The post Ex-Dividend 23/08/2024 first appeared on IC Markets | Official Blog.

• Prior 50.1
• Manufacturing PMI 42.1 vs 44.4 expected
• Prior 44.0
• Composite PMI 52.7 vs 49.1 expected
• Prior 49.1

The headline reading is a 27-month high and that lifts the French economy to post its best performance in terms of business activity since March last year. The big caveat here though is that the services sector is largely boosted by the Paris Olympics. While overall activity was better, there were declines to employment and also output expectations. So, it is likely to be a one-off. HCOB notes that:

“The French economy will likely grow 0.5% in the third quarter. The HCOB France Flash PMI for August indicates an
improvement in economic conditions, with the Composite PMI jumping over three index points to 52.7. This can be tracked
back exclusively to the service sector, with the business activity index rising almost five points. It should be emphasized that
August is likely an outlier due to the Olympic Games. However, the manufacturing sector continues to struggle, with
production declining even more sharply than in July.

“Service providers will have benefited from the Olympic Games. The HCOB Flash PMI for French services activity jumped to
55.0, its highest level since the second quarter of 2022 when GDP growth reached 0.4%. The one-off nature of this boost is
evident in the worsening employment situation, weaker output expectations and declining backlogs of work.

“French manufacturers are still struggling with weak demand. New orders declined for yet another month and at the fastest
pace since the COVID-19 pandemic. Given the decline in new export sales slowed, we can infer that the accelerated drop in
total new orders was domestically driven. However, factory prices increased at the quickest rate since March 2023. More
fittingly, the manufacturing employment situation worsened for another month, with jobs in the sector being shed by the
largest margin since May 2020.

“French companies are facing bleak prospects. The corresponding HCOB Flash PMI for output expectations in the coming
twelve months declined almost four index points. This decline was broad-based across the service and manufacturing
sectors, but more pronounced in the latter. Service providers may have revised their output expectations lower because
business activity was unusually high during July and August, most likely fuelled by the Olympic Games.”

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

• Eurostoxx +0.1%
• Germany DAX +0.1%
• France CAC 40 +0.1%
• UK FTSE +0.2%
• Spain IBEX +0.2%
• Italy FTSE MIB flat

Barring any surprises, the euro area PMI data shouldn’t do much to distract from ECB pricing. So, the broader market mood will depend more on the US data later. S&P 500 futures are flat at the moment to start the session. That’s not giving much else to work with either.

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

The push higher yesterday sees the pair break its high for the year and solidifies a firm break above the 1.3000 mark this week. That now brings into focus the 2023 high as cable goes in search of a potential breakout to its highest since 2022.

The music sheet in the chart above is reminiscent of what we’re seeing in EUR/USD here.

GBP/USD had previously lingered at levels in between its 100 (red line) and 200-week (blue line) moving averages this year before a pop back above 1.3000 last month. That failed to hold but buyers are finding renewed vigour as the dollar is seen struggling in the last two weeks.

That now brings in the 2023 high around 1.3142 into focus. If buyers can seal a break above that, there will be much breathing room for GBP/USD towards the upside next.

The key thing to note now is that all of this is coming off the back of markets anticipating a much more dovish Fed. They are convinced the inflation monster has been tamed in the US and worries are now turning towards the labour market instead.

Unlike with the BOE, there are still questions surrounding even a rate cut for September. And that divergence is what is pinning the dollar down across the board.

It’s not so much how aligned major central banks are about cutting rates. It’s all about the pace of the moves now.

And if the dollar stays under pressure as such, a technical break in GBP/USD alongside other dollar pairs will pile on the misery on the greenback from these last two weeks.

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

Global Markets:

•  Asian Stock Markets : Nikkei down 0.60%, Shanghai Composite down 0.30%, Hang Seng up 0.57% ASX up 0.24%
• Commodities : Gold at $2551.35 (-0.19%), Silver at $29.53 (0.01%), Brent Oil at $76.18 (-0.09%), WTI Oil at $71.82 (-0.18%)
• Rates : US 10-year yield at 3.805, UK 10-year yield at 3.893, Germany 10-year yield at 2.201

News & Data:

• (CAD) IPPI m/m  0.0% vs -0.3% expected
• (CAD) RMPI m/m  0.7% vs -0.7% expected
• (USD) Crude Oil Inventories  -4.6M% vs -2.0M expected

Markets Update:

Asia-Pacific markets presented a mixed performance on Thursday as investors assessed business activity data from Australia and Japan while awaiting PMI numbers from India. The Bank of Korea maintained its benchmark interest rate at 3.5%, aligning with expectations. The bank noted a continued downward trend in South Korea’s inflation but emphasized the need to monitor real estate prices and household debt.

