IC Markets Europe Fundamental Forecast | 12 September 2024

What happened in the Asia session?

With no major news events this morning, it was a relatively quiet session as the dollar index (DXY) pulled back towards 101.70 which provided lift for gold – spot prices climbed above $2,515/oz by Asia midday. Meanwhile, crude oil prices remain supported due

 to concerns of Hurricane Francine impacting production output as it makes landfall after passing through the Gulf of Mexico – WTI oil was seen rising towards $68 per barrel once more.

What does it mean for the Europe & US sessions?

After keeping interest rates on hold in July, the ECB looks set to make its second rate cut of this year. Following a reduction of 25 basis points in June, this central bank is now anticipated to make a whopping 60 basis points cut today to bring the main refinancing rate down from 4.25% to 3.65% while President Christine Lagarde will deliver her press conference half an hour after the statement drops. Should she communicate further dovish rhetoric during this media event, the Euro will likely face significant overhead pressures.

The Dollar Index (DXY)

Key news events today

PPI (12:30 pm GMT)

Unemployment Claims (12:30 pm GMT)

What can we expect from DXY today?

The Producer Price Index (PPI) – which measures wholesale inflation – moderated lower in July as headline and core PPI eased to 2.2% and 2.4% respectively on an annualised basis. With crude oil prices facing strong overhead pressures and manufacturing activity remaining in contraction over the past few months, prices could continue to ease further in August – a result that could function as an additional bearish catalyst for the dollar.

Meanwhile, unemployment claims have stabilized around 225K in recent weeks after trending higher from mid-May to end-July. This week’s forecast of 227K points to a continuation of steady claims and a lower-than-anticipated figure could provide lift for the dollar.

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 Bullish

Gold (XAU)

Key news events today

PPI (12:30 pm GMT)

Unemployment Claims (12:30 pm GMT)

What can we expect from Gold today?

The Producer Price Index (PPI) – which measures wholesale inflation – moderated lower in July as headline and core PPI eased to 2.2% and 2.4% respectively on an annualised basis. With crude oil prices facing strong overhead pressures and manufacturing activity remaining in contraction over the past few months, prices could continue to ease further in August – a result that could function as an additional bearish catalyst for the dollar.

Meanwhile, unemployment claims have stabilized around 225K in recent weeks after trending higher from mid-May to end-July. This week’s forecast of 227K points to a continuation of steady claims and a lower-than-anticipated figure could provide lift for the dollar. Whatever the outcome, it is bound to be a volatile period for gold prices.

Next 24 Hours Bias

Weak Bearish

The Australian Dollar (AUD)

Key news events today

No major news events.

What can we expect from AUD today?

Higher-than-anticipated core CPI readings out of the U.S. triggered strong demand for the greenback causing the Aussie to fall under 0.6650 overnight. This currency pair stabilized around this level as Asian markets came online and was retracing higher towards 0.6700 – these are the support and resistance levels for today.

Support: 0.6580

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

Weak Bearish

The Kiwi Dollar (NZD)

Key news events today

No major news events.

What can we expect from NZD today?

The Kiwi fell sharply towards the threshold of 0.6100 on the back of stronger-than-expected U.S. core CPI readings overnight. This currency pair was trading around 0.6130 at the beginning of the Asia session – these are the support and resistance levels for today.

Support: 0.6080

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 Bearish

The Japanese Yen (JPY)

Key news events today

No major news events.

What can we expect from JPY today?

Hawkish comments by Bank of Japan (BoJ) board member Junko Nakagawa triggered huge demand for the yen causing all the yen crosses to nosedive yesterday with USD/JPY tumbling as low a s 140.67. However, this currency pair managed to find a floor around the 141-level before higher-than-expected core CPI data out of the U.S. triggered robust demand for the dollar to push USD/JPY higher. This currency pair was trading around 142.50 as Asian markets came online – these are the support and resistance levels for today.

Support: 140.65

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 Bullish

The Euro (EUR)

Key news events today

ECB Monetary Policy Statement (12:15 pm GMT)

ECB Press Conference (12:45 pm GMT)

What can we expect from EUR today?

