The Fed gave market players what they wanted with a 50 bps rate cut yesterday. And the aftermath so far has been… fairly calm to be fair. The dollar did drop on the kneejerk reaction yesterday but that didn’t last too long. Treasury yields are bouncing back up and that’s creating for some mixed moves among major currencies at least.

As for stocks, it did fall yesterday but US futures are looking to bounce back strongly today. It’s all setting up for a rather swingy end to the week with most of the action likely to come in US trading.

Anyway, the central bank bonanza doesn’t just stop at the Fed this week. The BOE is next on the cards before we get to the BOJ tomorrow. Bailey & co. is expected to keep the bank rate unchanged today, with a vote of 7-2. The two dissenters are likely to be the more dovish members i.e. Dhingra and Ramsden.

Traders are pricing in ~81% odds of there being no change today. As such, the decision should not be one to rock the boat too much in sterling and broader markets on the day.

0600 GMT – Switzerland August trade balance data0800 GMT – Eurozone July current account balance1100 GMT – BOE announces its September monetary policy decision

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.

IC Markets Europe Fundamental Forecast | 19 September 2024

What happened in the Asia session?

After growing 0.2% QoQ in the first quarter of 2024, New Zealand’s economy contracted 0.2% QoQ in the second quarter. This marked the sixth quarter of contraction over the past year and a half but it was less worse than originally anticipated – markets were forecasting a decline of 0.4%. The combination of weak economic output and higher demand for the greenback is likely to weigh on the Kiwi this morning.

A robust labour force report propelled the Aussie this morning as it surged towards the threshold of 0.6800, gaining almost 50 pips at its highest point. The unemployment rate remained unchanged at 4.2% while a whopping 47.5K jobs were added to the Australian economy. This marked the second highest job gains of 2024 as it beat the estimate of 26.4K by a wide margin – a result that could lead the Aussieto be one of the few currencies to defy the strength in the U.S. dollar today.

What does it mean for the Europe & US sessions?

After reducing its official bank rate by 25 basis points in August, the Bank of England (BoE) is now anticipated to keep rates steady at 5.0%. As GDP growth has picked up sharply thus far in 2024 while core CPI remains sticky, the Monetary Policy Committee members appear inclined to maintain the bank rate at current levels – a move that could provide lift for the Cable later today.

The Dollar Index (DXY)

Key news events today

Unemployment Claims (12:30 pm GMT)

What can we expect from DXY today?

After rising quite sharply from mid-May till the end of July, unemployment claims have steadied over the past six weeks with the 4-week average standing at 231K. With claims stabilizing in recent weeks, it alleviates some concerns surrounding labour market weakness as evident in the recent employment reports by the ADP and BLS. The forecast of 230K claims points to a continuation of stabilization for this data point – a lower figure could function as a near-term bullish catalyst for the dollar.

Central Bank Notes:

• The Federal Funds Rate target range was reduced by 50 basis points to 4.75% to 5.00% on 18th September in an 11 to 1 vote with Governor Michelle Bowman dissenting, preferring to cut rates by a smaller amount.
• The Committee seeks to achieve maximum employment and inflation at the rate of 2% over the longer run and has gained greater confidence that inflation is moving sustainably toward 2%, and judges that the risks to achieving its employment and inflation goals are roughly in 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 slowed, and the unemployment rate has moved up but remains low.
• Inflation has made further progress toward the Committee’s 2% objective but remains somewhat elevated.
• 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 6 to 7 November 2024.

Next 24 Hours Bias

Medium Bullish

Gold (XAU)

Key news events today

Unemployment Claims (12:30 pm GMT)

What can we expect from Gold today?

After rising quite sharply from mid-May till the end of July, unemployment claims have steadied over the past six weeks with the 4-week average standing at 231K. With claims stabilizing in recent weeks, it alleviates some concerns surrounding labour market weakness as evident in the recent employment reports by the ADP and BLS. The forecast of 230K claims points to a continuation of stabilization for this data point – a lower figure could function as a near-term bullish catalyst for the dollar which would weigh on gold prices.

