IC Markets Europe Fundamental Forecast | 16 September 2024

What happened in the Asia session?

Financial markets were closed in China and Japan today due to their respective bank holidays – with a two-day holiday for the Mid-Autumn Festival in China while Japan observes Respect for the Aged Day. Trading activity was quieter than usual as the dollar index (DXY) hit a low of 100.80 while spot prices for gold made a new intraday all-time high of $2,589.00/oz – the current direction for these two asset classes should continue to extend further as the day progresses.

What does it mean for the Europe & US sessions?

The Euro Area has recorded a trade surplus throughout 2024 thus far and another month of higher surplus could function as a potential bullish catalyst for the Euro – the latest trade balance data will be released at 9:00 am GMT. The Euro briefly climbed above 1.1100 during the Asia session before pulling back slightly but this currency pair should remain elevated today.

The Dollar Index (DXY)

Key news events today

Empire State Manufacturing Index (12:30 pm GMT)

What can we expect from DXY today?

Manufacturing activity in the state of New York has remained in contraction since last December with the index registering a reading of -4.7 in August as new orders fell modestly while labour market conditions remained weak. September’s estimate of -4.1 points to another month of weak output and another sluggish result could increase the headwinds that are currently faced by the dollar later today.

Central Bank Notes:

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

Next 24 Hours Bias

Medium Bearish

Gold (XAU)

Key news events today

Empire State Manufacturing Index (12:30 pm GMT)

What can we expect from Gold today?

Manufacturing activity in the state of New York has remained in contraction since last December with the index registering a reading of -4.7 in August as new orders fell modestly while labour market conditions remained weak. September’s estimate of -4.1 points to another month of weak output and another sluggish result could increase the headwinds that are currently faced by the dollar later today and potentially lift gold prices higher.

Next 24 Hours Bias

Medium Bullish

The Australian Dollar (AUD)

Key news events today

No major news events.

What can we expect from AUD today?

After closing at 0.6703 last Friday, the Aussie gapped slightly lower to open at 0.6689 this morning before racing higher towards 0.6720. This currency pair was trading around 0.6710 as Asian markets came online – these are the support and resistance levels for today.

Support: 0.6640

Resistance: 0.6750

Central Bank Notes:

• The RBA kept the cash rate target unchanged at 4.35% on 6th August, 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?

After closing at 0.6157 last Friday, the Kiwi gapped slightly lower to open at 0.6154 this morning before rising above 0.6165. This currency pair was trading around 0.6155 at the beginning of the Asia session – these are the support and resistance levels for today.

Support: 0.6125

Resistance: 0.6235

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

Bank Holiday (Respect for the Aged Day)

What can we expect from JPY today?

Demand for the yen has surged over the last couple of weeks as USD/JPY tumbled more than 3.6% over this period as it dived under 142 last Friday to close at 140.85. This currency pair opened to slide lower towards 140.40 as Asian markets came online – these are the support and resistance levels for today.

Support: 139.40

Resistance: 143.70

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

Trade Balance (9:00 am GMT)

What can we expect from EUR today?

The Euro Area has recorded a trade surplus throughout 2024 thus far and another month of higher surplus could function as a potential bullish catalyst for the Euro. This currency pair was trading around 1.1090 at the beginning of the Asia session and could continue to climb higher as the day progresses.

Central Bank Notes:

• The Governing Council today decided to reduce the three key ECB interest rates on 12th September, after holding rates steady in July.
• Accordingly, the interest rate on the main refinancing operations and the interest rates on the marginal lending facility and the deposit facility will be decreased to 3.65%, 3.90% and 3.50% respectively.
• Recent inflation data have come in broadly as expected, and the latest ECB staff projections see headline inflation averaging 2.5% in 2024, 2.2% in 2025 and 1.9% in 2026.
• For core inflation, the projections for 2024 and 2025 have been revised up slightly, as services inflation has been higher than expected. At the same time, staff continue to expect a rapid decline in core inflation, from 2.9% this year to 2.3% in 2025 and 2.0% in 2026.
• ECB staff projections forecast that the economy will grow by 0.8% in 2024, rising to 1.3% in 2025 and 1.5% in 2026 which is a slight downward revision compared with the June projections, mainly owing to a weaker contribution from domestic demand over the next few quarters.
• 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 17 October 2024.

Next 24 Hours Bias

Medium Bullish

The Swiss Franc (CHF)

Key news events today

No major news events.

What can we expect from CHF today?