After keeping interest rates on hold in July, the ECB looks set to make its second rate cut of this year. Following a reduction of 25 basis points in June, this central bank is now anticipated to make a whopping 60 basis points cut today to bring the main refinancing rate down from 4.25% to 3.65% while President Christine Lagarde will deliver her press conference half an hour after the statement drops. Should she communicate further dovish rhetoric during this media event, the Euro will likely face significant overhead pressures.

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 Bearish

The Swiss Franc (CHF)

Key news events today

SNB Chairman Jordan Speaks (2:25 pm GMT)

What can we expect from CHF today?

Swiss National Bank (SNB) Chairman Thomas Jordan will be speaking at Bankers’ Day 2024 organized by the Swiss Bankers Association in Geneva where audience questions are expected. With the next monetary policy meeting taking place in two weeks, Chairman Jordan could drop further clues on the direction of future monetary policy action which could potentially put pressure on the franc later today.

Central Bank Notes:

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

Next 24 Hours Bias

Medium Bullish

The Pound (GBP)

Key news events today

No major news events.

What can we expect from GBP today?

Cable tumbled overnight on the back of stronger-than-expected U.S. core CPI readings, reversing from 1.3090 to drop all the way down to the threshold of 1.3000. This currency pair stabilized around this threshold to retrace higher towards 1.3050 at the beginning of the Asia session – these are the support and resistance levels for today.

Support: 1.2950

Resistance: 1.3100

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 Bearish

The Canadian Dollar (CAD)

Key news events today

No major news events.

What can we expect from CAD today?

Higher-than-anticipated core CPI readings out of the U.S. triggered strong demand for the greenback causing USD/CAD to hit an overnight high of 1.3623 but the bullish move was short-lived. This currency pair pulled back towards 1.3560 as Asian markets came online and could slide lower should crude oil prices remain lifted – 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 Bullish

Oil

Key news events today

No major news events.

What can we expect from Oil today?

After drawing down for three consecutive weeks, the EIA crude oil inventories posted a gain of 0.83M barrels of crude which was marginally lower than the forecast of a 0.90M. However, crude oil prices spiked overnight as Hurricane Francine ripped through key oil-producing zones in the U.S. Gulf of Mexico with WTI oil jumping more than 2.3% – the largest daily gain since 26th August – and almost hit the $68-mark. This benchmark pulled back towards $67 per barrel at the beginning of this session but tailwinds remain intact for now and should keep prices supported today.

Next 24 Hours Bias

Weak Bullish

The post IC Markets Europe Fundamental Forecast | 12 September 2024 first appeared on IC Markets | Official Blog.

The dollar held its ground after the US CPI report yesterday here. It was a bit of a mixed one with some emphasis on the monthly core rising. But again, it just serves to rebuff expectations for a 25 bps rate cut next week. That rather than a 50 bps move and market players had to tone down their expectations on that. The odds of a 50 bps rate cut next week plunged after the data, now down to ~13%.

As mentioned, the dollar was a beneficiary as bond yields also bounced. USD/JPY in particular caught a modest bid and is pushing back up now to around 142.70 on the day. That comes as 10-year Treasury yields nudge back up to 3.66% from around 3.61% yesterday. But perhaps more importantly, 2-year yields held the line here.

The report yesterday is a good reminder that while inflation has died down quite a bit, it’s still a process in the making. It serves as a starting point for the Fed to move by 25 bps this month. And it’s also a reminder that market pricing can get carried away at times. Think back to the six rate cuts priced in for 2024 in December last year.

Coming into today, the immediate focus and attention now turns towards the ECB. However, it’s not one to really surprise considering the circumstances leading up to the policy decision. For some background: The ECB meets later this week, what to expect?

A 25 bps rate cut is all but confirmed and if Lagarde plays it right, there shouldn’t be too much volatility in the aftermath.

Instead, US data later on in the day might offer more for markets. We will have the weekly initial jobless claims and then the PPI data.

The reaction yesterday is helping to keep things in check on the week. Although, stocks look to be poised to try and pull higher again thanks to Nvidia’s nudge up yesterday.

0700 GMT – Spain August final CPI figures1215 GMT – ECB announces its September monetary policy decision1245 GMT – ECB president Lagarde press conference

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.

Major US stock indices had a snapback day, and what a snapback day it was.