This decision followed the release of the Federal Reserve’s July meeting minutes, where it was revealed that some participants advocated for an earlier rate cut in July rather than waiting until September. However, the majority agreed that, assuming the data remained consistent with expectations, easing policy at the next meeting would be appropriate.

 Japan’s business activity in August accelerated, with the composite purchasing managers index rising to 53.0 from July’s 52.5, reflecting growth in both the manufacturing and services sectors. 

South Korea’s Kospi fell 0.34% after reversing earlier gains, and the small-cap Kosdaq dropped 1.39%. Meanwhile, Hong Kong’s Hang Seng index rose by 0.5%, and mainland China’s CSI 300 fell by 0.24%.

In Australia, the S&P/ASX 200 gained 0.24%, buoyed by an increase in the country’s flash composite PMI for August, which reached a three-month high of 51.4, driven by rising services activity. In the U.S., all major benchmarks rose following the Fed minutes, with the S&P 500 nearing its record high, the Nasdaq Composite up 0.57%, and the Dow Jones Industrial Average increasing by 0.14%.

Upcoming Events: 

• 12:30 PM GMT – USD Unemployment Claims
• 01:45 PM GMT – USD Flash Manufacturing PMI
• 01:45 PM GMT – USD Flash Service PMI

The post Thursday 22nd August 2024: Asia-Pacific Markets Mixed Amid Economic Data and Rate Decisions first appeared on IC Markets | Official Blog.

IC Markets Europe Fundamental Forecast | 22 August 2024

What happened in the Asia session?

After slowing over the past four months, the flash Composite PMI reading for the month of August showed business activity in Australia picking up. Once again, overall growth was led by the services sector with total new orders – a leading indicator for future business – rose for the first time since May while employment levels also grew. The Aussie was hovering around 0.6740 and is likely to remain elevated as the day progresses.

Meanwhile, Japan’s business activity rose at its fastest pace since May 2023 as the flash readings showed Composite PMI activity increasing to 53.0 which was mainly supported by the services sector. The manufacturing sector has now contracted since July but services activity expansion accelerated in August led by rising new business inflows, including export business. Despite the better-than-expected PMI figure, demand for the yen remains relatively weak as USD/JPY hovers above 145.

What does it mean for the Europe & US sessions?

The flash Composite PMI reading for the month of August is expected to show a sixth consecutive month of expansion in the Euro Area, albeit at the softest pace since March. PMI activity has slowed over the last couple of months with July’s reading easing to 50.2 while the flash estimate of 50.1 points to a fractional growth for the manufacturing and services sectors. Should the flash PMI miss market expectations, we could see the Euro lose steam as European markets get under way.

Moving over to the U.K., the flash Composite PMI reading for the month of August is expected to show business and manufacturing activity expand for the tenth consecutive month. Significant selling pressures for the dollar lifted Cable briefly above the threshold of 1.3100 overnight. Should we see a stronger set of PMI readings, it will likely provide another tailwind for Cable to make another attempt to breach that threshold today.

The Dollar Index (DXY)

Key news events today

S&P Global Composite PMI (1:45 pm GMT)

What can we expect from DXY today?

The flash Composite PMI reading for the month of August is once again expected to show the U.S. services sector leading business activity as a whole. After six months of expansion, the manufacturing sector slipped into contraction in July and looks set to notch a second consecutive month of decline. Should the flash readings surprise market expectations to the downside, we could see the current dollar sell-off accelerate even further 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

Weak Bearish

Gold (XAU)

Key news events today

S&P Global Composite PMI (1:45 pm GMT)

What can we expect from Gold today?

The flash Composite PMI reading for the month of August is once again expected to show the U.S. services sector leading business activity as a whole. After six months of expansion, the manufacturing sector slipped into contraction in July and looks set to notch a second consecutive month of decline. Should the flash readings surprise market expectations to the downside, we could see the current dollar sell-off accelerate even further later today – a move that would keep gold prices elevated.