Next 24 Hours Bias

Medium Bearish

The Australian Dollar (AUD)

Key news events today

Labour Force Report (1:30 am GMT)

What can we expect from AUD today?

A robust labour force report propelled the Aussie this morning as it surged towards the threshold of 0.6800, gaining almost 50 pips at its highest point. The unemployment rate remained unchanged at 4.2% while a whopping 47.5K jobs were added to the Australian economy. This marked the second highest job gains of 2024 as it beat the estimate of 26.4K by a wide margin – a result that could lead the Aussieto be one of the few currencies to defy the strength in the U.S. dollar today.

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 Bullish

The Kiwi Dollar (NZD)

Key news events today

GDP (10:45 pm GMT 18th September)

What can we expect from NZD today?

After growing 0.2% QoQ in the first quarter of 2024, New Zealand’s economy contracted 0.2% QoQ in the second quarter. This marked the sixth quarter of contraction over the past year and a half but it was less worse than originally anticipated – markets were forecasting a decline of 0.4%. The combination of weak economic output and higher demand for the greenback is likely to weigh on the Kiwi this morning.

Central Bank Notes:

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

Next 24 Hours Bias

Weak Bullish

The Japanese Yen (JPY)

Key news events today

No major news events.

What can we expect from JPY today?

Following yesterday’s FOMC meeting and press conference by Chairman Jerome Powell, demand for the dollar saw a renewed resurgence as USD/JPY broke above the 142-level overnight before racing past 143 as Asian markets came online. This currency pair is likely to continue climbing higher as the day progresses – these are the support and resistance levels for today.

Support: 139.80

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

Medium Bullish

The Euro (EUR)

Key news events today

No major news events.

What can we expect from EUR today?

The Euro initially spiked as high as 1.1188 before reversing sharply to dive under 1.1100 following yesterday’s FOMC meeting and press conference by Chairman Jerome Powell. Overhead pressures were building for this currency pair at the beginning of the Asia session and it is likely to slide lower today – these are the support and resistance levels for today.

Support: 1.1000

Resistance: 1.1180

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 Bearish

The Swiss Franc (CHF)

Key news events today

No major news events.

What can we expect from CHF today?

Following yesterday’s FOMC meeting and press conference by Chairman Jerome Powell, bids for the dollar surged creating massive tailwinds for USD/CHF as this currency pair raced past 0.8450 overnight. The strong bullish momentum is likely to push UDS/CHF beyond the threshold of 0.8500 today – these are the support and resistance levels for today.

Support: 0.8400

Resistance: 0.8550

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

BoE Monetary Policy Statement (11:00 am GMT)

What can we expect from GBP today?

After reducing its official bank rate by 25 basis points in August, the Bank of England (BoE) is now anticipated to keep rates steady at 5.0%. As GDP growth has picked up sharply thus far in 2024 while core CPI remains sticky, the Monetary Policy Committee members appear inclined to maintain the bank rate at current levels – a move that could provide lift for the Cable later today.

Central Bank Notes:

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

Next 24 Hours Bias

Medium Bearish

The Canadian Dollar (CAD)

Key news events today

No major news events.

What can we expect from CAD today?

Following yesterday’s FOMC meeting and press conference by Chairman Jerome Powell, demand for the dollar saw a renewed resurgence as USD/CAD made a clean break above the 1.360-threshold overnight. This currency pair was racing towards 1.3650 at the beginning of the Asia session – these are the support and resistance levels for today.

Support: 1.3550

Resistance: 1.3700

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

Medium Bullish

Oil

Key news events today

No major news events.

What can we expect from Oil today?

Crude oil prices fell overnight as a 50-basis point rate cut by the Federal Reserve at yesterday’s FOMC meeting raised concerns over a looming slowdown in the world’s largest economy. With ongoing demand concerns from China lingering for most parts of 2024, prices face significant headwinds. WTI oil reversed sharply from $70.30 to plunge as low as $68.95 per barrel by the end of the U.S. session – this benchmark will likely continue to head south as the day progresses.