• The Dow industrial average was lower by 743.89 points, but is closing up 124.75 points or 0.31% at 40861.71. At one point today all the Dow stocks were trading lower.
• The S&P was down -88.56 points but is closing higher by 58.60 points or 1.07% at 5554.12
• The NASDAQ index was down -238.04 points, and is closing up 369.65 points or 2.17% at 17395.53.

The Russell 2000 is closing up 6.41 points or 0.31% at 2103.84, but was down over -38.75 points at session lows.

Nvidia moved sharply higher after CEO Jensen Huang spoke positively at a Communicopia conference today. It’s shares are closing up $8.68 or 8.03% at 116.78.

SMCI is taking off it’s recent problems and rose $32.44 or 7.86% to $445.16

IBM hit a record high for the first time in a decade up 2.13% on the day at $209.

• Broadcom rose $10 or 6.75% to $158.21
• Micron rose $3.80 or 4.38% to $90.65.
• AMD rose 7 dollars or 4.90% to $149.84
• Intel is up $0.68 or 3.56% at $19.66
• Arm Holding is closing up $13.10 or 10.30% at $140.32.

A solid snapback day for the major stocks

This article was written by Greg Michalowski at www.forexlive.com.

This is different from what majority of economists are expecting, that to be just one more rate cut this year. Goldman Sachs now sees back-to-back moves for the BOE in November and then December. The firm had previously forecast one more rate cut in the final quarter for this year.

I’m waiting to see if there are more details on their outlook further out. If there is, I’ll update in the post later.

But for added context, traders are pricing in ~49 bps worth of rate cuts for the remainder of the year currently. But for the meeting next week, the odds are showing ~78% of there being no change.

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

The data shows that real median rental costs increased by 3.8% last year while real median home values rose by 1.8%, via data released as part of the American Community Survey. Meanwhile, the Census Bureau data itself shows that renter households spent 31.0% of their income on housing costs at the median last year. And that is unchanged from 2022.

The latter indicates that either renter household incomes were able to keep pace with the rent increase and/or higher-income households are the ones starting to become renters.

That said, the data finds that the split is very much varied by race. Within Black or African American renters, 56.2% paid more than 30% of their income on housing costs. That compares to 46.7% of white renter households. Meanwhile, Asian households were the least cost-burdened according to the data.

In tying this back to markets, the backdrop going into last year was that the Fed had raised interest rates and that sidelined home buyers. In turn, that is resulting in more people renting overall. And with inflation higher at the time, shelter costs also increased. And that particular line in the US CPI report has been a key detail to watch, at least up until recently.

But with the data above, it does suggest that perhaps households are able to keep pace with that at least.

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

DXY (US Dollar Index):

Potential Direction: Bearish
Overall momentum of the chart: Bearish

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

Pivot: 102.34
Supporting reasons: Pullback support, aligned with the 100% Fibonacci Projection and 127.20% Fibonacci Extension, indicating a level of Fibonacci confluence where price might face resistance.

1st support: 101.36
Supporting reasons: An overlap support, suggesting a level where price may find strong support and prevent further declines.

1st resistance: 102.93
Supporting reasons: Pullback resistance, indicating a level where price might encounter selling pressure during an upward move.

EUR/USD:

Potential Direction: Bullish
Overall momentum of the chart: Bullish

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

Pivot: 1.1006
Supporting reasons: An overlap support, suggesting a key level where price might find support and bounce back.

1st support: 1.0943
Supporting reasons: An overlap support, aligned with the 61.80% Fibonacci Retracement and 161.80% Fibonacci Extension, indicating Fibonacci confluence where price might find strong support.

1st resistance: 1.1111

Supporting reasons: Pullback resistance, indicating a potential level where price may face selling pressure during an upward move.

EUR/JPY:

Potential Direction: Bearish
Overall momentum of the chart: Bearish

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

Pivot: 157.55
Supporting reasons: Pullback resistance, indicating a key level where price might face selling pressure.

1st support: 155.24
Supporting reasons: Swing low support, aligned with the 61.80% Fibonacci Projection, suggesting a potential level where price may find support and prevent further declines.

1st resistance: 160.26
Supporting reasons: Pullback resistance, indicating a level where price might encounter resistance during an upward move.

EUR/GBP:

Potential Direction: Bearish
Overall momentum of the chart: Bearish

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

Pivot: 0.8453
Supporting reasons: Identified as pullback support, reinforced by the 23.6% Fibonacci Retracement, indicating a potential area where the price might stall before continuing downward.

