Major currencies might not be too active so far today but they are slowly leaning in the direction of a softer dollar. The greenback rebounded after the US retail sales data last week. However, that quickly faltered on Friday and the selling has carried over to the new week. Here are some key happenings in the dollar pairs at the moment:

• EUR/USD secures breakout above 1.1000, eyes the December highs of 1.1123-39
• GBP/USD tests waters above 1.3000 today, with sights on the July high of 1.3044
• USD/CAD continues downside run after rejection of 1.3900, now looks to 200-DMA at 1.3598
• AUD/USD extends upside rebound with July highs near 0.6800 eyed next
• NZD/USD pulls above its 200-DMA, may look towards its Feb, March, and June highs of 0.6218-22

In other words, there is scope for the dollar to move lower across multiple charts at the moment.

And all else being equal, that looks to be where we are headed. The key risk event this week will be on Thursday from Fed chair Powell’s speech. But there will also be PMI data to watch alongside the US weekly jobless claims on the economic calendar.

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

Looking at the breakdown, surpluses were recorded for goods (€39 billion), primary income (€14 billion) and services (€12 billion). These were partly offset by a deficit for secondary income (€14 billion).

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

• Germany DAX +0.1%
• France CAC 40 +0.1%
• UK FTSE -0.3%
• Spain IBEX +0.2%
• Italy FTSE MIB +0.2%

S&P 500 futures are up 0.1% but overall, there isn’t too much drive in the risk mood on the day. That isn’t giving much for broader markets to work with either as such. A typical summer’s day.

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

Global Markets:

•  Asian Stock Markets : Nikkei up 1.98%, Shanghai Composite down 1.05%, Hang Seng down 0.51% ASX up 0.22%
• Commodities : Gold at $2545.35 (0.09%), Silver at $29.59 (0.81%), Brent Oil at $77.38 (-0.359%), WTI Oil at $73.22 (-0.62%)
• Rates : US 10-year yield at 3.878, UK 10-year yield at 3.926, Germany 10-year yield at 2.245

News & Data:

• (USD) CB Leading Index m/m  -0.6% vs -0.4% expected

Markets Update:

Asia-Pacific markets were mostly up on Tuesday, following a strong rally on Wall Street, while investors closely examined the minutes of the Reserve Bank of Australia’s (RBA) latest meeting.Japan’s Nikkei 225 led the region, rising over 2%, driven by gains in utilities and healthcare stocks. The broader Topix index also saw an increase of 1.3%.

In China, loan prime rates were maintained at 3.35% for the one-year LPR and 3.85% for the five-year LPR, as expected by economists in a Reuters poll. The one-year LPR serves as the benchmark for most corporate loans, while the five-year LPR is the reference rate for mortgages.

The RBA released minutes from its August meeting, where it kept the benchmark interest rate at 4.35%. The central bank acknowledged that inflation remained “above target” and persistent. Although the board considered raising the interest rate, it ultimately decided to maintain the current rate, citing insufficient data to justify a change. The RBA cautioned that a rate cut was unlikely in the short term, and future rate adjustments could not be ruled out.

South Korea’s Kospi rose 0.87%, and the small-cap Kosdaq climbed 1%. However, consumer sentiment in South Korea fell in August to 100.8 from a two-year high, influenced by concerns over a potential U.S. recession.

Australia’s S&P/ASX 200 edged up 0.22% after the RBA’s release, while Hong Kong’s Hang Seng index and mainland China’s CSI300 both dipped 0.42%.In the U.S., the Dow Jones Industrial Average gained 0.58%, the S&P 500 rose 0.97%, and the Nasdaq Composite jumped 1.39%.

Upcoming Events: 

• 12:30 PM GMT – CAD CPI m/m
• 12:30 PM GMT – CAD Median CPI y/y
• 12:30 PM GMT – CAD Trimmed CPI y/y
• 12:30 PM GMT – CAD Common CPI y/y
• 12:30 PM GMT – CAD Core CPI m/m

The post Tuesday 20th August 2024: Asia-Pacific Markets Gain Amid Wall Street Rally first appeared on IC Markets | Official Blog.

IC Markets Europe Fundamental Forecast | 20 August 2024

What happened in the Asia session?