Next 24 Hours Bias

Weak Bullish

The post IC Markets Europe Fundamental Forecast | 19 September 2024 first appeared on IC Markets | Official Blog.

The firm is changing up their call after the Fed moved more aggressively to start things off with a 50 bps rate cut here. Their previous call was for the Fed to only perform quarterly cuts in 2025. But now, they are expecting the Fed to go with 25 bps rate cuts at each of the meetings in January, March, May, and June.

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

Fed Cuts by 50 Points – Nasdaq Down by 0.3%

US markets experienced a volatile trading day, with the majority of products ultimately closing around familiar levels after the Federal Reserve cut interest rates by 50 basis points. Stock markets initially reacted positively to the cut but later reversed course following the press conference. By the close of trading, the Dow had dropped 0.25%, the S&P 500 declined by 0.29%, and the Nasdaq finished 0.31% lower.

There were significant moves in both rates and foreign exchange as well, with the dollar ending the day slightly higher, while yields rebounded after recent losses. The 2-year yield added 3.8 basis points, reaching 3.629%, and the 10-year yield gained 6.6 basis points to trade back up to 3.708%. Oil prices also dipped, with Brent down by 0.1% to $73.65 and WTI declining by 0.3% to $70.91. Gold saw a volatile session, surging to a new record high of $2,599.92 before crashing later in trading to close 0.7% lower at $2,552 per ounce.

Fed Opts for 50, but Markets Remain Unimpressed

The Federal Reserve delivered what some investors were hoping for, initiating their easing cycle with a 50-basis point cut. However, markets ended the day on a disappointing note, with all three major US indices closing lower. The initial reaction was positive, but as Chairman Jerome Powell updated the market during his press conference, cautioning that this move does not necessarily signal further large cuts, markets began to pull back. This, combined with the dot plot indicating only another 50 points of cuts expected by year-end—below market expectations—led to the choppy trading conditions. Investors will now be closely monitoring the market’s reaction over the coming days and scrutinising upcoming data to see if it will push the Fed off its current course.

No Respite for Traders – Another Big Day Ahead

There will be no respite for traders today as they have little time to digest the FOMC’s first rate cut in four years before facing a packed event calendar. Early in the day, New Zealand’s Quarterly GDP figures came in slightly better than expected, and attention now shifts to the Australian Employment numbers. The highlight of the day will come during the London session, with the Bank of England expected to hold the Official Bank Rate at 5%. However, sterling traders are bracing for volatility around the event. The US session is also expected to be lively, following yesterday’s Fed move, with key data releases including the weekly unemployment claims, the Philly Fed Manufacturing Index, and Existing Home Sales figures.

The post General Market Analysis – 19/09/24 first appeared on IC Markets | Official Blog.

The kneejerk reaction was for a weaker dollar as yields came off slightly as well. But all that didn’t last too long as the yields bounced back alongside the dollar. Equities raced higher initially too before falling back to close lower by the end of the day. The sell the fact trade prevailed, or at least it did in the first aftershock.

As yields are continuing to hold higher, that is helping to keep USD/JPY propped up today. The pair is up another 0.6% to 143.15 currently but off its earlier high of 143.94 in Asia. 2-year Treasury yields are holding higher at near 3.64% and keeping further away from the 2023 low. So, that is a contributive factor. Meanwhile, 10-year yields are up another 3.4 bps to 3.72% currently.

“But the Fed cut more than what was expected by economists. Yields should be falling instead. Why isn’t it the case?”

Even with traders paring back some pricing of a 50 bps rate cut right before the decision yesterday, it is clear that there is a decent amount of positioning for such a move. That’s one. The other thing is that the Fed’s dot plots show 25 bps rate cuts for both November and December. And that roughly aligns with what markets have priced in.

Traders are seeing ~69 bps of rate cuts in the next two meetings. However, when you look out to September next year, it is at ~186 bps and that isn’t much changed whatsoever from before. In other words, traders were expecting at least one 50 bps move this year and one more early next year as well. And those expectations are still vindicated.