1st support: 0.8409
Supporting reasons: Marked as a multi swing low support, suggesting a significant area where previous declines have found a buying interest.

1st resistance: 0.8485

Supporting reasons: Recognized as pullback resistance, supported by the 38.2% Fibonacci Retracement, indicating a potential level where the price may face selling pressure if it retraces upward.

GBP/USD:

Instrument: GBP/USD
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 reaction off pivot and drop to 1st support.

Pivot: 1.3060
Supporting reasons: Pullback resistance, indicating a level where price may face selling pressure during a rebound.

1st support: 1.2942
Supporting reasons: An overlap support, suggesting a level where price could find buying interest and potentially prevent further declines.

1st resistance: 1.3115
Supporting reasons: Swing high resistance, indicating a level where price might encounter resistance during an upward movement.

GBP/JPY:

Potential Direction: Bearish
Overall momentum of the chart: Bearish
Price could potentially make a bearish reaction off pivot and drop to 1st support.

Pivot: 187.95

Supporting reasons: an overlap resistance, aligned with the 23.60% Fibonacci Retracement, indicating a key level where price might face selling pressure.

1st support: 183.11
Supporting reasons: swing low support, indicating a potential level where price might find buying interest to prevent further declines.

1st resistance: 189.77

Supporting reasons: An overlap resistance, aligned with the 50% Fibonacci Retracement, suggesting a potential area where price may face resistance during an upward move.

USD/CHF:

Instrument: USD/CHF
Potential Direction: Bullish
Overall momentum of the chart: Bullish

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

Pivot: 0.8497
Supporting reasons: An overlap support, suggesting a key level where price has previously found buying interest and may offer support again.

1st support: 0.8375
Supporting reasons: Swing low support, indicating a level where price could find buying interest to prevent further declines.

1st resistance: 0.8620
Supporting reasons: Pullback resistance, aligned with the 61.80% Fibonacci Retracement, suggesting a potential area where price might face selling pressure during an upward move.

USD/JPY:

Potential Direction: Bearish
Overall momentum of the chart: Bearish

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

Pivot: 143.66
Supporting reasons: An overlap resistance, aligned with the 50% Fibonacci Retracement, indicating a level where price might face resistance and potentially reverse.

1st support: 140.65
Supporting reasons: Aligned with the 161.80% Fibonacci Extension, suggesting a potential level where price might find strong support.

1st resistance: 145.46
Supporting reasons: An overlap resistance, aligned with the50% Fibonacci Retracement, indicating a potential level where price may encounter resistance during an upward move.

USD/CAD:

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: 1.3616
Supporting reasons: Identified as an overlap resistance that aligns close to a 38.2% Fibonacci retracement, suggesting a potential area where selling pressures could intensify.

1st support: 1.3493
Supporting reasons: Identified as a swing-low support, indicating a key level where price has found support recently.

1st resistance: 1.3699
Supporting reasons: Identified as an overlap resistance that aligns close to a 50% Fibonacci retracement, indicating a potential area that could halt any further upward movement.

AUD/USD:

Potential Direction: Bullish
Overall momentum of the chart: Neutral

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

Pivot: 0.6640
Supporting reasons: Identified as an overlap support that aligns with a 38.2% Fibonacci retracement, suggesting a potential level where buying interests could pick up to stage a minor rebound.

1st support: 0.6582
Supporting reasons: Identified as a pullback support that aligns close to a 50% Fibonacci retracement, indicating a key level where price has found support in the past.

1st resistance: 0.6752
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.

NZD/USD

Potential Direction: Bullish
Overall momentum of the chart: Neutral

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

Pivot: 0.6124
Supporting reasons: Identified as an overlap support that aligns with a 38.2% Fibonacci retracement, suggesting a potential level where buying interests could pick up to stage a minor rebound.

1st support: 0.6077
Supporting reasons: Identified as an overlap support that aligns with a 50% Fibonacci retracement, indicating a potential level where price has found support in the past.

1st resistance: 0.6234
Supporting reasons: Identified as an overlap resistance that aligns close to 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 reverse off this level to pull back towards the 1st support.

Pivot: 41,056.42
Supporting reasons: Identified as a pullback resistance that aligns close to a 61.8% Fibonacci retracement, suggesting a potential level where selling pressures could intensify.