As demand for the dollar waned last week, USD/CHF fell under 0.8500 to close at 0.8490 last Friday. This currency pair gapped lower to open at 0.8462 before rising higher to trade around 0.8470 as Asian markets came online – these are the support and resistance levels for today.

Support: 0.8400

Resistance: 0.8560

Central Bank Notes:

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

Next 24 Hours Bias

Weak Bullish

The Pound (GBP)

Key news events today

No major news events.

What can we expect from GBP today?

Cable rose above the threshold of 1.3100 to close at 1.3122 last Friday. Bullish momentum remains strong as this currency pair climbed higher towards 1.3150 at the beginning of the Asia session – these are the support and resistance levels for today.

Support: 1.3010

Resistance: 1.3210

Central Bank Notes:

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

Next 24 Hours Bias

Medium Bullish

The Canadian Dollar (CAD)

Key news events today

No major news events.

What can we expect from CAD today?

Despite demand for the dollar waning last week, USD/CAD retraced higher as it hit a high of 1.3623 on Wednesday before closing at 1.3590 on Friday. This currency pair was trading around 1.3575 as Asian markets came online – these are the support and resistance levels for today.

Support: 1.3490

Resistance: 1.3650

Central Bank Notes:

• The Bank of Canada reduced its target for the overnight rate by 25 basis points for the third consecutive meeting to 4.25% while continuing its policy of balance sheet normalization on 4th September.
• Canada’s economy grew 2.1% in the second quarter of 2024, led by government spending and business investment.
• This second quarter GDP growth was slightly stronger than forecast in July, but preliminary indicators suggest that economic activity was soft through June and July.
• As expected, inflation slowed further to 2.5% in July. The Bank’s preferred measures of core inflation averaged around 2.5% and the share of components of the consumer price index growing above 3% is roughly at its historical norm.
• High shelter price inflation is still the biggest contributor to total inflation but is starting to slow while inflation also remains elevated in some other services.
• The labour market continues to slow, with little change in employment in recent months. Wage growth, however, remains elevated relative to productivity.
• The Governing Council is carefully assessing these opposing forces on inflation and monetary policy decisions will be guided by incoming information and our assessment of their implications for the inflation outlook.
• The Bank remains resolute in its commitment to restoring price stability for Canadians.
• Next meeting is on 23 October 2024.

Next 24 Hours Bias

Weak Bearish

Oil

Key news events today

No major news events.

What can we expect from Oil today?

Crude oil prices staged a rebound last Wednesday to buck a four-week decline to close in the green last Friday. WTI oil bounced off its lows at $65.27 before closing at $68.65 per barrel. Overhead pressures for this commodity remain as production supply in the U.S. gulf of Mexico resumed following Hurricane Francine having a minor impact on supply disruptions while industrial output in China – the world’s top oil importer – slowed to a five-month low in August. WTI oil was trading around $68.90 per barrel this morning – these are the support and resistance levels for today.

Support: 65.70

Resistance: 71.80

Next 24 Hours Bias

Weak Bearish

The post IC Markets Europe Fundamental Forecast | 16 September 2024 first appeared on IC Markets | Official Blog.

It may be a holiday in Japan and China but that hasn’t dampened the trading mood to start the week so far. The dollar is pushed lower as we look towards European trading, with USD/JPY in particular testing the 140.00 mark. The low earlier touched 139.94 and marks the lowest level since July last year. The pressure is certainly on.

Besides that, the greenback is also trading slightly lower across the board with all the focus and attention this week turning towards the Fed. Market players are now starting to push the narrative of a 50 bps rate cut, with odds of that seen at ~59% currently. Will the Fed give in or will they push back against what markets want?

Meanwhile, gold is continuing to race higher to fresh record highs – now up 0.4% to $2,586. The train continues to march on, especially with yields staying pinned down as well. But again, it all lies with the Fed in trading this week.

Looking to the session ahead, there won’t be much to distract from things. It’s all about major central bank decisions this week. So, anything in the run up to that will be a matter of positioning flows mostly. The data front will have little to offer on a week like this, though we do have US retail sales tomorrow at least. But for today, nothing major.

0630 GMT – Switzerland August producer and import prices0800 GMT – Italy August final CPI figures0800 GMT – SNB total sight deposits w.e. 13 September0900 GMT – Eurozone July trade balance data

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.

This will keep market players on their toes in the days ahead, especially the Fed decision. USD/JPY is on the brink of a break under 140.00 and 2-year Treasury yields might be threatening a fall to its lowest in two years. Meanwhile, gold is surging to fresh record highs as broader markets are still taking into consideration a 50 bps move by the Fed this week.