The RBA released the minutes of its meeting that took place on 6th August where the cash rate was left unchanged at 4.35%. These minutes reiterated the central bank’s hawkish guidance as the risk of inflation not returning to the target band of 2 to 3% within a reasonable timeframe had increased. The minutes also noted that Governor Michele Bullock and her fellow policymakers were attuned to the need to balance inflation and employment risks. Despite the relatively hawkish minutes, the Aussie retreated away from this morning’s high of 0.6738 but it should remain elevated as the day progresses.

What does it mean for the Europe & US sessions?

Inflation in the Euro Area has remained relatively stable over the past three months and the final readings for July point to headline CPI modestly rising 2.6% YoY while the core remains unchanged at 2.9% YoY from the previous month. Should the final result match the preliminary readings, the Euro could lose some steam as European markets get underway.

Inflationary pressures in Canada have dissipated quite significantly in 2024 as measured by the various metrics. July’s estimates for median-, trimmed- and common-CPI all point to further easing, putting potential downward pressure on the Loonie. Should inflation come in ‘soft’ once more, we could see USD/CAD stabilize after falling strongly over the last couple of weeks.

The Dollar Index (DXY)

Key news events today

FOMC Member Bostic Speaks (5:35 pm GMT)

FOMC Member Barr Speaks (6:45 pm GMT)

What can we expect from DXY today?

Federal Reserve Bank of Atlanta President Raphael Bostic will be participating in a fireside chat at an event hosted by the Federal Reserve Bank of Atlanta where audience questions are expected. After which, Federal Reserve Governor Michael Barr will be speaking about cybersecurity at the Joint Financial and Banking Information Infrastructure Committee-Financial Services Sector Coordinating Council Meeting in Washington DC. Should either of these FOMC members drop any remarks on upcoming policy action for the September meeting, we can expect higher volatility for the greenback later today.

Central Bank Notes:

• The Federal Funds Rate target range remained unchanged at 5.25% to 5.50% for the eighth meeting in a row.
• The Committee seeks to achieve maximum employment and inflation at the rate of 2% over the longer run and judges that the risks to achieving its employment and inflation goals continue to move into better balance.
• The economic outlook is uncertain, and the Committee is attentive to the risks to both sides of its dual mandate.
• Recent indicators suggest that economic activity has continued to expand at a solid pace while job gains have moderated, and the unemployment rate has moved up but remains low.
• In considering any adjustments to the target range for the federal funds rate, the Committee will carefully assess incoming data, the evolving outlook, and the balance of risks and does not expect it will be appropriate to reduce the target range until it has gained greater confidence that inflation is moving sustainably toward 2%.
• In assessing the appropriate stance of monetary policy, the Committee will continue to monitor the implications of incoming information for the economic outlook and would be prepared to adjust the stance of monetary policy as appropriate if risks emerge that could impede the attainment of the Committee’s goals.
• In addition, the Committee will continue reducing its holdings of Treasury securities and agency debt and agency mortgage-backed securities. Beginning in June, the Committee slowed the pace of decline of its securities holdings by reducing the monthly redemption cap on Treasury securities from $60 billion to $25 billion.
• The Committee will maintain the monthly redemption cap on agency debt and agency mortgage-backed securities at $35 billion and will reinvest any principal payments in excess of this cap into Treasury securities.
• Next meeting runs from 17 to 18 September 2024.

Next 24 Hours Bias

Weak Bearish

Gold (XAU)

Key news events today

FOMC Member Bostic Speaks (5:35 pm GMT)

FOMC Member Barr Speaks (6:45 pm GMT)

What can we expect from Gold today?

Federal Reserve Bank of Atlanta President Raphael Bostic will be participating in a fireside chat at an event hosted by the Federal Reserve Bank of Atlanta where audience questions are expected. After which, Federal Reserve Governor Michael Barr will be speaking about cybersecurity at the Joint Financial and Banking Information Infrastructure Committee-Financial Services Sector Coordinating Council Meeting in Washington DC. Should either of these FOMC members drop any remarks on upcoming policy action for the September meeting, we can expect higher volatility for gold prices later today.

