IC Markets Europe Fundamental Forecast | 21 August 2024

What happened in the Asia session?

The dollar index (DXY) stabilized around 101.30 this morning to retrace slightly higher while spot prices for gold hovered around $2,510/oz. With no major news this morning, markets were relatively quiet with most currency pairs consolidating around their respective levels.

What does it mean for the Europe & US sessions?

The API stockpiles unexpectedly increased by 0.35M barrels of crude versus a forecasted drawdown of 2.8M. This surprise inventory build continues to put downward pressure on prices as WTI oil slid lower towards $74 per barrel. Should the EIA crude oil inventories also experience another week of higher inventories, oil prices will remain in its downward trend.

The Dollar Index (DXY)

Key news events today

FOMC Meeting Minutes (6:00 pm GMT)

What can we expect from DXY today?

The minutes of the FOMC meeting that took place on 30th to 31st July will be released on Wednesday, where we will get a closer look at the deliberations that took place between Fed Chairman Jerome Powell and his fellow policymakers. Should the minutes point to a much more dovish discussion among FOMC members than originally thought, we can expect the dollar to come under pressure once more especially after last week’s softer-than-expected CPI and PPI data for the month of July.

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

FOMC Meeting Minutes (6:00 pm GMT)

What can we expect from Gold today?

The minutes of the FOMC meeting that took place on 30th to 31st July will be released on Wednesday, where we will get a closer look at the deliberations that took place between Fed Chairman Jerome Powell and his fellow policymakers. Should the minutes point to a much more dovish discussion among FOMC members than originally thought, we can expect the dollar to come under pressure once more which would potentially lift gold prices later today.

Next 24 Hours Bias

Weak Bullish

The Australian Dollar (AUD)

Key news events today

No major news events.

What can we expect from AUD today?

Widespread dollar weakness has kept the Aussie elevated this week. This currency pair was trading around 0.6740 as Asian markets came online – these are the support and resistance levels for today.

Support: 0.6700

Resistance: 0.6790

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 over the last three trading days as it climbed above 0.6160 overnight. This currency pair pulled back slightly to trade around 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

No major news events.

What can we expect from JPY today?

Weakness in the greenback pushed USD/JPY lower overnight as it fell under 146. This currency pair was trading around 145.50 as Asian markets came online – these are the support and resistance levels for today.

Support: 144.20

Resistance: 149.35

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

No major news events.

What can we expect from EUR today?

Yesterday’s final inflation print for the month of July showed headline and core CPI coming in line with their respective estimates while dollar weakness keeps the Euro elevated. This currency pair was trading around 1.1120 at the beginning of the Asia session – these are the support and resistance levels for today.

Support: 1.1020

Resistance: 1.1150

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?

Dollar weakness drove USD/CHF lower overnight as it fell under 0.8600. This currency pair was trading around 0.8540 as Asian markets came online – these are the support and resistance levels for today.

Support: 0.800

Resistance: 0.8625

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

No major news events.

What can we expect from GBP today?

Widespread dollar weakness provided a strong tailwind for the Pound as it briefly climbed above 1.3050 overnight. This currency pair pulled back slightly to trade around 1.3025 at the beginning of the Asia session – these are the support and resistance levels for today.

Support: 1.2940

Resistance: 1.3050

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?

Inflationary pressures in Canada continue to dissipate as evident in the overnight CPI data but that did not stop the Loonie from strengthening. Demand for this currency has been strong as it pushed USD/CAD lower yesterday. This currency pair was trading around 1.3620 as Asian markets came online – these are the support and resistance levels for today.

Support: 1.3600

Resistance: 1.3675

Central Bank Notes:

• The Bank of Canada reduced its target for the overnight rate by 25 basis points to 4.50% while continuing its policy of balance sheet normalization.
• Canada’s economic growth likely picked up to about 1.5% through the first half of this year and is forecasted to increase in the second half of 2024 and through 2025.
• Overall, the Bank forecasts GDP growth of 1.2% in 2024, 2.1% in 2025, and 2.4% in 2026, reflecting stronger exports and a recovery in household spending and business investment as borrowing costs ease.
• CPI inflation moderated to 2.7% in June after increasing in May as broad inflationary pressures eased.
• The Bank’s preferred measures of core inflation have been below 3% for several months and the breadth of price increases across components of the CPI is now near its historical norm but shelter price inflation remains high, driven by rent and mortgage interest costs, and is still the biggest contributor to total inflation.
• These preferred measures of core inflation are expected to slow to about 2.5% in the second half of 2024 and ease gradually through 2025 and CPI inflation is expected to come down below core inflation in the second half of this year, largely because of base year effects on gasoline prices.
• There are signs of slack in the labour market with the unemployment rate rising to 6.4%, as employment continues to grow more slowly than the labour force and job seekers taking longer to find work. Wage growth is showing some signs of moderation, but remains elevated.
• The Governing Council’s future monetary policy decisions will be guided by incoming information and assessment of their implications for the inflation outlook.
• Recent data has increased the council’s confidence that inflation will continue to move towards the 2% target. Nonetheless, risks to the inflation outlook remain.
• Next meeting is on 4 September 2024.

Next 24 Hours Bias

Weak Bearish

Oil

Key news events today

EIA Crude Oil Inventories (2:30 pm GMT)

What can we expect from Oil today?

The API stockpiles unexpectedly increased by 0.35M barrels of crude versus a forecasted drawdown of 2.8M. This surprise inventory build continues to put downward pressure on prices as WTI oil slid lower towards $74 per barrel. Should the EIA crude oil inventories also experience another week of higher inventories, oil prices will remain in its downward trend.

Next 24 Hours Bias

Medium Bearish

The post IC Markets Europe Fundamental Forecast | 21 August 2024 first appeared on IC Markets | Official Blog.

Global Markets:

•  Asian Stock Markets : Nikkei down 0.51%, Shanghai Composite down 0.30%, Hang Seng down 1.03% ASX down 0.02%
• Commodities : Gold at $2554.35 (0.19%), Silver at $29.59 (0.21%), Brent Oil at $77.18 (-0.09%), WTI Oil at $73.02 (-0.12%)
• Rates : US 10-year yield at 3.808, UK 10-year yield at 3.918, Germany 10-year yield at 2.205

News & Data:

• (CAD) CPI m/m  0.4% vs 0.4% expected
• (CAD) Median CPI y/y  2.4% vs 2.5% expected
• (CAD) Trimmed CPI y/y  2.7% vs 2.8% expected
• (CAD) Common CPI y/y  2.2% vs 2.2% expected

Markets Update:

.Asia-Pacific markets mostly declined on Wednesday, following a downturn in U.S. benchmark indexes, with the S&P 500 and Nasdaq Composite ending their eight-day winning streak. Japan’s trade data for July showed a 10.3% increase in exports and a 16.6% rise in imports year-on-year. However, these figures were below economists’ expectations, leading to a trade deficit of 621.84 billion yen ($4.28 billion), significantly higher than the anticipated 330.7 billion yen.

This latest trade data comes just before the Bank of Japan’s recent interest rate hike, which has strengthened the yen. Typically, a weaker yen benefits Japanese exporters and trading houses, both of which are major players on the Nikkei 225. However, after the release of the data, Japan’s Nikkei 225 slipped 0.5%, while the broader Topix index fell 0.23%.

Elsewhere in Asia, Hong Kong’s Hang Seng index dropped 0.93%, and mainland China’s CSI 300 fell 0.19%. The Hang Seng was particularly dragged down by technology and consumer cyclical stocks, with JD.com leading the declines, plunging 11.4% after Walmart announced plans to sell its stake in the Chinese e-commerce giant, reportedly valued at $3.74 billion.

South Korea’s Kospi was the exception, reversing earlier losses to climb 0.26%, making it the only major index in positive territory, although the small-cap Kosdaq dropped 0.91%. Australia’s S&P/ASX 200 also experienced a slight decline. Meanwhile, in the U.S., the S&P 500, Nasdaq Composite, and Dow Jones Industrial Average all posted modest losses overnight.

Upcoming Events: 

• 12:30 PM GMT – CAD IPPI m/m
• 12:30 PM GMT – CAD RMPI m/m
• 02:30 PM GMT – USD Crude Oil Inventories

The post Wednesday 21st August 2024: Asia-Pacific Markets Decline Amid Weak Trade Data and U.S. Losses first appeared on IC Markets | Official Blog.