As things stand, traders are pricing in higher odds of a 50 bps move on Wednesday as compared to a 25 bps one. The odds of the former are now at ~59% with a 25 bps move only at ~41%. Meanwhile, traders are also pricing in some ~118 bps of rate cuts for what’s left of this year.

In other words, that is saying the Fed will surely deliver a 50 bps at one meeting with consideration of another in the other remaining two. Are market players getting too carried away here?

It all comes down to what the Fed has to say on Wednesday and if there will be any push back. If so, it will be interesting to see how markets react to that after the latest pricing moves last week.

After the FOMC meeting, there will be the BOE and BOJ policy decisions to follow later in the week. Both central banks are not expected to make any changes to their policy settings though.

For the BOE, there might be room to cut moving forward so long as inflation continues to trend downwards. But policymakers haven’t been too pushy about the issue just yet. As for the BOJ, well they’ve been saying that market conditions are still too volatile for them to do anything at the moment. I mean, they don’t want to rock the boat too much after having already done so at the end of July and early August.

As such, the BOE and BOJ outcomes are likely to be less eventful as compared to the Fed this week.

Besides that, the PBOC is also one to watch as they will be making a decision on the LPR on Friday.

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 pivot and head towards 1st resistance.

Pivot: 100.52
Supporting reasons: Swing high resistance, which could act as a significant level for a potential bounce.

1st support: 99.75
Supporting reasons: Multi-swing low support, with confluence from the 161.80% Fibonacci Extension, indicating a strong support area.

1st resistance: 101.78
Supporting reasons: Multi-swing high resistance, likely to be a key resistance level if the price moves higher.

EUR/USD:

Potential Direction: Bearish
Overall momentum of the chart: Bullish

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

Pivot: 1.1151
Supporting reasons: An overlap resistance, which may provide a significant level for a bearish reaction.

1st support: 1.0979
Supporting reasons: An overlap support with 50% Fibonacci Retracement, indicating a potential area where the price may find support if it drops.

1st resistance: 1.1274
Supporting reasons: Swing high resistance, which may be a key level if the price moves higher.

EUR/JPY:

Potential Direction: Bullish
Overall momentum of the chart: Bearish

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

Pivot: 154.70
Supporting reasons: Multi-swing low support, which may provide a key level for a bullish bounce.

1st support: 151.52
Supporting reasons: An overlap support with 127.20% Fibonacci Extension, indicating a strong support level.

1st resistance: 159.96
Supporting reasons: Pullback resistance, is likely to be a significant level if the price advances.

EUR/GBP:

Potential Direction: Bearish
Overall momentum of the chart: Bearish

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

Pivot: 0.8490
Supporting reasons: Pullback resistance, reinforced by 38.20% Fibonacci Retracement, making it a significant level for potential bearish reaction.

1st support: 0.8407
Supporting reasons: Multi-swing low support, providing a key level where the price may find support if the bearish trend continues.

1st resistance: 0.8533
Supporting reasons: Pullback resistance with 61.80% Fibonacci Retracement, suggesting it could act as a strong resistance if the price rebounds.

GBP/USD:

Potential Direction: Bearish
Overall momentum of the chart: Bearish

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

Pivot: 1.3182
Supporting reasons: An Overlap resistance, reinforced by 61.80% Fibonacci Retracement, indicating a key level where the price might face resistance and trigger a bearish reaction.

1st support: 1.3009
Supporting reasons: An Overlap support, reinforced by 38.20% Fibonacci Retracement, providing a significant level where the price might find support if the bearish trend continues.

1st resistance: 1.3266
Supporting reasons: Swing high resistance, which might act as a barrier for any potential price rebounds.

GBP/JPY:

Potential Direction: Bearish
Overall momentum of the chart: Bearish
Factors contributing to the momentum: Price is below the bearish Ichimoku cloud.

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

Pivot: 186.29
Supporting reasons: An Overlap resistance, indicating a key level where the price might encounter resistance and trigger further bearish movement.

1st support: 180.22
Supporting reasons: Swing low support, which could act as a significant level where the price may find support if the bearish trend persists.

1st resistance: 193.17
Supporting reasons: Swing high resistance, serving as a potential barrier for any upward price movement.

USD/CHF:

Potential Direction: Neutral
Overall momentum of the chart: Bearish

Price could potentially fluctuate between the 1st resistance and 1st support level.

1st support: 0.8394
Supporting reasons: Multi-swing low support, indicating a level where price has historically found support and could potentially stabilize.