Next 24 Hours Bias

Weak Bullish

The Australian Dollar (AUD)

Key news events today

S&P Global Composite PMI (11:00 pm GMT 21st August)

What can we expect from AUD today?

After slowing over the past four months, the flash Composite PMI reading for the month of August showed business activity in Australia picking up. Once again, overall growth was led by the services sector with total new orders – a leading indicator for future business – rose for the first time since May while employment levels also grew. The Aussie was hovering around 0.6740 and is likely to remain elevated as the day progresses.

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 dovish FOMC minutes provided a strong tailwind for the Kiwi as it rose to hit an overnight high of 0.6178. However, this currency pair pulled back slightly to edge toward 0.6150 at the beginning of the Asia session – these are the support and resistance levels for today.

Support: 0.6090

Resistance: 0.6200

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

S&P Global Composite PMI (12:30 am GMT)

What can we expect from JPY today?

Japan’s business activity rose at its fastest pace since May 2023 as the flash readings showed Composite PMI activity increasing to 53.0 which was mainly supported by the services sector. The manufacturing sector has now contracted since July but services activity expansion accelerated in August led by rising new business inflows, including export business. Despite the better-than-expected PMI figure, demand for the yen remains relatively weak as USD/JPY hovers above 145.

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 Bearish

The Euro (EUR)

Key news events today

S&P Global Composite PMI (8:00 am GMT)

What can we expect from EUR today?

The flash Composite PMI reading for the month of August is expected to show a sixth consecutive month of expansion in the Euro Area, albeit at the softest pace since March. PMI activity has slowed over the last couple of months with July’s reading easing to 50.2 while the flash estimate of 50.1 points to a fractional growth for the manufacturing and services sectors. Should the flash PMI miss market expectations, we could see the Euro lose steam as European markets get under way.

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 Bullish

The Swiss Franc (CHF)

Key news events today

No major news events.

What can we expect from CHF today?

The dovish FOMC minutes caused USD/CHF to decline overnight as it tumbled towards the 0.8500-level. However, this currency pair stabilized around this zone as Asian markets came online and was seen retracing slightly higher off yesterday’s low – these are the support and resistance levels for today.

Support: 0.8500

Resistance: 0.8560

Central Bank Notes:

• The SNB eased monetary policy by lowering its key policy rate by 25 basis points for the second consecutive meeting, going from 1.50% to 1.25% in June.
• The underlying inflationary pressure has decreased again compared to the previous quarter but inflation had risen slightly since the last monetary policy assessment, and stood at 1.4% in May.
• The inflation forecast puts average annual inflation at 1.3% for 2024, 1.1% for 2025 and 1.0% for 2026, based on the assumption that the SNB policy rate is 1.25% over the entire forecast horizon.
• Swiss GDP growth was moderate in the first quarter of 2024 with the services sector continuing to expand, while manufacturing stagnated.
• Growth is likely to remain moderate in Switzerland in the coming quarters as the SNB anticipates GDP growth of around 1% this year while currently expecting growth of around 1.5% for 2025.
• Next meeting is on 26 September 2024.

Next 24 Hours Bias

Weak Bearish

The Pound (GBP)

Key news events today

S&P Global Composite PMI (8:30 am GMT)

What can we expect from GBP today?

The flash Composite PMI reading for the month of August is expected to show business and manufacturing activity in the U.K. expand for the tenth consecutive month. Significant selling pressures for the dollar lifted Cable briefly above the threshold of 1.3100 overnight. Should we see a stronger set of PMI readings, it will likely provide another tailwind for Cable to make another attempt to breach that threshold today.

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

Weak Bullish

The Canadian Dollar (CAD)

Key news events today

No major news events.

What can we expect from CAD today?

The dovish FOMC minutes drove USD/CAD lower overnight as it broke under the threshold of 1.3600. This currency pair was trading around 1.3580 as Asian markets came online and is likely to extend its downward slide as the day progresses – these are the support and resistance levels for today.

Support: 1.3500

Resistance: 1.3650

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?

Despite a larger-than-anticipated drawdown in the EIA crude oil inventories, oil prices remain under intense selling pressures. In contrast to the surprise inventory build as observed in the API stockpiles on Tuesday, 4.6M barrels of crude were removed from the EIA inventories versus the forecast of a 2M-drawdown. However, this latest inventory data point could not prevent WTI oil from tumbling under $73 overnight. This benchmark was trading around $72.80 per barrel at the beginning of the Asia session.