The Japanese yen remains a little swingy but less so than in the days before at least. The rest of the major currencies bloc is trapped in narrow ranges as we look to European trading later. So far on the day, the changes are light as seen with dollar pairs below.

In general, the dollar is still under pressure with some key boundaries being pushed on the charts as noted here.

The FOMC meeting minutes is the notable item on the agenda today but there won’t be anything in Europe to catch markets’ attention. All the focus will be on tomorrow with PMI data before we get to the Jackson Hole symposium later in the week. Fed chair Powell’s speech is the one that everyone is waiting for.

1100 GMT – US MBA mortgage applications w.e. 16 August

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: 101.29
Supporting reasons: Supported by the 161.80% Fibonacci Extension, suggesting a potential reversal point where buying pressure could increase.

1st support: 100.60
Supporting reasons: Identified as swing low support, indicating a previous level where the price found support and may do so again.

1st resistance: 102.28
Supporting reasons: Identified as an overlap resistance, indicating a level where the price has previously encountered selling pressure.

EUR/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: 1.1122
Supporting reasons: Identified as swing high resistance and 100% Fibonacci Projection, indicating a level where selling pressure may increase.

1st support: 1.1019
Supporting reasons: Identified as an overlap support, suggesting a previous level where the price found support and may do so again.

1st resistance: 1.1251
Supporting reasons: Identified as swing high resistance, indicating a level where the price has previously encountered selling pressure.

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: 1.3033
Supporting reasons: Identified as swing high resistance, indicating a level where the price has previously faced selling pressure.

1st support: 1.2944
Supporting reasons: Identified as an overlap support, suggesting an area where the price might find support after a decline.

1st resistance: 1.3144
Supporting reasons: Identified as a level influenced by the 127.20% Fibonacci Extension, indicating potential resistance where the price might encounter selling pressure.

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: Bearish
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, reinforced by the 78.60% Fibonacci Retracement, indicating a potential level where the price might find support and initiate an upward move.

1st support: 0.8425
Supporting reasons: Identified as a swing low support, suggesting a significant level where the price might stabilize after a decline.

1st resistance: 0.8620
Supporting reasons: Identified as a pullback resistance, indicating a level where the price might encounter resistance after an upward correction.

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: 1.3602
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: 1.3674
Supporting reasons: Identified as an overlap resistance that aligns close to a 23.6% Fibonacci retracement level, 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 is falling towards the pivot and could 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 is falling towards the pivot and could potentially make a bullish bounce off this level to rise towards the 1st resistance.

Pivot: 5,496.71

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

1st support: 5,402.66

Supporting reasons: Identified as a pullback support that aligns close to a 38.2% Fibonacci retracement level, suggesting a potential area where price could find 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 is rising towards the pivot and could potentially make a bearish reversal off this level to 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: 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: 2,805.94

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

1st Support: 2,523.64

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

1st Resistance: 3,104.48

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

WTI/USD (Oil):

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: 72.61

Supporting Reasons: Identified as a swing-low support that aligns close to a 100% Fibonacci projection level, indicating a potential area where buying interests could pick up to stage a minor rebound.

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: 75.33

Supporting Reasons: Identified as an overlap 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 reaction off the pivot and drop to 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 Wednesday 21st August 2024: Technical Outlook and Review first appeared on IC Markets | Official Blog.

Australia approved plans for a massive solar and battery farm that would export energy to Singapore

• announced environmental approvals for the US$24 billion SunCable project in Australia’s remote north
• project will include an array of panels, batteries and, eventually, a cable linking Australia with Singapore
• hoped that energy production will begin in 2030
• project will provide four gigawatts of energy per hour for domestic use & two more gigawatts sent to Singapore via undersea cable will supply about 15 percent of the city-state’s needs

More info in the interesting report from AFP.