That might better explain the initial reaction we’re seeing in the bond market perhaps.

After their messaging since Jackson Hole, I was still expecting the Fed move by 25 bps even though I had grown increasingly sympathetic towards the argument for a 50 bps move. But I’ll hand it to Powell for at least keeping the calm in markets. The fear in moving by 50 bps was that it might signal a panic that there might be something they’re seeing in the economy that’s in worse shape.

However, their dot plot projection for just two more 25 bps rate cuts was perhaps the key selling point. That helped to ensure that this move was more of an insurance rather than a panic move to catch up.

All that being said, it is still a 50 bps rate cut at the end of the day. The Fed is on track to keep cutting rates from hereon. And ultimately, that means more accommodative monetary policy conditions.

If they had went with 25 bps yesterday, it might’ve resulted in more kicking and screaming in markets. To some extent, you can say that the Fed chose the lesser of two evils. That is if you’re an equities bull I guess.

The dollar on the other hand, is somehow not really falling apart – at least for now. But at the balance, if the Fed is going to be cutting quicker than other major central banks, rate differentials dictate that the greenback should underperform against the rest of the major currencies bloc.

In particular, AUD/USD and GBP/USD might be looking more favourable for a move higher as both the RBA and BOE are still finding it tough to claim victory against inflation at the moment.

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

DXY (US Dollar Index):

Potential Direction: Bullish
Overall momentum of the chart: Bullish

Price could potentially make a: Bullish continuation towards 1st resistance.

Pivot: 101.00
Supporting reasons: Pullback support, indicating a level where the price may find support and potentially bounce higher.

1st support: 100.21
Supporting reasons: Swing low support, suggesting a significant level where the price might find buying interest if it drops.

1st resistance: 102.30
Supporting reasons: Pullback resistance and 127.20% Fibonacci Extension, indicating a strong resistance level where the price could face challenges moving higher.

EUR/USD:

Potential Direction: Bearish
Overall momentum of the chart: Bearish

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

Pivot: 1.1109
Supporting reasons: Pullback resistance, suggesting that this level may act as a resistance point where the price could face downward pressure.

1st support: 1.0993
Supporting reasons: Pullback support and 50% Fibonacci Retracement, indicating a key support level where the price might find buying interest if it declines further.

1st resistance: 1.1195
Supporting reasons: Multi-swing high resistance, suggesting a strong resistance level where the price could encounter selling pressure if it attempts to rise.

EUR/JPY:

Potential Direction: Bullish
Overall momentum of the chart: Bullish

Price could potentially make a bullish continuation towards 1st resistance

Pivot: 157.54
Supporting reasons: An overlap support, suggesting it may hold if the price retraces.

1st support: 155.45
Supporting reasons: Swing low support, providing a potential base if the price drops.

1st resistance: 159.96
Supporting reasons: Pullback resistance with 61.80% Fibonacci Retracement, indicating it could be a significant level of resistance.

EUR/GBP:

Potential Direction: Bearish
Overall momentum of the chart: Bearish

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

Pivot: 0.8454
Supporting reasons: An overlap resistance combined with the 23.60% Fibonacci Retracement, suggesting it could act as a strong resistance level.

1st support: 0.8400
Supporting reasons: Swing low support, which may provide a base if the price declines.

1st resistance: 0.8507
Supporting reasons: Pullback resistance with 50% Fibonacci Retracement, indicating potential resistance if the price rises.

GBP/USD:

Potential Direction: Bearish
Overall momentum of the chart: Bearish

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

Pivot: 1.3211
Supporting reasons: An overlap resistance, suggesting it may act as a strong resistance level.

1st support: 1.3034
Supporting reasons: An overlap support which could serve as a key level for price to potentially find support.

1st resistance: 1.3297
Supporting reasons: A swing high resistance, indicating a possible resistance level if the price rises.