Next 24 Hours Bias

Medium Bearish

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

It’s certainly one step at a time for EUR/USD this week with the pair having posted four straight days of gains coming into today. At first, it was about holding a break above 1.1000. Then, it was about challenging the December highs of 1.1123-39. Now, the pair might look even further towards its 2023 high of 1.1275 next.

So far this year, the pair has been trading in a range in between its 100 (red line) and 200-week (blue line) moving averages. But this week, buyers are looking to break out of that. The previous attempt in 2023 was halted by the 100-month moving average and that will be a focus point as well this time at 1.1220.

That alongside the 2023 high of 1.1275 will be key levels to watch in the weeks ahead for EUR/USD as buyers look to build on the latest upside momentum.

The push higher this week comes as the dollar is sinking across the board. Traders are pivoting away from the greenback now as they sense a more dovish Fed, anticipating that inflation is well under control in the US. Meanwhile, a worsening labour market will be a cause for concern that the Fed might have to cut rates at a quicker pace.

In that sense, they are banking on a divergence of sorts on the outlook for major central banks. Even if the others are also cutting rates, they may not feel as much urgency as the Fed might at the moment. Or at least in terms of the size of the moves.

As such, EUR/USD isn’t the only chart showing potential for a stronger breakout. GBP/USD and USD/CHF are the other obvious ones but even USD/CAD, AUD/USD, and NZD/USD are nearing key technical junctures that could spell more pain to come for the dollar.

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

The dollar remains under pressure this week, with bond yields sinking further in US trading yesterday. The revision to the non-farm payrolls here was a key factor, alongside the FOMC meeting minutes as well. A rate cut is certainly coming next month but traders are also growing more confident about a more dovish Fed in the year ahead.

Looking to June next year, traders are pricing in ~191 bps of rate cuts in the next seven meetings. That’s a little more than a 25 bps rate cut at each meeting from next month up until the first half of next year.

In any case, the point is that the dollar is still looking rather vulnerable and may be poised for further losses this week.

EUR/USD is looking to hold a break at its highest since July last year, targeting the 1.1200 mark next. Meanwhile, GBP/USD is slowly inching towards its July high of 1.3140-42 next. And stronger breaks there could see both pairs free up room to roam to its highest since 2021.

Besides that, USD/CAD is inching below its May and July lows as well as its 200-day moving average under 1.3600. That will see the pair lose altitude with little support holding a further drop from there.

And we have USD/JPY moving back to test 145.00 and AUD/USD also looking to its July highs near 0.6800 currently.

It’s all working against the dollar at the moment.

Looking to the day ahead, the dollar flows will continue to be a focus especially with US PMI data coming up. But in European trading, the euro will be under the spotlight with French and German PMI on the agenda. Barring any surprises though, it should reaffirm odds for a rate cut by the ECB next month – even if the economy holding up or stagnating somewhat.

As such, broader market sentiment will be eyeing the data from the US once again today.

0715 GMT – France August flash manufacturing, services, composite PMI0730 GMT – Germany August flash manufacturing, services, composite PMI0800 GMT – Eurozone August flash manufacturing, services, composite PMI0830 GMT – UK August flash manufacturing, services, composite PMI1000 GMT – UK August CBI trends total orders

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.

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

DXY (US Dollar Index):

Potential Direction: Bullish
Overall momentum of the chart: Bearish

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

Pivot: 101.01
Supporting reasons: Identified as swing low support, indicating a potential area where buyers could enter the market, leading to a bullish bounce.

1st support: 100.45
Supporting reasons: Supported by the 61.80% Fibonacci Projection, highlighting a significant level where the price might find support if it falls below the pivot.

1st resistance: 102.16
Supporting reasons: Marked as pullback resistance, reinforced by the 50% Fibonacci Retracement, suggesting an area where the price might encounter selling pressure, potentially reversing the bullish move.

EUR/USD:

Potential Direction: Bearish
Overall momentum of the chart: Bullish

Price could potentially make a bearish continuation towards the 1st support.

Pivot: 1.1177
Supporting reasons: Identified as swing high resistance, indicating a potential area where the price may face selling pressure and reverse.