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

• Potential candidate for Japan PM supports BOJ continuing to hike rates
• New Zealand data – July card spending -3.8% y/y (prior -3.1%)
• China automaker lobby warns of enormous risks and uncertainty from EU tariffs on EVs
• US non farm payrolls revisions data due Wednesday – could wipe off 1mn jobs
• Federal Open Market Committee (FOMC) July meeting minutes will be published today
• Australian July leading index ticks into positive
• PBOC sets USD/ CNY central rate at 7.1307 (vs. estimate at 7.1303)
• NZD/USD looks cheap says JP Morgan
• Japan – July exports +10.3% y/y (expected +11.4%) & imports +16.6% y/y (expected +14.9%)
• An unpopular FOMC forecast – a 25bp September interest rate cut is ‘one and done’ for 2024
• OK, who’s coming to Sydney to meet Justin and I?
• HSBC is wary of a lower yen later this week
• JP Morgan says to say goodbye to the carry trade – unlikely to return to predominance
• “Mpox not new Covid and can be stopped, expert says”
• ICYMI: China is considering a new funding option for local governments to buy unsold homes
• Oil – private survey of inventory shows a headline crude oil build vs. draw expected
• Trade ideas thread – Wednesday, 21 August, insightful charts, technical analysis, ideas
• Eyes on Wednesday’s non-farm payrolls benchmark revisions

USD/JPY
continued to move around during Asia trade, covering a few laps from
just under 145.00 to just over 145.50. As I posted earlier, the
reverberations of the Bank of Japan rate hike, expectations of a
September Federal Open Market Committee (FOMC) rate cut, and the
carry unwind are all contributing. Mix in the Summer (northern
summer) markets thinner than at other times of year, and a dash of
diminished liquidity exacerbated by the wild swings.

From
Japan today we had trade data. Bloomberg carried an interview with
Katsunobu Kato, a potential candidate for the country’s next prime
minister who made clear his support for the Bank of Japan moving
further with rate hikes.

Apart
from Japan it was fairly subdued. Notably, the People’s Bank of
China set
its daily reference rate for the yuan broadly in line with
expectations, a sign it’s loosening its tight grip for the currency
its
been propping up for months and months. The PBoC (and yuan) have been
a beneficiary of the weaker USD and stronger JPY.

Some useful info is due out of the US on Wednesday:

• US non farm payrolls revisions data due Wednesday – could wipe off 1mn jobs
• Federal Open Market Committee (FOMC) July meeting minutes will be published today

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

IC Markets Asia Fundamental Forecast | 21 August 2024

What happened in the U.S. session?

Federal Reserve Bank of Atlanta President Raphael Bostic participation in a fireside chat on payments inclusion and Federal Reserve Governor Michael Barr speech about cybersecurity yesterday did not have any major impact on the direction of the dollar as the dollar index (DXY) slid under 101.50 overnight. Traders have been selling the greenback strongly since last Friday to notch three consecutive days of decline thus far.

What does it mean for the Asia Session?

Spot prices for gold made a new intraday high of $2,531.72/oz overnight as the ongoing dollar sell-off provides strong tailwinds for this precious metal. Prices pulled back slightly to $2,510/oz this morning but bidders are likely to keep this commodity elevated as the day progresses.

The Dollar Index (DXY)

Key news events today

FOMC Meeting Minutes (6:00 pm GMT)

What can we expect from DXY today?

The minutes of the FOMC meeting that took place on 30th to 31st July will be released on Wednesday, where we will get a closer look at the deliberations that took place between Fed Chairman Jerome Powell and his fellow policymakers. Should the minutes point to a much more dovish discussion among FOMC members than originally thought, we can expect the dollar to come under pressure once more especially after last week’s softer-than-expected CPI and PPI data for the month of July.

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

FOMC Meeting Minutes (6:00 pm GMT)

What can we expect from Gold today?

The minutes of the FOMC meeting that took place on 30th to 31st July will be released on Wednesday, where we will get a closer look at the deliberations that took place between Fed Chairman Jerome Powell and his fellow policymakers. Should the minutes point to a much more dovish discussion among FOMC members than originally thought, we can expect the dollar to come under pressure once more which would potentially lift gold prices later today.

Next 24 Hours Bias

Weak Bullish

The Australian Dollar (AUD)

Key news events today

No major news events.

What can we expect from AUD today?

Widespread dollar weakness has kept the Aussie elevated this week. This currency pair was trading around 0.6740 as Asian markets came online – these are the support and resistance levels for today.

Support: 0.6700

Resistance: 0.6790

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 over the last three trading days as it climbed above 0.6160 overnight. This currency pair pulled back slightly to trade around 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

No major news events.