1st support: 40,202.56
Supporting reasons: Identified as a multi-swing-low support, indicating a key level where price has found support in the past.

1st resistance: 41,604.84

Supporting reasons: Identified as a swing-high resistance that aligns close to the all-time high, 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 reverse off this level to pull back towards the 1st support.

Pivot: 18,546.80
Supporting reasons: Identified as an overlap resistance that aligns close to a 38.2% Fibonacci retracement, suggesting a potential level where selling pressures could intensify.

1st support: 18,247.90
Supporting reasons: Identified as a multi-swing-low support that aligns with a 38.2% Fibonacci retracement, indicating a key level where price has found support recently.

1st resistance: 18,971.60
Supporting reasons: Identified as a swing-high resistance that aligns close to the all-time high, indicating a potential area that could halt any further upward movement.

US500 (S&P 500): 

Potential Direction: Bullish
Overall momentum of the chart: Neutral

Price is rising towards the pivot and could potentially make a bullish break above this level to rise towards the 1st resistance.

Pivot: 5,561.63
Supporting reasons: Identified as a potential breakout level where the bullish momentum could carry price higher.

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

1st resistance: 5,669.89
Supporting reasons: Identified as a multi-swing-high resistance that aligns close to the all-time high, indicating a potential area that could halt any 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: 60,783.25
Supporting reasons: Identified as a swing-high resistance that aligns close to a 61.8% Fibonacci retracement, suggesting a potential level where selling pressures could intensify.

1st support: 55,534.89
Supporting reasons: Identified as a pullback support, indicating a key level where price has found strong support recently.

1st resistance: 64,376.72
Supporting reasons: Identified as a swing-high resistance, indicating a potential area that could halt any 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: 2,454.11
Supporting reasons: Identified as a swing-high resistance that aligns close to a 50% Fibonacci retracement, suggesting a potential level where selling pressures could intensify.

1st support: 2,290.88
Supporting reasons: Identified as a multi-swing-low support, indicating a key level where price has found strong support recently.

1st resistance: 2,575.58
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.

WTI/USD (Oil):

Potential Direction: Bearish
Overall momentum of the chart: Bearish

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

Pivot: 68.13
Supporting reasons: Identified as an overlap resistance, suggesting a potential level where selling pressures could intensify. The presence of the bearish channel and the bearish Ichimoku Cloud add further significance to the strength of this downtrend.

1st support: 66.04
Supporting reasons: Identified as a swing-low support, indicating a key level where price has found strong support recently.

1st resistance: 70.62
Supporting reasons: Identified as a pullback resistance that aligns with a 38.2% Fibonacci retracement, indicating a potential area that could halt any further upward movement.

XAU/USD (GOLD):

Potential Direction: Bearish
Overall momentum of the chart: Bearish

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

Pivot: 2526.68
Supporting reasons: Multi-swing high resistance, suggesting a key level where price might face selling pressure.

1st support: 2486.64
Supporting reasons: Swing low support, indicating a level where price might find buying interest to prevent further declines.

1st resistance: 2540.67
Supporting reasons: Aligned with the 127.20% Fibonacci Extension, suggesting a potential level where price may encounter resistance during an upward move.

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The post Thursday 12th September 2024: Technical Outlook and Review first appeared on IC Markets | Official Blog.

IC Markets Asia Fundamental Forecast | 12 September 2024

What happened in the U.S. session?

Although headline CPI matched its respective estimates on a monthly and annualised basis, the monthly core reading rose higher than originally anticipated in August. Headline CPI increased by 0.2% MoM while easing from 2.9% to 2.5% YoY but the core rose 0.3% MoM which was higher than the forecast of a 0.2% gain. On an annualised basis, the core reading remained unchanged from the previous month as it rose 3.2% YoY to match its estimate.

Although inflationary pressures continue to dissipate at a headline level, the core readings are highlighting sticky or stubborn prices. Traders reacted to this latest consumer inflation print with strong bids for the dollar causing the dollar index (DXY) to surge from 101.44 to as high as 101.82 before retreating slightly off this level while spot prices for gold tumbled towards the $2,500/oz region overnight.

What does it mean for the Asia Session?