1st resistance: 0.8555
Supporting reasons: An Overlap resistance, suggesting a level where price may encounter resistance and struggle to advance further.

USD/JPY:

Potential Direction: Bearish
Overall momentum of the chart: Bearish
Factors contributing to the momentum: Price is below the bearish Ichimoku cloud, indicating a prevailing bearish trend.

Price could potentially make a: Bearish continuation towards 1st support.

Pivot: 144.04
Supporting reasons: An Overlap resistance, where price has historically struggled to move above, reinforcing the bearish outlook.

1st support: 137.95
Supporting reasons: Swing low support, reinforced by the 161.80% Fibonacci Extension, suggesting a strong level where price may find significant support if the bearish trend continues.

1st resistance: 149.42
Supporting reasons: Swing high resistance, indicating a level where price may face difficulty moving beyond if a reversal or retracement occurs.

USD/CAD:

Potential Direction: Bullish
Overall momentum of the chart: Neutral

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

Pivot: 1.3547
Supporting reasons: Identified as an overlap support that aligns with a 38.2% Fibonacci retracement, suggesting a potential area where buying interests could pick up to stage a minor rebound.

1st support: 1.3439
Supporting reasons: Identified as a multi-swing-low support, indicating a key level where price has found strong support in the past.

1st resistance: 1.3616
Supporting reasons: Identified as a swing-high resistance that aligns close to a 38.2% Fibonacci retracement, indicating a potential area that could halt any further upward movement. The presence of the bearish Ichimoku Cloud adds further significance to the downward momentum.

AUD/USD:

Potential Direction: Bearish
Overall momentum of the chart: Neutral

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

Pivot: 0.6798
Supporting reasons: Identified as a multi-swing-high resistance, suggesting a potential level where selling interests could intensify.

1st support: 0.6645
Supporting reasons: Identified as a swing-low support that aligns with a 38.2% Fibonacci retracement, indicating a key level where price has recently found support.

1st resistance: 0.6882
Supporting reasons: Identified as a multi-swing-high resistance that aligns with a 127.2% Fibonacci extension, indicating a potential area that could halt any further upward movement.

NZD/USD

Potential Direction: Bullish
Overall momentum of the chart: Neutral

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

Pivot: 0.6119

Supporting reasons: Identified as a swing-low support that aligns close to a 38.2% Fibonacci retracement, suggesting a potential level where buying interests could pick up to stage a minor rebound.

1st support: 0.5984
Supporting reasons: Identified as a swing-low support, indicating a potential level where price has found strong support in the past.

1st resistance: 0.6224
Supporting reasons: Identified as a pullback resistance that aligns with a 61.8% Fibonacci retracement, indicating a potential area that could halt any further upward movement.

US30 (DJIA):

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 pull back towards the 1st support.

Pivot: 41,604.84
Supporting reasons:  Identified as a swing-high resistance that aligns close to the all-time high, suggesting a potential area where selling pressures could intensify.

1st support: 40,202.56
Supporting reasons: Identified as a swing-low support that aligns close to a 50% Fibonacci retracement, indicating a key level where price has found support recently.

1st resistance: 42,532.73

Supporting reasons: Identified as a resistance that aligns with a 78.6% Fibonacci projection, indicating a potential area that could halt any further upward movement.

DE40 (DAX):

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 pull back towards the 1st support.

Pivot: 18,971.60
Supporting reasons: Identified as a swing-high resistance that aligns with a 127.2% Fibonacci extension, suggesting a potential area where selling pressures could intensify.

1st support: 18,262.80
Supporting reasons: Identified as a swing-low support that aligns with a 38.2% Fibonacci retracement, indicating a key level where price has found support recently.

1st resistance: 19,404.37
Supporting reasons: Identified as a resistance that aligns with a 61.8% Fibonacci projection, indicating a potential area that could halt any further upward movement.

US500 (S&P 500): 

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 pull back towards the 1st support.

Pivot: 5,669.89
Supporting reasons: Identified as a multi-swing-high resistance that aligns close to the all-time high, suggesting a potential area where selling pressures could intensify.

1st support: 5,385.30
Supporting reasons: Identified as a swing-low support that aligns close to a 50% Fibonacci retracement, indicating a key level where price has found support recently.

1st resistance: 5,830.11
Supporting reasons: Identified as a resistance that aligns with a 78.6% Fibonacci projection, indicating a potential area that could halt any further upward movement.