Next 24 Hours Bias

Weak Bullish

The Australian Dollar (AUD)

Key news events today

Monetary Policy Meeting Minutes (1:30 am GMT)

What can we expect from AUD today?

The RBA released the minutes of its meeting that took place on 6th August where the cash rate was left unchanged at 4.35%. These minutes reiterated the central bank’s hawkish guidance as the risk of inflation not returning to the target band of 2 to 3% within a reasonable timeframe had increased. The minutes also noted that Governor Michele Bullock and her fellow policymakers were attuned to the need to balance inflation and employment risks. Despite the relatively hawkish minutes, the Aussie retreated away from this morning’s high of 0.6738 but it should 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

Weak Bullish

The Kiwi Dollar (NZD)

Key news events today

No major news events.

What can we expect from NZD today?

Widespread dollar weakness lifted the Kiwi yesterday as it rose from 0.6036 to as high as 0.6117. This currency pair was trading around 0.6115 at the beginning of the Asia session – these are the support and resistance levels for today.

Support: 0.5985

Resistance: 0.6150

Central Bank Notes:

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

Next 24 Hours Bias

Weak Bullish

The Japanese Yen (JPY)

Key news events today

No major news events.

What can we expect from JPY today?

Weakness in the greenback supported USD/JPY as it steadied around 145.40 yesterday before edging higher towards 146.70 during the U.S. session. This currency pair was trading around 146.35 as Asian markets came online – these are the support and resistance levels for today.

Support: 142.10

Resistance: 150.90

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

CPI (9:00 am GMT)

What can we expect from EUR today?

Inflation in the Euro Area has remained relatively stable over the past three months and the final readings for July point to headline CPI modestly rising 2.6% YoY while the core remains unchanged at 2.9% YoY from the previous month. Should the final result match the preliminary readings, the Euro could lose some steam as European markets get underway.

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

SNB Chairman Jordan Speaks (9:30 am GMT)

What can we expect from CHF today?

SNB Chairman Thomas Jordan will be speaking at an event in Schwyz where his statements and comments could inject higher volatility for the franc. The ongoing dollar weakness pushed USD/CHF lower towards the threshold of 0.8600. This currency pair was trading around 0.8620 at the beginning of the Asia session.

Central Bank Notes:

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

Next 24 Hours Bias

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 yesterday as it broke above 1.2950 convincingly. This currency pair was trading around 1.2990 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

CPI (12:30 pm GMT)

What can we expect from CAD today?

Inflationary pressures in Canada have dissipated quite significantly in 2024 as measured by the various metrics. July’s estimates for median-, trimmed- and common-CPI all point to further easing, putting potential downward pressure on the Loonie. Should inflation come in ‘soft’ once more, we could see USD/CAD stabilize after falling strongly over the last couple of weeks.

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

API Crude Oil Stock (8:30 pm GMT)

What can we expect from Oil today?

Crude oil prices fell strongly overnight as concerns surrounding a supply disruption diminish as hopes of a ceasefire in the Middle East gain further traction. WTI oil declined more than 2% overnight as it tumbled under $75-mark – this benchmark was trading around $74.60 per barrel as Asian markets came online.

Moving over to inventories, the API stockpiles fell more than anticipated last week as 5.2M barrels of crude were removed from storage. Should we see a second consecutive week of a higher drawdown, it could provide oil prices with a much-needed near-term floor.

Next 24 Hours Bias

Medium Bearish

The post IC Markets Europe Fundamental Forecast | 20 August 2024 first appeared on IC Markets | Official Blog.

• Prior +0.2%

Looking at the breakdown, there were increases in the price for intermediate goods (+0.2%) and energy (+0.5%). Besides that, the price for capital goods and durable consumer goods were flat on the month. Meanwhile, the price for consumer goods in general fell by 0.1% in July. If you strip out energy, producer prices were seen up 0.1% compared to June.

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

• Prior CHF 6.18 billion; revised to CHF 6.12 billion

The Swiss trade surplus narrowed in July as exports fell by 0.5% while imports expanded by 6.1% on the month.

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

The precious metal caught an upside break at the end of last week, pushing past its previous triple-top pattern. That culminated in a break to fresh record highs above $2,500. And that is where we are seeing price continue to hold so far this week.