GBP/JPY:

Potential Direction: Bearish
Overall momentum of the chart: Bullish

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

Pivot: 189.28
Supporting reasons: Pullback resistance and 61.80% Fibonacci Retracement indicate that this level could act as resistance where the price may encounter selling pressure.

1st support: 186.60
Supporting reasons: An Overlap support, suggesting this level might provide a point of support where the price could potentially find buying interest.

1st resistance: 192.01
Supporting reasons: Pullback resistance, indicating this level may be a significant resistance if the price attempts to rise.

USD/CHF:

Potential Direction: Bullish
Overall momentum of the chart: Bullish

Price could potentially make a: Bullish continuation towards 1st resistance.

Pivot: 0.8429
Supporting reasons: Swing low support indicates a level where the price might find support and bounce.

1st support: 0.8375
Supporting reasons: Swing low support, which could act as an additional support level if the price drops further.

1st resistance: 0.8583
Supporting reasons: A pullback resistance, combined with 127.2% Fibonacci Extension, indicates a strong confluence of resistance levels where the price might encounter selling pressure.

USD/JPY:

Potential Direction: Bullish
Overall momentum of the chart: Bullish

Price could potentially make a: Bullish continuation towards the 1st resistance.

Pivot: 142.85
Supporting reasons: Pullback support, suggesting the price might find support here and potentially reverse to the upside.

1st support: 139.56
Supporting reasons: Swing low support, providing a level where the price might find further support if it drops below the pivot.

1st resistance: 147.18
Supporting reasons: An overlap resistance level, indicating a strong area where the price could face resistance.

USD/CAD:

Potential Direction: Bullish
Overall momentum of the chart: Bullish

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

Pivot: 1.3613
Supporting reasons: Identified as an overlap support, suggesting a potential area where buying interests could pick up to resume the uptrend.

1st support: 1.3546
Supporting reasons: Identified as a pullback support that aligns with a 50% Fibonacci retracement, indicating a key level where price has found strong 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: Bullish

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

Pivot: 0.6731
Supporting reasons: Identified as an overlap support that aligns close to a 50% Fibonacci retracement, suggesting a potential level where buying interests could pick up to resume the uptrend.

1st support: 0.6642
Supporting reasons: Identified as an overlap support that aligns with a 38.2% Fibonacci retracement, indicating a key level where price has found strong support in the past.

1st resistance: 0.6813
Supporting reasons: Identified as a multi-swing-high resistance, indicating a potential area that could halt any further upward movement.

NZD/USD

Potential Direction: Bullish
Overall momentum of the chart: Bullish

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

Pivot: 0.6155

Supporting reasons:  Identified as an overlap support that aligns close to a 61.8% Fibonacci retracement, suggesting a potential level where buying interests could pick up to resume the uptrend.

1st support: 0.6090
Supporting reasons: Identified as a pullback support that aligns close to a 50% Fibonacci retracement, indicating a potential level where price could find support.

1st resistance: 0.6252
Supporting reasons: Identified as an overlap resistance that aligns close to a 78.6% Fibonacci retracement, indicating a potential area that could halt any further upward movement.

US30 (DJIA):

Potential Direction: Bearish
Overall momentum of the chart: Bullish

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

Pivot: 41,992.28
Supporting reasons: Identified as a resistance that aligns with a 61.8% Fibonacci projection, suggesting a potential area where selling pressures could intensify.

1st support: 41,096.34

Supporting reasons: Identified as an overlap support that aligns close to a 50% Fibonacci retracement, indicating a potential level where price could find support.

1st resistance: 42,533.15

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: 18,247.90
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: 19,403.73
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: Bullish

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

Pivot: 5,669.89
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: 5,544.60
Supporting reasons: Identified as an overlap support that aligns with a 50% Fibonacci retracement, indicating a key level where price has found support recently.

1st resistance: 5,830.73
Supporting reasons: Identified as a resistance that aligns with a confluence of Fibonacci levels i.e. the 78.6% projection and the 161.8% extension, indicating a potential area that could halt any further upward movement.