As Asian markets digest the latest CPI figures, the DXY once again jumped above 101.80 while gold stabilized around $2,510/oz. Meanwhile, crude oil prices spiked overnight as Hurricane Francine ripped through key oil-producing zones in the U.S. Gulf of Mexico with WTI oil jumping more than 2.3% – the largest daily gain since 26th August – and almost hit the $68-mark. This benchmark pulled back towards $67 per barrel at the beginning of this session but tailwinds remain intact for now and should keep prices supported today.

The Dollar Index (DXY)

Key news events today

PPI (12:30 pm GMT)

Unemployment Claims (12:30 pm GMT)

What can we expect from DXY today?

The Producer Price Index (PPI) – which measures wholesale inflation – moderated lower in July as headline and core PPI eased to 2.2% and 2.4% respectively on an annualised basis. With crude oil prices facing strong overhead pressures and manufacturing activity remaining in contraction over the past few months, prices could continue to ease further in August – a result that could function as an additional bearish catalyst for the dollar.

Meanwhile, unemployment claims have stabilized around 225K in recent weeks after trending higher from mid-May to end-July. This week’s forecast of 227K points to a continuation of steady claims and a lower-than-anticipated figure could provide lift for the dollar.

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 Bullish

Gold (XAU)

Key news events today

PPI (12:30 pm GMT)

Unemployment Claims (12:30 pm GMT)

What can we expect from Gold today?

The Producer Price Index (PPI) – which measures wholesale inflation – moderated lower in July as headline and core PPI eased to 2.2% and 2.4% respectively on an annualised basis. With crude oil prices facing strong overhead pressures and manufacturing activity remaining in contraction over the past few months, prices could continue to ease further in August – a result that could function as an additional bearish catalyst for the dollar.

Meanwhile, unemployment claims have stabilized around 225K in recent weeks after trending higher from mid-May to end-July. This week’s forecast of 227K points to a continuation of steady claims and a lower-than-anticipated figure could provide lift for the dollar. Whatever the outcome, it is bound to be a volatile period for gold prices.

Next 24 Hours Bias

Weak Bearish

The Australian Dollar (AUD)

Key news events today

No major news events.

What can we expect from AUD today?

Higher-than-anticipated core CPI readings out of the U.S. triggered strong demand for the greenback causing the Aussie to fall under 0.6650 overnight. This currency pair stabilized around this level as Asian markets came online and was retracing higher towards 0.6700 – these are the support and resistance levels for today.

Support: 0.6580

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

Weak Bearish

The Kiwi Dollar (NZD)

Key news events today

No major news events.

What can we expect from NZD today?

The Kiwi fell sharply towards the threshold of 0.6100 on the back of stronger-than-expected U.S. core CPI readings overnight. This currency pair was trading around 0.6130 at the beginning of the Asia session – these are the support and resistance levels for today.

Support: 0.6080

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 Bearish

The Japanese Yen (JPY)

Key news events today

No major news events.

What can we expect from JPY today?

Hawkish comments by Bank of Japan (BoJ) board member Junko Nakagawa triggered huge demand for the yen causing all the yen crosses to nosedive yesterday with USD/JPY tumbling as low a s 140.67. However, this currency pair managed to find a floor around the 141-level before higher-than-expected core CPI data out of the U.S. triggered robust demand for the dollar to push USD/JPY higher. This currency pair was trading around 142.50 as Asian markets came online – these are the support and resistance levels for today.

Support: 140.65

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 Bullish

The Euro (EUR)

Key news events today

ECB Monetary Policy Statement (12:15 pm GMT)

ECB Press Conference (12:45 pm GMT)

What can we expect from EUR today?

After keeping interest rates on hold in July, the ECB looks set to make its second rate cut of this year. Following a reduction of 25 basis points in June, this central bank is now anticipated to make a whopping 60 basis points cut today to bring the main refinancing rate down from 4.25% to 3.65% while President Christine Lagarde will deliver her press conference half an hour after the statement drops. Should she communicate further dovish rhetoric during this media event, the Euro will likely face significant overhead pressures.

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 Bearish

The Swiss Franc (CHF)

Key news events today

SNB Chairman Jordan Speaks (2:25 pm GMT)

What can we expect from CHF today?