BTC/USD (Bitcoin):

Potential Direction: Bullish
Overall momentum of the chart: Neutral

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

Pivot: 53,776.62
Supporting reasons: Identified as a multi-swing-low support, suggesting a potential level where buying interests could pick up to stage a rebound.

1st support: 49,048.70
Supporting reasons: Identified as an overlap support that aligns with a 50% Fibonacci retracement, indicating a key level where price has found strong in the past.

1st resistance: 60,529.00
Supporting reasons: Identified as a swing-high resistance that aligns with a 61.8% Fibonacci retracement, indicating a potential area that could halt any further upward movement.

ETH/USD (Ethereum):

Potential Direction: Bullish
Overall momentum of the chart: Neutral

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

Pivot: 2,135.44
Supporting reasons: Identified as an overlap support that aligns close to a 78.6% Fibonacci retracement, suggesting a potential level where buying interests could pick up to stage a rebound.

1st support: 1,729.30
Supporting reasons: Identified as an overlap support, indicating a potential level where price could find strong.

1st resistance: 2,553.98
Supporting reasons: Identified as an overlap resistance that aligns with a 61.8% Fibonacci retracement, indicating a potential area that could halt any further upward movement. The presence of the bearish Ichimoku Cloud adds further significance to the downward momentum.

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: 66.34
Supporting reasons: Identified as a multi-swing-low support that aligns close to a 161.8% Fibonacci extension, suggesting a potential level where buying interests could pick up to stage a minor rebound.

1st support: 61.79
Supporting reasons: Identified as a multi-swing-low support that aligns close to a 61.8% Fibonacci projection, indicating a key level where price could find strong support.

1st resistance: 70.35
Supporting reasons: Identified as an overlap resistance that aligns with a 38.2% Fibonacci retracement, indicating a potential area that could halt any further upward movement. The presence of the bearish Ichimoku Cloud adds further significance to the downward momentum.

XAU/USD (GOLD):

Potential Direction: Bearish
Overall momentum of the chart: Bullish
Factors contributing to the momentum: Despite the overall bullish trend, there is a potential bearish reaction expected.

Price could potentially make a: Bearish reaction off pivot and drop to 1st support.

Pivot: 2583.95
Supporting reasons: 61.80% Fibonacci Projection, indicating a level where price might face resistance and reverse.

1st support: 2526.68
Supporting reasons: Pullback support, a key level where price has previously found support and may again.

1st resistance: 2613.19
Supporting reasons: 78.60% Fibonacci Projection, suggesting a significant resistance level if the bullish trend continues.

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The post Monday 16th September 2024: Technical Outlook and Review first appeared on IC Markets | Official Blog.

Japan is on holiday today, but that is irrelevant to yen buyers.

USD/JPY to its lowest in 12 months, without fresh news nor data to drive it (none is needed, as I’ve been saying for a while now):

The USD is lower pretty much across the board also. Even AUD, which had been troubled by the poor data from China over the weekend, is gaining against the big dollar.

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

IC Markets Asia Fundamental Forecast | 16 September 2024

What happened in the U.S. session?

The preliminary findings on consumer sentiment by the University of Michigan (UoM) rose for the second consecutive month to 69.0 in September. This marked the highest reading since May as buying conditions for durables improved, driven by more favourable prices as perceived by consumers while year-ahead expectations for personal finances and the economy both improved. However, there was a modest weakening in views of labour markets moving forward. The dollar index (DXY) was hovering around 100.90 prior to the release of this data point and received a minor boost as this index reversed to climb higher and close at 101.11 on Friday.

What does it mean for the Asia Session?

Financial markets will be closed in China and Japan today due to their respective bank holidays – with a two-day holiday for the Mid-Autumn Festival in China while Japan observes Respect for the Aged Day. Traders can definitely expect much lower trading activity and volume in the first half of today – the DXY gapped lower to open at 101.03 before sliding lower towards 100.90 while spot prices for gold floated around $2,580/oz.

The Dollar Index (DXY)

Key news events today

Empire State Manufacturing Index (12:30 pm GMT)

What can we expect from DXY today?

Manufacturing activity in the state of New York has remained in contraction since last December with the index registering a reading of -4.7 in August as new orders fell modestly while labour market conditions remained weak. September’s estimate of -4.1 points to another month of weak output and another sluggish result could increase the headwinds that are currently faced by the dollar later today.

Central Bank Notes:

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

Next 24 Hours Bias

Medium Bearish

Gold (XAU)

Key news events today

Empire State Manufacturing Index (12:30 pm GMT)

What can we expect from Gold today?