BTC/USD (Bitcoin):

Potential Direction: Bullish
Overall momentum of the chart: Bullish

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

Pivot: 61,198.85
Supporting reasons: Identified as a pullback support, suggesting a potential level where buying interests could pick up to resume the uptrend.

1st support: 57,494.54
Supporting reasons: Identified as a swing-low support that aligns close to a 50% Fibonacci retracement, indicating a key level where price has found strong in the past.

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 reverse off this level to drop towards the 1st support.

Pivot: 2,454.11
Supporting reasons: Identified as a multi-swing-high resistance that aligns close to a 50% Fibonacci retracement, suggesting a potential level where selling pressures could intensify.

1st support: 2,275.32
Supporting reasons: Identified as a multi-swing-low support that aligns with a 61.8% Fibonacci retracement, indicating a potential level where price has recently found support.

1st resistance: 2,573.77
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.

WTI/USD (Oil):

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: 68.91
Supporting reasons: Identified as an overlap support that aligns with a 50% Fibonacci retracement, suggesting a potential level where buying interests could pick up to stage a rebound.

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

1st resistance: 72.61
Supporting reasons: Identified as a pullback resistance that aligns close to a 50% 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 the 1st support.

Pivot: 2577.86
Supporting reasons: An overlap resistance, suggesting this level may act as a resistance where the price could encounter selling pressure.

1st support: 2531.68
Supporting reasons: Pullback support, 61.80% Fibonacci Retracement, indicating this level might provide support where the price could find buying interest.

1st resistance: 2600.28
Supporting reasons: Swing high resistance, implying this level may act as a significant barrier if the price attempts to rise.

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The post Thursday 19th September 2024: Technical Outlook and Review first appeared on IC Markets | Official Blog.

IC Markets Asia Fundamental Forecast | 19 September 2024

What happened in the U.S. session?

In an 11 to 1 vote, the Federal Reserve reduced its Federal Funds Rate target range by 50 basis points (bps) to 4.75% to 5.00% with Governor Michelle Bowman dissenting, preferring to cut rates by a smaller amount. This was the first time since 2005 that a Fed Governor had cast a dissenting vote at an FOMC meeting. The statement noted that recent indicators show that economic activity has continued to expand at a solid pace while job gains have slowed, and the unemployment rate has moved up but remains low. The statement also stated that the Fed has gained greater confidence that inflation is moving sustainably toward 2%, making further progress but remains somewhat elevated.

During his press conference, Chairman Jerome Powell defended the 50-bps cut by saying that it was made as a sign of risk management and a commitment of not falling behind the curve. Powell also focused on the slowdown in the labour market and tried to soothe markets that the Fed is keeping a close watch on this segment of the economy. Stocks and bonds initially rallied in the immediate aftermath of the release of the statement while the dollar index (DXY) tumbled from 100.87 to as low as 100.21. However, the direction for all the above asset classes reversed course as stock and bond markets fell to give up all their prior gains whilst the DXY jumped to hit an overnight high of 101.14.

What does it mean for the Asia Session?

After growing 0.2% QoQ in the first quarter of 2024, New Zealand’s economy contracted 0.2% QoQ in the second quarter. This marked the sixth quarter of contraction over the past year and a half but it was less worse than originally anticipated – markets were forecasting a decline of 0.4%. The combination of weak economic output and higher demand for the greenback is likely to weigh on the Kiwi this morning.

Employment growth has been pretty steady in Australia over the past four months but the unemployment rate has increased to 4.2% in July to mark the highest level since January 2022. However, the estimated employment change of 26.4K for the month of August points to the slowest rate of job creation since March. Should jobs growth miss its forecast while the unemployment rate edges higher, the Aussie could face near-term headwinds this morning.

The Dollar Index (DXY)

Key news events today

Unemployment Claims (12:30 pm GMT)

What can we expect from DXY today?