1st support: 1.1045
Supporting reasons: Marked by pullback support, reinforced by the 61.80% Fibonacci Retracement, suggesting a significant level where the price might find support after a bearish move.

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

EUR/JPY:

Potential Direction: Bullish
Overall momentum of the chart: Bullish

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

Pivot: 159.35
Supporting reasons: Identified as an overlap support and 50% Fibonacci Retracement, indicating a potential level where buyers may enter the market.

1st support: 155.86
Supporting reasons: Identified as swing low support and 78.60% Fibonacci Retracement, suggesting a significant area where previous declines have found support.

1st resistance: 163.80
Supporting reasons: Identified as multi-swing high 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 potentially make a bearish reaction off the pivot and drop to the 1st support.

Pivot: 0.8551
Supporting reasons: Identified as pullback resistance and 50% Fibonacci Retracement, indicating a level where selling pressure might emerge.

1st support: 0.8498
Supporting reasons: Identified as pullback support, suggesting an area where the price could find support after a decline.

1st resistance: 0.8584
Supporting reasons: Identified as an overlap resistance, marking a historical point where the price has previously reversed or encountered selling pressure.

GBP/USD:

Potential Direction: Bearish
Overall momentum of the chart: Bullish

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

Pivot: 1.3126
Supporting reasons: Identified as swing high resistance, indicating a potential area where the price may face selling pressure and reverse.

1st support: 1.2944
Supporting reasons: Marked as an overlap support level, reinforced by the 38.20% Fibonacci Retracement, suggesting a significant level where the price might find support after a bearish move.

1st resistance: 1.3275
Supporting reasons: Another swing high resistance, indicating a historical point where previous rallies faced selling pressure or reversed.

GBP/JPY:

Potential Direction: Bullish
Overall momentum of the chart: Bullish

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

Pivot: 187.94
Supporting reasons: Identified as an overlap resistance, combined with the 38.20% Fibonacci Retracement, indicating a level where the price might find support and potentially continue upward.

1st support: 184.76
Supporting reasons: Identified as an overlap support, reinforced by the 61.80% Fibonacci Retracement, suggesting a strong area where the price might find support after a decline.

1st resistance: 192.13
Supporting reasons: Identified as a multi-swing high resistance, coupled with the 61.80% Fibonacci Retracement, indicating a level where the price might encounter selling pressure.

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: 0.8502
Supporting reasons: Identified as an overlap support level, reinforced by the 78.60% Fibonacci Retracement, indicating a potential area where the price may find support and reverse upwards.

1st support: 0.8425
Supporting reasons: Marked as swing low support, suggesting a significant level where previous declines found support.

1st resistance: 0.8620
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: Bullish
Overall momentum of the chart: Bullish

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

Pivot: 144.62
Supporting reasons: Identified as pullback support, reinforced by the 61.80% Fibonacci Retracement and 100% Fibonacci Projection, indicating a confluence that strengthens this level as a potential area for a bullish reversal.

1st support: 141.73
Supporting reasons: Identified as a swing low support, suggesting a key level where the price might find strong buying interest.

1st resistance: 149.36
Supporting reasons: Identified as swing high 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: 1.3560
Supporting reasons: Identified as a pullback support, indicating a potential area where buying interests could pick up to stage a minor rebound.

1st support: 1.3466
Supporting reasons: Identified as a pullback support that aligns close to a 127.2% Fibonacci extension level, indicating a potential area where price could find strong support.

1st resistance: 1.3636
Supporting reasons: Identified as a pullback resistance, indicating a potential area that could halt any further upward movement. The presence of the bearish Ichimoku Clouds adds further significance to the strength of this resistance zone.

AUD/USD:

Potential Direction: Bearish
Overall momentum of the chart: Bullish

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

Pivot: 0.6752
Supporting reasons: Identified as a pullback resistance, indicating a potential area where selling pressures could intensify.

1st support: 0.6701
Supporting reasons: Identified as an overlap support, suggesting a potential area where price could find support.

1st resistance: 0.6790
Supporting reasons: Identified as a swing-high resistance, indicating a significant area that could halt further upward movement.

NZD/USD

Potential Direction: Bullish
Overall momentum of the chart: Bullish

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

Pivot: 0.6125
Supporting reasons: Identified as a pullback support, indicating a potential area where buying interests could pick up to resume the uptrend.