What can we expect from JPY today?

Weakness in the greenback pushed USD/JPY lower overnight as it fell under 146. This currency pair was trading around 145.50 as Asian markets came online – these are the support and resistance levels for today.

Support: 144.20

Resistance: 149.35

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

No major news events.

What can we expect from EUR today?

Yesterday’s final inflation print for the month of July showed headline and core CPI coming in line with their respective estimates while dollar weakness keeps the Euro elevated. This currency pair was trading around 1.1120 at the beginning of the Asia session – these are the support and resistance levels for today.

Support: 1.1020

Resistance: 1.1150

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?

Dollar weakness drove USD/CHF lower overnight as it fell under 0.8600. This currency pair was trading around 0.8540 as Asian markets came online – these are the support and resistance levels for today.

Support: 0.800

Resistance: 0.8625

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

No major news events.

What can we expect from GBP today?

Widespread dollar weakness provided a strong tailwind for the Pound as it briefly climbed above 1.3050 overnight. This currency pair pulled back slightly to trade around 1.3025 at the beginning of the Asia session – these are the support and resistance levels for today.

Support: 1.2940

Resistance: 1.3050

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?

Inflationary pressures in Canada continue to dissipate as evident in the overnight CPI data but that did not stop the Loonie from strengthening. Demand for this currency has been strong as it pushed USD/CAD lower yesterday. This currency pair was trading around 1.3620 as Asian markets came online – these are the support and resistance levels for today.

Support: 1.3600

Resistance: 1.3675

Central Bank Notes:

• The Bank of Canada reduced its target for the overnight rate by 25 basis points to 4.50% while continuing its policy of balance sheet normalization.
• Canada’s economic growth likely picked up to about 1.5% through the first half of this year and is forecasted to increase in the second half of 2024 and through 2025.
• Overall, the Bank forecasts GDP growth of 1.2% in 2024, 2.1% in 2025, and 2.4% in 2026, reflecting stronger exports and a recovery in household spending and business investment as borrowing costs ease.
• CPI inflation moderated to 2.7% in June after increasing in May as broad inflationary pressures eased.
• The Bank’s preferred measures of core inflation have been below 3% for several months and the breadth of price increases across components of the CPI is now near its historical norm but shelter price inflation remains high, driven by rent and mortgage interest costs, and is still the biggest contributor to total inflation.
• These preferred measures of core inflation are expected to slow to about 2.5% in the second half of 2024 and ease gradually through 2025 and CPI inflation is expected to come down below core inflation in the second half of this year, largely because of base year effects on gasoline prices.
• There are signs of slack in the labour market with the unemployment rate rising to 6.4%, as employment continues to grow more slowly than the labour force and job seekers taking longer to find work. Wage growth is showing some signs of moderation, but remains elevated.
• The Governing Council’s future monetary policy decisions will be guided by incoming information and assessment of their implications for the inflation outlook.
• Recent data has increased the council’s confidence that inflation will continue to move towards the 2% target. Nonetheless, risks to the inflation outlook remain.
• Next meeting is on 4 September 2024.

Next 24 Hours Bias

Weak Bearish

Oil

Key news events today

EIA Crude Oil Inventories (2:30 pm GMT)

What can we expect from Oil today?

The API stockpiles unexpectedly increased by 0.35M barrels of crude versus a forecasted drawdown of 2.8M. This surprise inventory build continues to put downward pressure on prices as WTI oil slid lower towards $74 per barrel. Should the EIA crude oil inventories also experience another week of higher inventories, oil prices will remain in its downward trend.

Next 24 Hours Bias

Medium Bearish

The post IC Markets Asia Fundamental Forecast | 21 August 2024 first appeared on IC Markets | Official Blog.

Stocks Drift Ahead of Fed Minutes – Nasdaq Down 0.3%

Major U.S. stock indices drifted lower but remained near recent highs in trading yesterday as investors continued to price in potential rate cuts from the Federal Reserve in the coming months. The Nasdaq lost 0.33%, the S&P 500 declined by 0.20%, and the Dow edged down 0.15%. Traders are increasingly expecting deeper rate cuts, with treasury yields again taking a hit: the 2-year yield dropped by another 7 basis points to 3.998%, and the 10-year yield fell by 4.9 basis points to 3.818%. Meanwhile, the dollar reached an 8-month low on the index, closing at 101.44. Oil prices declined as Middle East tensions eased, with Brent down 0.6% to $77.20 and WTI off 0.4% to $74.40. Gold was once again the standout performer, hitting a new high of $2,531.60 before pulling back later in the session to close at $2,513.