After rising quite sharply from mid-May till the end of July, unemployment claims have steadied over the past six weeks with the 4-week average standing at 231K. With claims stabilizing in recent weeks, it alleviates some concerns surrounding labour market weakness as evident in the recent employment reports by the ADP and BLS. The forecast of 230K claims points to a continuation of stabilization for this data point – a lower figure could function as a near-term bullish catalyst for the dollar.

Central Bank Notes:

• The Federal Funds Rate target range was reduced by 50 basis points to 4.75% to 5.00% on 18th September in an 11 to 1 vote with Governor Michelle Bowman dissenting, preferring to cut rates by a smaller amount.
• The Committee seeks to achieve maximum employment and inflation at the rate of 2% over the longer run and has gained greater confidence that inflation is moving sustainably toward 2%, and judges that the risks to achieving its employment and inflation goals are roughly in 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 slowed, and the unemployment rate has moved up but remains low.
• Inflation has made further progress toward the Committee’s 2% objective but remains somewhat elevated.
• 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 6 to 7 November 2024.

Next 24 Hours Bias

Medium Bullish

Gold (XAU)

Key news events today

Unemployment Claims (12:30 pm GMT)

What can we expect from Gold today?

After rising quite sharply from mid-May till the end of July, unemployment claims have steadied over the past six weeks with the 4-week average standing at 231K. With claims stabilizing in recent weeks, it alleviates some concerns surrounding labour market weakness as evident in the recent employment reports by the ADP and BLS. The forecast of 230K claims points to a continuation of stabilization for this data point – a lower figure could function as a near-term bullish catalyst for the dollar which would weigh on gold prices.

Next 24 Hours Bias

Medium Bearish

The Australian Dollar (AUD)

Key news events today

Labour Force Report (1:30 am GMT)

What can we expect from AUD today?

Employment growth has been pretty steady in Australia over the past four months but the unemployment rate has increased to 4.2% in July to mark the highest level since January 2022. However, the estimated employment change of 26.4K for the month of August points to the slowest rate of job creation since March. Should jobs growth miss its forecast while the unemployment rate edges higher, the Aussie could face near-term headwinds this morning.

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 Bullish

The Kiwi Dollar (NZD)

Key news events today

GDP (10:45 pm GMT 18th September)

What can we expect from NZD today?

After growing 0.2% QoQ in the first quarter of 2024, New Zealand’s economy contracted 0.2% QoQ in the second quarter. This marked the sixth quarter of contraction over the past year and a half but it was less worse than originally anticipated – markets were forecasting a decline of 0.4%. The combination of weak economic output and higher demand for the greenback is likely to weigh on the Kiwi this morning.

Central Bank Notes:

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

Next 24 Hours Bias

Weak Bullish

The Japanese Yen (JPY)

Key news events today

No major news events.

What can we expect from JPY today?

Following yesterday’s FOMC meeting and press conference by Chairman Jerome Powell, demand for the dollar saw a renewed resurgence as USD/JPY broke above the 142-level overnight before racing past 143 as Asian markets came online. This currency pair is likely to continue climbing higher as the day progresses – these are the support and resistance levels for today.

Support: 139.80

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

Medium Bullish

The Euro (EUR)

Key news events today

No major news events.

What can we expect from EUR today?

The Euro initially spiked as high as 1.1188 before reversing sharply to dive under 1.1100 following yesterday’s FOMC meeting and press conference by Chairman Jerome Powell. Overhead pressures were building for this currency pair at the beginning of the Asia session and it is likely to slide lower today – these are the support and resistance levels for today.

Support: 1.1000

Resistance: 1.1180

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 Bearish

The Swiss Franc (CHF)

Key news events today

No major news events.

What can we expect from CHF today?

Following yesterday’s FOMC meeting and press conference by Chairman Jerome Powell, bids for the dollar surged creating massive tailwinds for USD/CHF as this currency pair raced past 0.8450 overnight. The strong bullish momentum is likely to push UDS/CHF beyond the threshold of 0.8500 today – these are the support and resistance levels for today.

Support: 0.8400

Resistance: 0.8550

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

BoE Monetary Policy Statement (11:00 am GMT)

What can we expect from GBP today?