Swiss National Bank (SNB) Chairman Thomas Jordan will be speaking at Bankers’ Day 2024 organized by the Swiss Bankers Association in Geneva where audience questions are expected. With the next monetary policy meeting taking place in two weeks, Chairman Jordan could drop further clues on the direction of future monetary policy action which could potentially put pressure on the franc later today.

Central Bank Notes:

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

Next 24 Hours Bias

Medium Bullish

The Pound (GBP)

Key news events today

No major news events.

What can we expect from GBP today?

Cable tumbled overnight on the back of stronger-than-expected U.S. core CPI readings, reversing from 1.3090 to drop all the way down to the threshold of 1.3000. This currency pair stabilized around this threshold to retrace higher towards 1.3050 at the beginning of the Asia session – these are the support and resistance levels for today.

Support: 1.2950

Resistance: 1.3100

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 Bearish

The Canadian Dollar (CAD)

Key news events today

No major news events.

What can we expect from CAD today?

Higher-than-anticipated core CPI readings out of the U.S. triggered strong demand for the greenback causing USD/CAD to hit an overnight high of 1.3623 but the bullish move was short-lived. This currency pair pulled back towards 1.3560 as Asian markets came online and could slide lower should crude oil prices remain lifted – 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 Bullish

Oil

Key news events today

No major news events.

What can we expect from Oil today?

After drawing down for three consecutive weeks, the EIA crude oil inventories posted a gain of 0.83M barrels of crude which was marginally lower than the forecast of a 0.90M. However, crude oil prices spiked overnight as Hurricane Francine ripped through key oil-producing zones in the U.S. Gulf of Mexico with WTI oil jumping more than 2.3% – the largest daily gain since 26th August – and almost hit the $68-mark. This benchmark pulled back towards $67 per barrel at the beginning of this session but tailwinds remain intact for now and should keep prices supported today.

Next 24 Hours Bias

Weak Bullish

The post IC Markets Asia Fundamental Forecast | 12 September 2024 first appeared on IC Markets | Official Blog.

• US firms optimism in China has fallen to its lowest level ever
• JPMorgan still expects a 50bp Federal Reserve interest rate cut next week
• Japan wholesale inflation dipped due to lower commodity prices and a stronger yen – recap
• 250bp of “shock and awe” rate cuts from the US Federal Reserve does not seem warranted
• Australia inflation expectations are slowly, slowly chipping lower, still way above target
• PBOC sets USD/ CNY mid-point today at 7.1214 (vs. estimate at 7.1219)
• BOJ’s Tamura says expects a gradual path for interest rate hikes
• Citi moves underweight equities
• Former Reserve Bank of Australia Governor Fraser says the RBA should cut its cash rate
• Japan Business Survey Index for Q3 2024 4.5% (prior -1.0%)
• Japan PPI (August) -0.2% m/m (expected +0.0%) and +2.5% y/y (expected +2.8%)
• UK pay awards drop to lowest level in two years
• Housing market in UK shows signs of recovery – RICS house price best since January 2020
• Reuters Japan Corporate Survey – firms wary of 50bp interest rate rise
• New Zealand retail sales data (August) +0.2% m/m and -2.9% y/y
• New Zealand data – Food Price Index (August) +0.2% m/m (prior +0.4%)
• Atlanta Fed President Bostic violated Federal Reserve trading rules
• North Korea fires ballistic missile toward East Sea (Sea of Japan)
• Chinese car industry is still struggling, car sales -5% y/y in August (prior -5.2%)
• Nomura forecasts a 25bp cut by the European Central Bank today, Thursday, September 12
• Citi are forecasting two 50bp interest rate cuts from the US Federal Reserve
• Forexlive Americas FX news wrap 11 Sep: US CPI data is mixed with core rising
• ICYMI – Goldman Sachs CEO Solomon said still a chance the Federal Reserve cut by 50bp
• Trade ideas thread – Thursday, 12 September, insightful charts, technical analysis, ideas

Bank
of Japan policy board member Naoki Tamura spoke
today, delivering a hawkish (for the BoJ) outlook. Tamura said
Japan’s neutral rate is likely to be around 1% at the minimum but
softened that by saying the path there would be a long one. There
is more in the linked post above.

USD/JPY
dropped from highs above 142.90 to under 142.25 (briefly). As I
update its sitting just below 142.50.

Also
from Japan today were data for August PPI. These showed lower
inflation pressures (see bullets above), slowing for the first time in eight months.