There was a bit of a challenge yesterday but buyers are not letting up just yet. So, what does this mean for gold from here?

Personally, I continue to wish for a stronger correction to the run higher in gold this year. There was some bit part consolidation from mid-April to June. However, there hasn’t been any real pullback or retracement to the surge higher in gold otherwise.

That’s my only qualm, that being a technical correction might be overdue for gold. But even so, it would just present another opportunity to reload on longs when taking a structural view.

With the Fed on course to cut rates and the dollar starting to feel the pinch of lower rates, the outlook for gold remains very much bullish.

Fed chair Powell is likely to almost confirm a rate cut for September at Jackson Hole this week. All else being equal, markets should also converge towards a 25 bps rate cut instead of a 50 bps move in the weeks ahead.

However, that doesn’t mean that gold will be stumped. The latest jump since Friday is largely driven from a bout of dollar softness. And that comes despite the readjustment in market pricing sine last week. So, there’s that.

But when you consider the structural view, it’s tough not to be convinced of a continued run higher in the next one to two years at least.

For now, the breakout looks to be stalling near $2,500. However, it won’t take much to reignite the flames and even if there is profit-taking to see price pull back lower from here, it will be a case of buying the dip for gold.

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

This as confirmed by Trump himself here:

“Comrade Kamala Harris has just informed us that she will NOT do the FoxNews Debate on September 4th. I am not surprised by this development because I feel that she knows it is very difficult, at best, for her to defend her record setting Flip-Flopping on absolutely everything she once believed in, including her statements that THERE WILL BE NO FRACKING IN PENNSYLVANIA and her HORRIBLE Performance on the Border, our “Border Czar,” where millions of criminals and people from mental institutions and terrorists, have been allowed to pour into our Country, totally unchecked and unvetted. It’s called, and she LOVES IT, an OPEN BORDER!!! Rather than the debate on September 4th, I have agreed to do a Tele-Town Hall, anchored by Sean Hannity, for Fox. It will take place in the Great Commonwealth of Pennsylvania – Details to follow!”

As mentioned, he will instead be doing a tele-town hall on the date itself.

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

The dollar is in a sluggish spot, as it comes under renewed pressure to start trading this week. EUR/USD broke out to its highest since December, now eyeing the highs then at 1.1123-39. Meanwhile, AUD/USD also extended its upside run to the highest in a month above the 0.6700 mark.

USD/JPY remains a focus as well, seeing volatile price action so far on the day. The pair fell to a low of 145.85 earlier but is now trading 100 pips above that near 147.00 – up 0.2% on the day. Here’s a look at the near-term chart:

Looking to European trading, traders will once again have to look to themselves for motivation to any moves. Risk trades got a boost in US trading yesterday but US futures are more muted today, with S&P 500 futures keeping flat. And there isn’t much on the economic calendar to really shake things up.

That means we might get another slow and quiet session while continuing to await more Fedspeak during the week.

0600 GMT – Germany July PPI figures0600 GMT – Switzerland July trade balance data0800 GMT – Eurozone June current account balance0900 GMT – Eurozone July final CPI figures

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: 101.42
Supporting reasons: Identified as an overlap support that aligns close to a 161.8% Fibonacci extension level, indicating a potential area where buying interests could pick up to stage a minor rebound.

1st support: 100.71
Supporting reasons: Identified as swing-low support, suggesting a significant area where previous declines have been halted.

1st resistance: 102.29
Supporting reasons: Identified as an overlap resistance, indicating a level that could halt any upward movement.

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 a swing-high resistance that aligns close to a 100% Fibonacci projection level, suggesting a significant level where selling pressures could intensify.

1st support: 1.1019
Supporting reasons: Identified as a pullback support, indicating a potential area where price could find support.

1st resistance: 1.1251
Supporting reasons: Identified as a swing-high resistance, representing a level where previous bullish advances have faced selling pressure, making it a key level to watch if the price continues to rise.

EUR/JPY:

Potential Direction: Bearish
Overall momentum of the chart: Neutral

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

Pivot: 164.05
Supporting reasons: Identified as an overlap resistance that aligns close to a 50% Fibonacci retracement level, indicating a significant area where selling pressures could intensify.

