could intensify.

1st Support: 72.95

Supporting Reasons: Identified as a multi-swing-low support, indicating a significant area where price has found support in the past.

1st Resistance: 80.03

Supporting Reasons: Identified as a swing-high resistance that aligns close to a 100% Fibonacci projection, indicating a potential barrier that could halt further upward movement.

XAU/USD (GOLD):

Potential Direction: Bearish
Overall momentum of the chart: Neutral

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

Pivot: 2,519.19
Supporting reasons: Identified as pullback resistance that aligns with a confluence of Fibonacci levels i.e. the 100% projection and the 127.2% extension, indicating a level where the price may encounter selling pressures.

1st support: 2,468.69
Supporting reasons: Marked as an overlap support that aligns close to a 23.6% Fibonacci retracement, suggesting an area where the price may find support after declining from the pivot.

1st resistance: 2,564.35
Supporting reasons: Identified as resistance that aligns with a 161.8% Fibonacci extension, indicating a potential level where the price may face resistance if it attempts a rally.

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The post Monday 26th August 2024: Technical Outlook and Review first appeared on IC Markets | Official Blog.

• Reuters Poll: India annual GDP growth seen at 6.9% in April-June (vs 7.8% in previous quarter).
• Reuters Poll: India economy to grow 7.0% in 2024-25 and 6.7% in 2025-26 (unchanged from July poll)

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

Commodities are mostly lower this morning with precious metals and base metals all trading in the red.

Oil is up +.035% at the time of writing after further escalation between Israel and Lebanon over the weekend.

In recent weeks oil have been more sensitive to good news on the geopolitical side compared to bad news, with pronounced weakness in oil on positive developments and smaller positive impact on oil prices from bad news.

On the technical side, WTI has once again managed to hold off a fourth test of key support around the $72 level. With US demand fears looking a bit overbaked, there could be more room for recovery.

However, the biggest risk for bulls right now is a cease-fire deal being reached.

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

Equity futures are trading mostly mixed this morning (not too surprising with a quiet calendar today and this week).

It’s been a fight between the Hang Seng (supported by real es and ASX200 (helped by stronger performance in real estate and tech) for the top spot this morning, with the majority of EMEA and US equity futures are trading very close to flat.

The biggest losers so far has been the CN50 and the Nikkei (both down over 1% at the time of writing). For the Nikkei the weakness is mostly likely coming from the stronger JPY we’ve seen so far this morning.

It’s not a very exciting calendar for the week ahead, so we might be seeing more of this sort of price action throughout the week.

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

IC Markets Asia Fundamental Forecast | 26 August 2024

What happened in the U.S. session?

Federal Reserve Chairman Jerome Powell’s speech at the Jackson Hole Economic Policy Symposium in Wyoming was extremely dovish as he basically confirmed the first interest rate cut by the Fed at the FOMC meeting in September, when he said the “time has come” to pivot monetary easing. The dollar index (DXY) was hovering around 101.45 prior to Powell’s speech but it swiftly dived below the 101-level to close at 100.67 last Friday.

What does it mean for the Asia Session?

As Asian markets digests Powell’s speech from the Jackson Hole symposium, overhead pressures remain intense for the DXY as it slid toward 100.50 while spot prices for gold remain elevated and hovered above $2,510/oz. Meanwhile, growing concerns on further escalation in the ongoing geo-political conflict in the Middle East have provided a strong tailwind for crude oil prices. WTI oil rebounded strongly in the second half of last week as it rose 4% over this period to close at $75.99 per barrel. Bullish momentum for this benchmark remains intact as it climbed above $76 this morning.

The Dollar Index (DXY)

Key news events today

Durable Goods Orders (12:30 pm GMT)

What can we expect from DXY today?

After making steady gains over four consecutive months, orders for durable goods plunged 6.6% MoM in June. This was the largest monthly decline since January 2024 and was led by transportation equipment and capital goods. July’s estimate of a 4.0% rise points to a strong rebound which would be the highest increase in 2024 and also the highest since November 2023. Should orders surpass market expectations, it could function as a near-term bullish catalyst for the dollar 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

Strong Bearish

Gold (XAU)

Key news events today

Durable Goods Orders (12:30 pm GMT)

What can we expect from Gold today?