News
flow was very light otherwise while the data calendar held lower tier
releases only.

EUR/USD
tracked sideways ahead of today’s European Central Bank
meeting. There is a preview above.

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

This was out earlier, posting here for interest.

Political tensions, China’s slowing economic growth, poor domestic demand, deflation, and fierce domestic competition are the backdrop to the results of this survey,

• Only 47% of US firms optimistic on 5-year outlook
• US firms profitable in China down to 66% in 2023
• Geopolitical tension rated as biggest challenge

Reuters have more info if you are interested.

—

On the flip side, some analysts are seeing the economy lifting itself off the canvas:

• Goldman Sachs on 3 reasons China’s economy is going to turn better
• China to remove restrictions on foreign investment in the manufacturing sector

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

Japanese ‘wholesale’ inflation levels eased back a little in August:

• Japan PPI (August) -0.2% m/m (expected +0.0%) and +2.5% y/y (expected +2.8%)

The main drivers were lower commodity prices, falling utility prices, and the appreciation of the Japanese yen.

Details showed that import prices dropped significantly

• falling to 2.6% YoY from 10.8% in July

While consumer price inflation is expected to temporarily rise to 3.0% YoY in August (the data is due late next week), it is projected to decline again from September, aided by the restart of Japan’s energy subsidy program.

The slowdown in wholesale prices gives, at the amrgin, the Bank of Japan (BoJ) time to assess financial market conditions, but if economic growth, particularly consumption, improves, the BoJ may resume rate hikes as soon as December. That’s what two BoJ officials have reiterated yesterday and today:

• ForexLive Asia-Pacific FX news wrap: Yen hit an eight month high on BOJ comments
• BOJ’s Tamura says expects a gradual path for interest rate hikes

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

Inflation Numbers Higher than Expected – Nasdaq Jumps 2%

Key US inflation data was slightly higher than anticipated overnight, increasing expectations that the Federal Reserve will raise rates by 25 basis points in a week’s time. US stock indices initially dipped following the release but recovered strongly in the afternoon, led by tech stocks. The Dow closed up 0.31%, while the S&P 500 and Nasdaq posted stronger gains, closing up 1.07% and 2.17% respectively. US Treasury yields rose, though not as sharply as some had expected. The 2-year yield gained 3 basis points to 3.645%, while the 10-year added 1 basis point to 3.655%. Oil prices rebounded from recent lows as concerns over production shutdowns in the Gulf of Mexico escalated, with Brent up 2.05% to $70.61 and WTI climbing 2.37% to $67.31. Gold saw choppy trading within its recent range but ultimately closed down 0.2% at $2,512 an ounce.

More Gains Ahead for the Greenback

The US dollar had a muted response to last night’s CPI data, appreciating by less than 0.1% on the DXY and remaining within recent ranges against most major currencies. A noticeable disconnect has emerged between market estimates of next week’s Federal Reserve rate hike and how the currency market is trading. Currently, the market is pricing an 85% probability of a 25-basis point hike next week, up from last week’s 50/50 odds. Both the dollar and treasury yields have been driven by these forecasts in recent weeks, though the correlation appears to have diminished. Some in the FX market suggest that this movement was anticipated, and traders are now awaiting the next catalyst to push currency pairs into new ranges. Tonight’s PPI data, along with the ECB’s announcement, could provide the impetus for the next market shift.

Another Busy Day Ahead for Traders

Traders are gearing up for another busy day in financial markets, with the European Central Bank expected to raise rates again and further US inflation data due. The Asian session has a relatively light calendar today, but markets are expected to remain active as investors digest last night’s US inflation report. The day’s main risk events are concentrated around the European and US trading session crossover, with the ECB rate decision and press conference bookending US PPI data and weekly unemployment claims. Later in the day, Swiss National Bank Chairman Thomas Jordan is scheduled to speak, and the US 30-year Bond Auction results are expected towards the close of trading.

The post General Market Analysis – 12/09/24 first appeared on IC Markets | Official Blog.

The Melbourne Institute Survey of Consumer Inflationary Expectations for Australia shows a drop to 4.4% in September

• prior 4.5%

The Reserve Bank of Australia target band is 2 to 3% for inflation.

Expectations are well above official CPI rates (quarterly and monthly)

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