Manufacturing activity in the state of New York has remained in contraction since last December with the index registering a reading of -4.7 in August as new orders fell modestly while labour market conditions remained weak. September’s estimate of -4.1 points to another month of weak output and another sluggish result could increase the headwinds that are currently faced by the dollar later today and potentially lift gold prices higher.

Next 24 Hours Bias

Medium Bullish

The Australian Dollar (AUD)

Key news events today

No major news events.

What can we expect from AUD today?

After closing at 0.6703 last Friday, the Aussie gapped slightly lower to open at 0.6689 this morning before racing higher towards 0.6720. This currency pair was trading around 0.6710 as Asian markets came online – these are the support and resistance levels for today.

Support: 0.6640

Resistance: 0.6750

Central Bank Notes:

• The RBA kept the cash rate target unchanged at 4.35% on 6th August, 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?

After closing at 0.6157 last Friday, the Kiwi gapped slightly lower to open at 0.6154 this morning before rising above 0.6165. This currency pair was trading around 0.6155 at the beginning of the Asia session – these are the support and resistance levels for today.

Support: 0.6125

Resistance: 0.6235

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

Bank Holiday (Respect for the Aged Day)

What can we expect from JPY today?

Demand for the yen has surged over the last couple of weeks as USD/JPY tumbled more than 3.6% over this period as it dived under 142 last Friday to close at 140.85. This currency pair opened to slide lower towards 140.40 as Asian markets came online – these are the support and resistance levels for today.

Support: 139.40

Resistance: 143.70

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

Trade Balance (9:00 am GMT)

What can we expect from EUR today?

The Euro Area has recorded a trade surplus throughout 2024 thus far and another month of higher surplus could function as a potential bullish catalyst for the Euro. This currency pair was trading around 1.1090 at the beginning of the Asia session and could continue to climb higher as the day progresses.

Central Bank Notes:

• The Governing Council today decided to reduce the three key ECB interest rates on 12th September, after holding rates steady in July.
• Accordingly, the interest rate on the main refinancing operations and the interest rates on the marginal lending facility and the deposit facility will be decreased to 3.65%, 3.90% and 3.50% respectively.
• Recent inflation data have come in broadly as expected, and the latest ECB staff projections see headline inflation averaging 2.5% in 2024, 2.2% in 2025 and 1.9% in 2026.
• For core inflation, the projections for 2024 and 2025 have been revised up slightly, as services inflation has been higher than expected. At the same time, staff continue to expect a rapid decline in core inflation, from 2.9% this year to 2.3% in 2025 and 2.0% in 2026.
• ECB staff projections forecast that the economy will grow by 0.8% in 2024, rising to 1.3% in 2025 and 1.5% in 2026 which is a slight downward revision compared with the June projections, mainly owing to a weaker contribution from domestic demand over the next few quarters.
• 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 17 October 2024.

Next 24 Hours Bias

Medium Bullish

The Swiss Franc (CHF)

Key news events today

No major news events.

What can we expect from CHF today?

As demand for the dollar waned last week, USD/CHF fell under 0.8500 to close at 0.8490 last Friday. This currency pair gapped lower to open at 0.8462 before rising higher to trade around 0.8470 as Asian markets came online – these are the support and resistance levels for today.

Support: 0.8400

Resistance: 0.8560

Central Bank Notes:

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

Next 24 Hours Bias

Weak Bullish

The Pound (GBP)

Key news events today

No major news events.

What can we expect from GBP today?

Cable rose above the threshold of 1.3100 to close at 1.3122 last Friday. Bullish momentum remains strong as this currency pair climbed higher towards 1.3150 at the beginning of the Asia session – these are the support and resistance levels for today.

Support: 1.3010

Resistance: 1.3210

Central Bank Notes:

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

Next 24 Hours Bias

Medium Bullish

The Canadian Dollar (CAD)

Key news events today

No major news events.

What can we expect from CAD today?

Despite demand for the dollar waning last week, USD/CAD retraced higher as it hit a high of 1.3623 on Wednesday before closing at 1.3590 on Friday. This currency pair was trading around 1.3575 as Asian markets came online – these are the support and resistance levels for today.