First Fed Update Today – Dollar in Focus

In what has been a quiet week, the market’s focus is on two key updates from the Federal Reserve, with the FOMC minutes due tonight and Fed Chair Jerome Powell scheduled to speak on Friday from Jackson Hole. Recent market movements indicate a preference for a more dovish Fed, and tonight’s minutes could be the first indication that might challenge this optimism. The dollar hit an 8-month low overnight, and some FX traders are beginning to feel that this move may be overdone. Rate cut expectations for September have not shifted significantly in the last few days, and many believe that another weak jobs report will be necessary to justify the recent market moves. Any suggestion that the Fed may want more data before pushing for cuts could lead to sharp reversals, particularly with the release coming during thinner liquidity conditions at the end of the day.

Slow Calendar Day Ahead for Traders

Today is expected to be a slow trading day in what has been a thin calendar week. However, one of the highlights of the week will occur at the end of the New York trading session. The first two sessions of the day have little to offer, so range-bound conditions are expected ahead of the New York open. The main focus will undoubtedly be the FOMC meeting minutes, which will be released near the end of the session. Oil traders will also be keeping an eye on the latest U.S. inventory data, which will be announced earlier in the day.

The post General Market Analysis – 21/08/24 first appeared on IC Markets | Official Blog.

China Automobile Manufacturers Association:

• firmly opposes EU Commissions final draft on high tariffs on Chinese
  made electric vehicles
• hopes EU will adhere
  to dialogue and cooperation with China, maintain fair
  non-discriminatory market environment
• tariff decision
  brings enormous risks and uncertainty for Chinese firms’ operations
  and investment in EU

China has overcapacity across a range of manufactured goods, EVs just one.

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

Adam posted on this on Tuesday:

• Eyes on Wednesday’s non-farm payrolls benchmark revisions

Adam included the estimate from Goldman Sachs of between 600K and 1mn jobs to be cut from the data.

And JP Morgan of 360K jobs.

Economists will argue about this data, all the caveats, but the concern is that if the revision is a big ‘un like those estimates suggest then the US labour market is already cooling much more than was thought.

Wall Street Journal Fed watcher Nick Timiraos says the Fed won’;t be taken by surprise by a big revision:

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

While we had a data release from Japan earlier the yen doesn’t need much to move around.

• Japan – July exports +10.3% y/y (expected +11.4%) & imports +16.6% y/y (expected +14.9%)

The volatility recently continued today, albeit in a reduced range than we are accustomed to:

The reverberations of the Bank of Japan rate hike, the imminent Federal Open Market Committee (FOMC) rate cut, and the carry unwind are all continuing.

Summer (northern summer) markets are thinner than at other times of year, and this diminished liquidity has been exacerbated by the wild swings.

Earlier:

• JP Morgan says to say goodbye to the carry trade – unlikely to return to predominance

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

From the report:

• The six-month annualised growth rate in the Westpac–Melbourne Institute Leading Index ticked back up to +0.06%.
• The last nine months has seen the Index growth rate hover in the –0.3 to +0.2% range, a clear improvement on the twelve months prior which saw much weaker reads in the –0.5 to –1% range.
• However, outright positives have proven hard to sustain. This is likely to be the case with the July result as well.

WPAC on their view of whats to come from the Reserve Bank of Australia:

• The Reserve Bank Board next meets on September 23–24. The RBA Governor made it clear following the last meeting in August that the Board was still not confident about the inflation outlook, retaining the position that it was not ruling anything in or out but adding that it was unlikely that the cash rate would be reduced in the short term.
• While the June quarter national accounts (due to be released on September 4) should clarify some questions about the strength of demand, and ease some of the Bank’s concerns about productivity growth as well, the messaging indicates that inflation updates will continue to be key for the Bank’s policy assessments. As such, there is little prospect of a shift either way in September with the next quarterly CPI update not due until October 30.

AUD/USD update:

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