1st support: 0.6080
Supporting reasons: Identified as a pullback support that aligns close to a 50% Fibonacci retracement level, suggesting a potential area where price could find strong support.

1st resistance: 0.6167
Supporting reasons: Identified as an overlap resistance, 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: 41,042.19

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

1st Support: 40,475.26

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

1st Resistance: 41,352.92

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.

DE40 (DAX):

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: 18,250.70

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

1st Support: 18,100.70

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 support.

1st Resistance: 18,593.70

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

US500 (S&P 500): 

Potential Direction: Bullish

Overall Momentum of the Chart: Bullish

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

Pivot: 5,561.63

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

1st support: 5,496.71

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

1st resistance: 5,669.89

Supporting reasons: Identified as a swing-high resistance that aligns close to a 127.2% extension Fibonacci level, suggesting a critical area that could halt further upward movement.

BTC/USD (Bitcoin):

Potential Direction: Bearish

Overall momentum of the chart: Neutral

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

Pivot: 61,687.65

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

1st support: 57,039.06

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

1st resistance: 65,483.09

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

ETH/USD (Ethereum):

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: 2,523.64

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

1st Support: 2,289.04

Supporting Reasons: Identified as a pullback support that aligns close to a 61.8% Fibonacci retracement level, indicating a potential area where price could find support.

1st Resistance: 2,805.94

Supporting Reasons: Identified as a pullback resistance  that aligns with a 50% Fibonacci retracement level, indicating a historical barrier where that could halt further upward movement.

WTI/USD (Oil):

Potential Direction: Bearish

Overall Momentum of the Chart: Bearish

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

Pivot: 72.61

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

1st Support: 70.31

Supporting Reasons: Identified as a pullback support that aligns with a 127.2% Fibonacci extension level, indicating a significant area where price has found support in the past.

1st Resistance: 74.79

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

XAU/USD (GOLD):

Potential Direction: Bearish
Overall momentum of the chart: Bullish

Price could potentially make a bearish continuation towards the 1st support.

Pivot: 2520.00
Supporting reasons: Identified as pullback resistance, indicating a potential area where the price might face selling pressure, causing a bearish reaction.

1st support: 2484.16
Supporting reasons: Identified as pullback support, suggesting a key level where the price might find support after a potential drop.

1st resistance: 2546.50
Supporting reasons: Reinforced by the 78.60% Fibonacci Projection, indicating a significant resistance level where the price could encounter strong selling pressure.

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

• Japan will release July inflation data on Friday (tomorrow)
• USD/JPY to fall below 140 by the end of the year (MUFG)
• Bank of Korea Gov Rhee says inflation conditions are appropriate for a rate cut
• Here’s when we’ll get the full agenda of the Fed’s Jackson Hole symposium
• Bank of Korea hints at rate cuts to come
• Commonwealth Bank of Australia forecast a 25bp September Federal Reserve interest rate cut
• Reminder, Bank of Japan Governor Ueda will speak in Japan’s parliament on Friday
• PBOC sets USD/ CNY mid-point today at 7.1228 (vs. estimate at 7.1226)
• Bank of Korea leaves its base rate unchanged at 3.5%, as expected
• Japan data – August flash Manufacturing PMI 49.5 (prior 49.1) Services 54.0 (prior 53.7)
• Goldman Sachs looking for GBP/CHF to trade higher, target 1.16
• Survey of Australian firms shows warning of 100K job losses ahead
• Australia preliminary August PMI: Manufacturing 48.7(prior 47.5) Services 52.2(prior 50.4)
• TD says macro positioning data in gold appear to be flashing warning signs – downside risk
• BlackRock’s Reider says US rates too high – “Fed Funds rate remains far too restrictive”
• UBS on the Fed (September cut coming) and S&P 500 (target 6200)
• Reports that at least 3 major banks got the jobs revision prior to the public release
• Goldman Sachs economists are already forecasting Harris to win the election
• Forexlive Americas FX news wrap: Non-farm payrolls revisions cut 818,000 jobs
• Trade ideas thread – Thursday, 22 August, insightful charts, technical analysis, ideas

USD/JPY
traded in a more subdued range today. It ticked a little higher
towards 145.65 before losing some ground. As I post its mid-range
around 145.30 or so.