1st support: 159.55
Supporting reasons: Identified as a pullback support that aligns close to a 50% Fibonacci retracement level, marking an area where previous declines have stabilized.

1st resistance: 167.59
Supporting reasons: Identified as pullback resistance that aligns close to 61.8% Fibonacci retracement level, suggesting a significant level where bullish attempts may face selling pressure.

EUR/GBP:

Potential Direction: Bearish
Overall momentum of the chart: Neutral

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

Pivot: 0.8584
Supporting reasons: Identified as an overlap resistance, suggesting a potential area where selling pressures could intensify.

1st support: 0.8508
Supporting reasons: Identified as pullback support that aligns close to a 50% Fibonacci retracement level, indicating a key level where the price could find strong support.

1st resistance: 0.8619
Supporting reasons: Identified as a pullback resistance, marking a significant area where bullish movements may encounter selling pressure.

GBP/USD:

Potential Direction: Bullish
Overall momentum of the chart: Bullish

Price could potentially make a bullish reaction off the pivot and rise to the 1st resistance.

Pivot: 1.2950
Supporting reasons: Identified as pullback support, suggesting a potential area where buying interests could pick up to resume the uptrend.

1st support: 1.2885
Supporting reasons: Identified as pullback support that aligns close to a 38.2% Fibonacci retracement level, indicating a significant area where price may find support after a decline.

1st resistance: 1.3032
Supporting reasons: Identified as a swing-high resistance, marking a level where bullish movements may encounter selling pressure.

GBP/JPY:

Potential Direction: Bearish
Overall momentum of the chart: Neutral

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

Pivot: 193.25
Supporting reasons: Identified as a pullback resistance that aligns close to a 50% Fibonacci retracement level, indicating a potential level where the price might face selling pressure.

1st support: 187.04
Supporting reasons: Identified as a pullback support that aligns close to a 38.2% Fibonacci retracement level, marking a significant area where previous declines have found support.

1st resistance: 198.80
Supporting reasons: Identified as pullback resistance that aligns close to a 61.80% Fibonacci retracement level, suggesting a potential reversal point where bullish attempts may falter.

USD/CHF:

Potential Direction: Bullish
Overall momentum of the chart: Neutral

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

Pivot: 0.8585
Supporting reasons: Identified as a pullback support that aligns with a 50% Fibonacci retracement level, indicating a potential level where buying interests could pick up.

1st support: 0.8503
Supporting reasons: Identified as a pullback support that aligns with a 78.6% Fibonacci retracement level, marking a significant area where previous declines have found support.

1st resistance: 0.8730
Supporting reasons: Identified as a pullback resistance that aligns close to a 50% Fibonacci retracement level, suggesting a potential reversal point where bullish attempts may struggle.

USD/JPY:

Potential Direction: Bearish
Overall momentum of the chart: Neutral

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

Pivot: 149.34
Supporting reasons: Identified as an overlap resistance that aligns with a 38.2% Fibonacci retracement level, indicating a potential level where selling pressures could intensify.

1st support: 144.27
Supporting reasons: Identified as a pullback support that aligns close to a 61.8% Fibonacci retracement level, suggesting a significant area where previous price declines have found buying interest.

1st resistance: 152.32
Supporting reasons: Identified as a pullback resistance that aligns close to a 50% Fibonacci retracement level, marking a potential area where bullish attempts might face 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, indicating a potential area that could halt any further upward movement.

AUD/USD:

Potential Direction: Bearish
Overall momentum of the chart: Bullish

Price is rising towards the pivot and could potentially make a bearish reversal off this level to 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: Bearish
Overall momentum of the chart: Bullish

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

Pivot: 0.6148
Supporting reasons: Identified as a pullback resistance that aligns with a confluence of Fibonacci levels i.e. the 78.6% retracement and the 161.8% extension levels, indicating a potential area where selling pressures could intensify.

1st support: 0.6080
Supporting reasons: Identified as a pullback support, suggesting a potential area where price could find strong support.