Support: 1.3490

Resistance: 1.3650

Central Bank Notes:

• The Bank of Canada reduced its target for the overnight rate by 25 basis points for the third consecutive meeting to 4.25% while continuing its policy of balance sheet normalization on 4th September.
• Canada’s economy grew 2.1% in the second quarter of 2024, led by government spending and business investment.
• This second quarter GDP growth was slightly stronger than forecast in July, but preliminary indicators suggest that economic activity was soft through June and July.
• As expected, inflation slowed further to 2.5% in July. The Bank’s preferred measures of core inflation averaged around 2.5% and the share of components of the consumer price index growing above 3% is roughly at its historical norm.
• High shelter price inflation is still the biggest contributor to total inflation but is starting to slow while inflation also remains elevated in some other services.
• The labour market continues to slow, with little change in employment in recent months. Wage growth, however, remains elevated relative to productivity.
• The Governing Council is carefully assessing these opposing forces on inflation and monetary policy decisions will be guided by incoming information and our assessment of their implications for the inflation outlook.
• The Bank remains resolute in its commitment to restoring price stability for Canadians.
• Next meeting is on 23 October 2024.

Next 24 Hours Bias

Weak Bearish

Oil

Key news events today

No major news events.

What can we expect from Oil today?

Crude oil prices staged a rebound last Wednesday to buck a four-week decline to close in the green last Friday. WTI oil bounced off its lows at $65.27 before closing at $68.65 per barrel. Overhead pressures for this commodity remain as production supply in the U.S. gulf of Mexico resumed following Hurricane Francine having a minor impact on supply disruptions while industrial output in China – the world’s top oil importer – slowed to a five-month low in August. WTI oil was trading around $68.90 per barrel this morning – these are the support and resistance levels for today.

Support: 65.70

Resistance: 71.80

Next 24 Hours Bias

Weak Bearish

The post IC Markets Asia Fundamental Forecast | 16 September 2024 first appeared on IC Markets | Official Blog.

Gold keeps on rising, no end in sight – especially with ongoing central bank rate cuts.

I posted this earlier, with other factors supportive for the metal:

• UBS says gold is its “Most Preferred” in its global asset allocation

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

• UBS says gold is its “Most Preferred” in its global asset allocation
• WSJ opinion piece argues the Fed should cut by a 50bp, not 25
• BoA analysts are not expecting much clarity from the FOMC this week
• ICYMI – China quietly slipped out very weak data over the weekend
• Reminder – there is no reference rate setting for the yuan today (CNY) – China on holidays
• UBS on the data ahead of the FOMC meeting – what could trigger a 50bp interest rate cut
• UK house price indicator has its biggest September m/m rise since 2016
• New Zealand Services PMI August 2024: 45.5 (prior 45.2)
• RBNZ says material monetary policy surprises are relatively rare.
• Trump complains “What’s going on?” when his stock trading is halted
• Trade ideas thread – Monday, 16 September, insightful charts, technical analysis, ideas
• Chinese and Japanese markets are closed today, Monday, September 16, 2024, for holidays
• Trading CME equity index futures? Don’t forget the rollover right about now: December 2024
• Weekend – Bank of Canada governor raises prospect of faster rate cuts, FT reports
• The FBI are treating the shooting incident as an assassination attempt on Trump
• Trump on the Sunday shooting, says he is safe and well, will never surrender
• Trump shooting (he’s unharmed) – Checking indicative FX rates – 16 September 2024
• More on the Trump shooting (Trump is unharmed) – Secret Service returned fire
• Gunshots fired “in the vicinity” of Trump – Trump is unharmed
• Newsquawk Week Ahead: FOMC, BoJ, BoE, US & UK Retail Sales, UK, Canada & Japan CPI
• Weekly Market Outlook (16-20 September)
• China August: Retail sales +2.1% y/y (expected +2.5) Industrial production +4.5% y/y (4.8)

There
was ongoing chatter about the likelihood of a 50bp interest rate cut
from the US Federal Reserve’s Federal Open Market Committee (FOMC)
on September 18. This weighed on the US dollar during the session
here. EUR, GBP and JPY all rose against the USD, albeit in limited
ranges.

Activity
was limited during the session with China, Japan, and South Korea all
closed for holidays. China will remain closed tomorrow, Tuesday.

–

That
summary doesn’t capture a flow of news and data from the weekend
and into the session. The big news was in US politics, where shots
were fired ‘in the vicinity’ of ex-President Trump. It appears
that Trump’s protective Secret Service detail engaged a suspected
shooter, firing shots. Trump was a good distance away and was
completely unharmed, thankfully. The FBI is treating the event as an
attempted assassination attempt on Trump, the second in 60 days.