We
had Japan’s flash manufacturing purchasing managers’ index (PMI) data
for August. This showed continued contraction for manufacturing and
expansion for services at a faster rate.

The
USD added a few points pretty much across the major’s board, but
ranges were small. EUR, AUD, NZD all fell against the big dollar.
USD/CAD and GBP/USD are not a lot changed.

South
Korea’s central bank, the Bank of Korea, held its benchmark interest
rate unchanged at 3.5%, as was widely expected. The Bank signalled it
was ready to start easing policy as inflation pressures and growth have eased. Governor Rhee said the Bank did not cut today due to concerns
over financial stability risks. Analysts expect a cut at the Bank’s
October meeting.

Sheesh … describing an 80 point USD/JPY range as subdued.

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

IC Markets Asia Fundamental Forecast | 22 August 2024

What happened in the U.S. session?

The minutes of the FOMC meeting that took place on 30th to 31st July indicated several Federal Reserve officials acknowledging that there was a plausible case for cutting interest rates in July before finally voting unanimously to keep them on hold at 5.25% to 5.50%. The minutes also showed Fed officials expecting disinflation to continue while highlighting the risk for further deterioration in the labour market. To sum it all up, this was definitely a dovish set of minutes which reinforces the first rate cut to take place in September – the only question is how large it will be. The dollar index (DXY), which was already in a strong downtrend, declined even further following the release of these minutes and it briefly dipped under the 101-level by the end of this session.

What does it mean for the Asia Session?

After slowing over the past four months, the flash Composite PMI reading for the month of August showed business activity in Australia picking up. Once again, overall growth was led by the services sector with total new orders – a leading indicator for future business – rose for the first time since May while employment levels also grew. The Aussie was hovering around 0.6740 and is likely to remain elevated as the day progresses.

Meanwhile, Japan’s business activity rose at its fastest pace since May 2023 as the flash readings showed Composite PMI activity increasing to 53.0 which was mainly supported by the services sector. The manufacturing sector has now contracted since July but services activity expansion accelerated in August led by rising new business inflows, including export business. Despite the better-than-expected PMI figure, demand for the yen remains relatively weak as USD/JPY hovers above 145.

The Dollar Index (DXY)

Key news events today

S&P Global Composite PMI (1:45 pm GMT)

What can we expect from DXY today?

The flash Composite PMI reading for the month of August is once again expected to show the U.S. services sector leading business activity as a whole. After six months of expansion, the manufacturing sector slipped into contraction in July and looks set to notch a second consecutive month of decline. Should the flash readings surprise market expectations to the downside, we could see the current dollar sell-off accelerate even further 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

Weak Bearish

Gold (XAU)

Key news events today

S&P Global Composite PMI (1:45 pm GMT)

What can we expect from Gold today?

The flash Composite PMI reading for the month of August is once again expected to show the U.S. services sector leading business activity as a whole. After six months of expansion, the manufacturing sector slipped into contraction in July and looks set to notch a second consecutive month of decline. Should the flash readings surprise market expectations to the downside, we could see the current dollar sell-off accelerate even further later today – a move that would keep gold prices elevated.

Next 24 Hours Bias

Weak Bullish

The Australian Dollar (AUD)

Key news events today

S&P Global Composite PMI (11:00 pm GMT 21st August)

What can we expect from AUD today?

After slowing over the past four months, the flash Composite PMI reading for the month of August showed business activity in Australia picking up. Once again, overall growth was led by the services sector with total new orders – a leading indicator for future business – rose for the first time since May while employment levels also grew. The Aussie was hovering around 0.6740 and is likely to remain elevated as the day progresses.

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 dovish FOMC minutes provided a strong tailwind for the Kiwi as it rose to hit an overnight high of 0.6178. However, this currency pair pulled back slightly to edge toward 0.6150 at the beginning of the Asia session – these are the support and resistance levels for today.

Support: 0.6090

Resistance: 0.6200

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

S&P Global Composite PMI (12:30 am GMT)

What can we expect from JPY today?

Japan’s business activity rose at its fastest pace since May 2023 as the flash readings showed Composite PMI activity increasing to 53.0 which was mainly supported by the services sector. The manufacturing sector has now contracted since July but services activity expansion accelerated in August led by rising new business inflows, including export business. Despite the better-than-expected PMI figure, demand for the yen remains relatively weak as USD/JPY hovers above 145.