1st resistance: 0.6216
Supporting reasons: Identified as a swing-high 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: Bearish

Overall Momentum of the Chart: Bullish

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

Pivot: 18,593.70

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

1st Support: 18,250.70

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

1st Resistance: 18,808.10

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

US500 (S&P 500): 

Potential Direction: Bearish

Overall Momentum of the Chart: Bullish

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

Pivot: 5,673.33

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

1st support: 5,496.71

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

1st resistance: 5,828.55

Supporting reasons: Identified as a resistance that aligns with 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: 75.21

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

Pivot: 2,508.14
Supporting reasons: Identified as pullback resistance that aligns with a 127.2% Fibonacci extension level, indicating a potential area where selling pressures could intensify.

1st support: 2,483.48
Supporting reasons: Identified as pullback support that aligns close to a 38.2% Fibonacci retracement level, indicating a potential area where buying interests could pick up to stage a rebound.

1st resistance: 2,547.78
Supporting reasons: Identified as a resistance that aligns with a 161.8% Fibonacci extension level, indicating a significant area where the price could encounter strong resistance.

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The post Tuesday 20th August 2024: Technical Outlook and Review first appeared on IC Markets | Official Blog.

IC Markets Asia Fundamental Forecast | 20 August 2024

What happened in the U.S. session?

The Conference Board released its Leading Economic Index (LEI) for the month of July where it fared worse than anticipated, dropping 0.6% down to 100.4, instead of the original forecast of a 0.4%-decline. Weakness was widespread among non-financial components as a sharp deterioration in new orders, persistently weak consumer expectations of business conditions, and softer building permits and hours worked in manufacturing drove the decline. These data points continue to hint at economic headwinds in the coming months. 

The dollar index (DXY) was hovering around 102.20 prior to the release of the LEI but it swiftly fell and broke under the threshold of 102. It slid lower towards 101.85 by the end of this session.

What does it mean for the Asia Session?

The RBA will release the minutes of its meeting that took place on 6th August where the cash rate was left unchanged at 4.35%. Market participants will get a closer look at the deliberations that took place between Governor Michele Bullock and her fellow policymakers in leaving the cash rate on hold for the 6th consecutive meeting. Any further hawkish hints from these minutes are likely to function as a near-term tailwind for the Aussie.

The Dollar Index (DXY)

Key news events today

FOMC Member Bostic Speaks (5:35 pm GMT)

FOMC Member Barr Speaks (6:45 pm GMT)

What can we expect from DXY today?

Federal Reserve Bank of Atlanta President Raphael Bostic will be participating in a fireside chat at an event hosted by the Federal Reserve Bank of Atlanta where audience questions are expected. After which, Federal Reserve Governor Michael Barr will be speaking about cybersecurity at the Joint Financial and Banking Information Infrastructure Committee-Financial Services Sector Coordinating Council Meeting in Washington DC. Should either of these FOMC members drop any remarks on upcoming policy action for the September meeting, we can expect higher volatility for the greenback later today.

Central Bank Notes:

• The Federal Funds Rate target range remained unchanged at 5.25% to 5.50% for the eighth meeting in a row.
• The Committee seeks to achieve maximum employment and inflation at the rate of 2% over the longer run and judges that the risks to achieving its employment and inflation goals continue to move into better balance.
• The economic outlook is uncertain, and the Committee is attentive to the risks to both sides of its dual mandate.
• Recent indicators suggest that economic activity has continued to expand at a solid pace while job gains have moderated, and the unemployment rate has moved up but remains low.
• In considering any adjustments to the target range for the federal funds rate, the Committee will carefully assess incoming data, the evolving outlook, and the balance of risks and does not expect it will be appropriate to reduce the target range until it has gained greater confidence that inflation is moving sustainably toward 2%.
• In assessing the appropriate stance of monetary policy, the Committee will continue to monitor the implications of incoming information for the economic outlook and would be prepared to adjust the stance of monetary policy as appropriate if risks emerge that could impede the attainment of the Committee’s goals.
• In addition, the Committee will continue reducing its holdings of Treasury securities and agency debt and agency mortgage-backed securities. Beginning in June, the Committee slowed the pace of decline of its securities holdings by reducing the monthly redemption cap on Treasury securities from $60 billion to $25 billion.
• The Committee will maintain the monthly redemption cap on agency debt and agency mortgage-backed securities at $35 billion and will reinvest any principal payments in excess of this cap into Treasury securities.
• Next meeting runs from 17 to 18 September 2024.