Also
of note, on Saturday China’s National Bureau of Statistics (NBS)
released very poor data for economic activity in August, and for home
prices slumping at a more rapid pace in August than in July (July
stabilisation measures appear to have dissipated). On the economic
data for August (more in the points above):

• retail
  sales were very disappointing (consumption
  remains weak)
• industrial
  output growth was
  the slowest
  since March
  (domestic demand remains weak)
• youth
  unemployment remained very high, above 17%

As
is usually the case the weak data brought calls for increased
stimulus. If the pattern of the past couple of years persists any
further stimulus will be piecemeal only, though.

On
the central bank front, Bank of Canada Governor Macklem was
interviewed by the Financial Times. He raised the prospect of quicker
cuts ahead, citing the labour market pointing towards downside risks.

USD/JPY remained heavy:

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

UBS analysts have reaffirm their bullish outlook on gold, pointing to its value as a hedge against macroeconomic and geopolitical uncertainties:

• maintains a target price of $2,700/oz by mid-2025

In brief from the UBS report:

• Gold has jumped by 23% in 2024, to its highest ever price, due to lower US yield expectations and diversification out of US dollars by central banks.

• Gold has once again outperformed equities during times of high volatility, reaffirming this historical tendency

• has been supported by the European Central Bank’s rate cuts, although trimmed expectations of the scale of Fed cuts has been been a bit of a counter to this

• support also from flows into physically-backed gold ETFs, August marked the fourth consecutive month of inflows

• safe-haven demand

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

US Stocks Surge Higher Over the Weekend – Dow up 0.7%

US stock markets pushed higher again on Friday as expectations for a 50-basis-point cut from the Fed this week increased. The Dow rose 0.72%, the S&P 500 climbed 0.54%, and the tech-heavy Nasdaq jumped another 0.65%. The S&P is now just 1% off all-time highs heading into the crucial week ahead. US Treasury yields pulled back in line with these expectations, with the 2-year dropping 5.9 basis points to 3.580% and the benchmark 10-year falling 2.1 basis points to 3.659%. The dollar drifted lower, with the index now sitting near a 9-month low as the fresh week approaches. Oil prices fell in late trading as US output in the Gulf of Mexico resumed following Hurricane Francine, with Brent down 0.5% to $71.61 a barrel and WTI off 0.5% to $68.65 a barrel. Gold stood out again, powering to fresh record highs for the second day in a row, adding another 0.8% to close at $2,576 after hitting a high of $2,585.99.

Fed Rate Cut Expectations Surge

Futures markets are now pricing in a 47% chance of a larger cut from the FOMC this week, up significantly from the 28% chance priced in on Thursday. This move was supported by hawkish comments from former New York Fed President Bill Dudley on Friday, though not by recent data updates. Some investors are questioning the speed and size of market adjustments, as both headline CPI and PPI numbers came in slightly higher than expected this week. With US stock indices still powering ahead, and the S&P sitting just 1% off all-time highs, there is concern the market may have overreacted. If expectations remain near these levels heading into Wednesday’s Fed meeting, a 25-basis-point cut could lead to significant market corrections.

Calm Before the Market Storm

The macroeconomic calendar looks sparse tomorrow, ahead of what could be one of the most pivotal weeks in the trading year. Traders are expecting positive moves at the Asian open on Monday, following another strong day on Wall Street on Friday. Liquidity could be limited early in the day, as both China and Japan enjoy long weekends. While there is little of note on the calendar during the Asian and European sessions, traders are anticipating increased volatility due to the major updates scheduled for later in the week.

The New York open will see the release of the Empire State Manufacturing Index, with the market pricing in a 4.1 decrease. However, expect more volatility from any updates on Fed rate cut expectations.

The post General Market Analysis – 16/09/24 first appeared on IC Markets | Official Blog.

Data from China for August economic activity was terrible.

Weak consumption was reflected in very slow retail sales growth. A previous bright spot, industrial production, decelerated also.

Youth unemployment remained wedged at 17.1%

Home prices slumped at their sharpest rate in a year.

My post from the weekend included bizarrely upbeat comments from China’s National Bureau of Statistics (NBS):

• China August: Retail sales +2.1% y/y (expected +2.5) Industrial production +4.5% y/y (4.8)

It looks like Temu has seen a rush on these. Not surprising after that data.

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

Data via property
website Rightmove in the UK

September average asking prices for homes increased by
0.8%, double the average for the time of year in the series and the biggest for the month since 2016.

• -1.5 August

For the y/y +1.2%

• prior +0.8%

Rightmove cited the market getting a boost from a new government and
the first rate cut from the Bank of England since 2020.

• “still uncertainties ahead,
  including the timing of a second Bank Rate cut, and which
  segments of the market could be affected by announcements in
  October’s Autumn Statement”

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