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 Bearish

The Euro (EUR)

Key news events today

S&P Global Composite PMI (8:00 am GMT)

What can we expect from EUR today?

The flash Composite PMI reading for the month of August is expected to show a sixth consecutive month of expansion in the Euro Area, albeit at the softest pace since March. PMI activity has slowed over the last couple of months with July’s reading easing to 50.2 while the flash estimate of 50.1 points to a fractional growth for the manufacturing and services sectors. Should the flash PMI miss market expectations, we could see the Euro lose steam as European markets get under way.

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 Bullish

The Swiss Franc (CHF)

Key news events today

No major news events.

What can we expect from CHF today?

The dovish FOMC minutes caused USD/CHF to decline overnight as it tumbled towards the 0.8500-level. However, this currency pair stabilized around this zone as Asian markets came online and was seen retracing slightly higher off yesterday’s low – these are the support and resistance levels for today.

Support: 0.8500

Resistance: 0.8560

Central Bank Notes:

• The SNB eased monetary policy by lowering its key policy rate by 25 basis points for the second consecutive meeting, going from 1.50% to 1.25% in June.
• The underlying inflationary pressure has decreased again compared to the previous quarter but inflation had risen slightly since the last monetary policy assessment, and stood at 1.4% in May.
• The inflation forecast puts average annual inflation at 1.3% for 2024, 1.1% for 2025 and 1.0% for 2026, based on the assumption that the SNB policy rate is 1.25% over the entire forecast horizon.
• Swiss GDP growth was moderate in the first quarter of 2024 with the services sector continuing to expand, while manufacturing stagnated.
• Growth is likely to remain moderate in Switzerland in the coming quarters as the SNB anticipates GDP growth of around 1% this year while currently expecting growth of around 1.5% for 2025.
• Next meeting is on 26 September 2024.

Next 24 Hours Bias

Weak Bearish

The Pound (GBP)

Key news events today

S&P Global Composite PMI (8:30 am GMT)

What can we expect from GBP today?

The flash Composite PMI reading for the month of August is expected to show business and manufacturing activity in the U.K. expand for the tenth consecutive month. Significant selling pressures for the dollar lifted Cable briefly above the threshold of 1.3100 overnight. Should we see a stronger set of PMI readings, it will likely provide another tailwind for Cable to make another attempt to breach that threshold today.

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

Weak Bullish

The Canadian Dollar (CAD)

Key news events today

No major news events.

What can we expect from CAD today?

The dovish FOMC minutes drove USD/CAD lower overnight as it broke under the threshold of 1.3600. This currency pair was trading around 1.3580 as Asian markets came online and is likely to extend its downward slide as the day progresses – these are the support and resistance levels for today.

Support: 1.3500

Resistance: 1.3650

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?

Despite a larger-than-anticipated drawdown in the EIA crude oil inventories, oil prices remain under intense selling pressures. In contrast to the surprise inventory build as observed in the API stockpiles on Tuesday, 4.6M barrels of crude were removed from the EIA inventories versus the forecast of a 2M-drawdown. However, this latest inventory data point could not prevent WTI oil from tumbling under $73 overnight. This benchmark was trading around $72.80 per barrel at the beginning of the Asia session.

Next 24 Hours Bias

Medium Bearish

The post IC Markets Asia Fundamental Forecast | 22 August 2024 first appeared on IC Markets | Official Blog.

Jibun Bank S&P Global PMI Flash / Preliminary for August 2024 for Japan

Manufacturing PMI 49.5

• prior 49.1

Services 54.0

• prior 53.7

Composite 53.0

• prior 52.5

Commentary from the report, in summary:

• Business Activity: Continued solid expansion in Japanese private sector firms in August 2024.
• Growth Drivers: Services sector activity accelerated; manufacturing output returned to growth after a brief decline in July.
• Demand Trends: Divergence observed; solid rise in new business for services, but subdued demand in the goods-producing sector.
• Business Confidence: Optimism remained above average but eased to a 19-month low due to concerns over labor constraints and rising price pressures.
• Labor and Employment: Service sector faced labor constraints, leading to slower employment growth.
• Price Pressures: Selling price inflation dropped to its lowest since November 2023, despite rising input costs.
• Margin Pressures: Both manufacturers and service sector firms faced margin pressures as they partially absorbed price increases to stay competitive and support sales.

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