Next 24 Hours Bias

Weak Bearish

Gold (XAU)

Key news events today

FOMC Member Bostic Speaks (5:35 pm GMT)

FOMC Member Barr Speaks (6:45 pm GMT)

What can we expect from Gold today?

Federal Reserve Bank of Atlanta President Raphael Bostic will be participating in a fireside chat at an event hosted by the Federal Reserve Bank of Atlanta where audience questions are expected. After which, Federal Reserve Governor Michael Barr will be speaking about cybersecurity at the Joint Financial and Banking Information Infrastructure Committee-Financial Services Sector Coordinating Council Meeting in Washington DC. Should either of these FOMC members drop any remarks on upcoming policy action for the September meeting, we can expect higher volatility for gold prices later today.

Next 24 Hours Bias

Weak Bullish

The Australian Dollar (AUD)

Key news events today

Monetary Policy Meeting Minutes (1:30 am GMT)

What can we expect from AUD today?

The RBA will release the minutes of its meeting that took place on 6th August where the cash rate was left unchanged at 4.35%. Market participants will get a closer look at the deliberations that took place between Governor Michele Bullock and her fellow policymakers in leaving the cash rate on hold for the 6th consecutive meeting. Any further hawkish hints from these minutes are likely to function as a near-term tailwind for the Aussie.

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

Weak Bullish

The Kiwi Dollar (NZD)

Key news events today

No major news events.

What can we expect from NZD today?

Widespread dollar weakness lifted the Kiwi yesterday as it rose from 0.6036 to as high as 0.6117. This currency pair was trading around 0.6115 at the beginning of the Asia session – these are the support and resistance levels for today.

Support: 0.5985

Resistance: 0.6150

Central Bank Notes:

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

Next 24 Hours Bias

Weak Bullish

The Japanese Yen (JPY)

Key news events today

No major news events.

What can we expect from JPY today?

Weakness in the greenback supported USD/JPY as it steadied around 145.40 yesterday before edging higher towards 146.70 during the U.S. session. This currency pair was trading around 146.35 as Asian markets came online – these are the support and resistance levels for today.

Support: 142.10

Resistance: 150.90

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

CPI (9:00 am GMT)

What can we expect from EUR today?

Inflation in the Euro Area has remained relatively stable over the past three months and the final readings for July point to headline CPI modestly rising 2.6% YoY while the core remains unchanged at 2.9% YoY from the previous month. Should the final result match the preliminary readings, the Euro could lose some steam as European markets get underway.

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

SNB Chairman Jordan Speaks (9:30 am GMT)

What can we expect from CHF today?

SNB Chairman Thomas Jordan will be speaking at an event in Schwyz where his statements and comments could inject higher volatility for the franc. The ongoing dollar weakness pushed USD/CHF lower towards the threshold of 0.8600. This currency pair was trading around 0.8620 at the beginning of the Asia session.

Central Bank Notes:

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

Next 24 Hours Bias

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 yesterday as it broke above 1.2950 convincingly. This currency pair was trading around 1.2990 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

CPI (12:30 pm GMT)

What can we expect from CAD today?

Inflationary pressures in Canada have dissipated quite significantly in 2024 as measured by the various metrics. July’s estimates for median-, trimmed- and common-CPI all point to further easing, putting potential downward pressure on the Loonie. Should inflation come in ‘soft’ once more, we could see USD/CAD stabilize after falling strongly over the last couple of weeks.

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

API Crude Oil Stock (8:30 pm GMT)

What can we expect from Oil today?

Crude oil prices fell strongly overnight as concerns surrounding a supply disruption diminish as hopes of a ceasefire in the Middle East gain further traction. WTI oil declined more than 2% overnight as it tumbled under $75-mark – this benchmark was trading around $74.60 per barrel as Asian markets came online.

Moving over to inventories, the API stockpiles fell more than anticipated last week as 5.2M barrels of crude were removed from storage. Should we see a second consecutive week of a higher drawdown, it could provide oil prices with a much-needed near-term floor.

Next 24 Hours Bias

Medium Bearish

The post IC Markets Asia Fundamental Forecast | 20 August 2024 first appeared on IC Markets | Official Blog.