After making steady gains over four consecutive months, orders for durable goods plunged 6.6% MoM in June. This was the largest monthly decline since January 2024 and was led by transportation equipment and capital goods. July’s estimate of a 4.0% rise points to a strong rebound which would be the highest increase in 2024 and also the highest since November 2023. Should orders surpass market expectations, it could function as a near-term bullish catalyst for the dollar and potentially limit the recent gains in gold prices later today.

Next 24 Hours Bias

Medium Bullish

The Australian Dollar (AUD)

Key news events today

No major news events.

What can we expect from AUD today?

The Aussie rose strongly for the third consecutive week as it gained nearly 1.9% to close at 0.6796 on Friday, gaining almost 120 pips in the process. This currency pair opened at 0.6786 and pulled back slightly as Asian markets came online.

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 Bullish

The Kiwi Dollar (NZD)

Key news events today

No major news events.

What can we expect from NZD today?

The Kiwi rose strongly for the fourth consecutive week as it gained nearly 3% to close at 0.6232 on Friday, gaining almost 200 pips in the process. This currency pair opened at 0.6233 and pulled back slightly at the beginning of the Asia session.

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

Medium Bullish

The Japanese Yen (JPY)

Key news events today

No major news events.

What can we expect from JPY today?

After demand for the Japanese yen waned for two weeks in a row in mid-August, bidders returned relatively strongly causing USD/JPY to decline nearly 2.2 to close at 144.37 on Friday, losing almost 330 pips in the process. This currency pair opened at 144.24 to resume the downtrend as Asian markets came online.

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

Medium Bearish

The Euro (EUR)

Key news events today

Germany ifo Business Climate (8:00 am GMT)

What can we expect from EUR today?

Business sentiment in Germany has declined for three consecutive months as it fell from 89.4 in April down to 87.0 in July as companies were less satisfied with the current business situation and skepticism regarding the coming months has increased considerably. August’s estimate of 86 points to marginal deterioration of sentiment which could potentially cause the Euro to suffer a slight pullback.

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

Medium Bullish

The Swiss Franc (CHF)

Key news events today

No major news events.

What can we expect from CHF today?

Demand for the franc increased significantly last week as USD/CHF tumbled over 2% to close at 0.8479, losing over 180 pips in the process. This currency pair opened at 0.8480 to resume the downtrend at the beginning of the Asia session.

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 Bearish

The Pound (GBP)

Key news events today

Bank Holiday.

What can we expect from GBP today?

As financial markets will be closed for a bank holiday, we can expect slightly lower trading volume during the European session. The Pound strengthened for the second week in a row as Cable rose almost 2.1% to close at 1.3209 on Friday, gaining 280 pips in the process. This currency pair opened at 1.3214 at today’s open and should remain elevated as the day progresses.

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 Bullish

The Canadian Dollar (CAD)

Key news events today

No major news events.

What can we expect from CAD today?

The Loonie has strengthened significantly over the past three weeks causing USD/CAD to lose over 2.7% over this period while closing at 1.3507 on Friday. This currency pair opened at 1.3504 at today’s open and overhead pressures remain.

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

Medium Bearish

Oil

Key news events today

No major news events.

What can we expect from Oil today?

Growing concerns on further escalation in the ongoing geo-political conflict in the Middle East have provided a strong tailwind for crude oil prices. WTI oil rebounded strongly in the second half of last week as it rose 4% over this period to close at $75.99 per barrel. Bullish momentum for this benchmark remains intact as it climbed above $76 this morning – these are the support and resistance levels for today.

Support: 72.95

Resistance: 77.50

Next 24 Hours Bias

Strong Bullish

The post IC Markets Asia Fundamental Forecast | 26 August 2024 first appeared on IC Markets | Official Blog.