After reducing its official bank rate by 25 basis points in August, the Bank of England (BoE) is now anticipated to keep rates steady at 5.0%. As GDP growth has picked up sharply thus far in 2024 while core CPI remains sticky, the Monetary Policy Committee members appear inclined to maintain the bank rate at current levels – a move that could provide lift for the Cable later today.

Central Bank Notes:

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

Next 24 Hours Bias

Medium Bearish

The Canadian Dollar (CAD)

Key news events today

No major news events.

What can we expect from CAD today?

Following yesterday’s FOMC meeting and press conference by Chairman Jerome Powell, demand for the dollar saw a renewed resurgence as USD/CAD made a clean break above the 1.360-threshold overnight. This currency pair was racing towards 1.3650 at the beginning of the Asia session – these are the support and resistance levels for today.

Support: 1.3550

Resistance: 1.3700

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

Medium Bullish

Oil

Key news events today

No major news events.

What can we expect from Oil today?

Crude oil prices fell overnight as a 50-basis point rate cut by the Federal Reserve at yesterday’s FOMC meeting raised concerns over a looming slowdown in the world’s largest economy. With ongoing demand concerns from China lingering for most parts of 2024, prices face significant headwinds. WTI oil reversed sharply from $70.30 to plunge as low as $68.95 per barrel by the end of the U.S. session – this benchmark will likely continue to head south as the day progresses.

Next 24 Hours Bias

Weak Bullish

The post IC Markets Asia Fundamental Forecast | 19 September 2024 first appeared on IC Markets | Official Blog.

• New Zealand remains in a prolonged recession. RBNZ needs to get cash rate below 4%, asap.
• Bank of England Interest Rate Decision: Analysts Predict No Change in Rates
• Australian August unemployment rate 4.2% (vs. 4.2% expected)
• PBOC sets USD/ CNY reference rate for today at 7.0983 (vs. estimate at 7.0924)
• What’s coming up from the Reserve Bank of New Zealand after the weak NZ GDP data!
• New Zealand GDP data showed a contraction, not as bad as expected – recap
• South Korean Finance Minister says ready to deploy “contingency plans” if needed
• Hong Kong’s central bank follows the Fed, cuts base rate by 50bp to 5.25%
• US House fails to pass government funding bill – government shut down looming
• New Zealand Q2 GDP -0.2% q/q (expected -0.4%)
• BoA anticipate the Bank of England (BoE) will maintain Bank Rate at 5.0% at meeting today
• Just waking up? Here’s the short summary of Wednesday’s FOMC rate cut
• Brazil’s central bank has hiked its benchmark rate by 25bps to 10.75% – yes, hiked
• China has frozen the assets of 9 US firms in the country
• Forexlive Americas FX news wrap 18 Sep: Fed starts rate cuts with a 50 bp cut
• ICYMI – US regulators to allow shares to trade in increments of half a penny
• Trade ideas thread – Thursday, 19 September, insightful charts, technical analysis, ideas

While
we had some significant data from the time zone today these were of
local importance only and the main driver continued to be the follow
through from the US Federal Reserve rate cut.

USD/JPY
was the most notable gainer. Early lows just under 142.00 were soon
shrugged off and the pair rocketed nearly 2 big figures higher. The
USD gained also against other major FX but not nearly to the same
extent, and, as I post, some of these have been retraced.

AUD
and NZD,
for example have net held on (AUD is higher on the session). Which
brings me to that local data I spoke of above.

From
New Zealand we had Q2 GDP data. This showed a contracting New Zealand
economy, though not as deeply as was expected. Growth in Q1, though,
was revised a little lower. The poor data emphasised the need for the
Reserve Bank of New Zealand to maintain its new easing cycle after it
first cut in August.

From
Australia we had August
month employment
data, with a strong headline of an unchanged unemployment rate and
nearly
50K jobs added on the month. The details, though, were not as
encouraging. The entire gain in employment was in part-time jobs,
while full-time jobs showed a (small) loss.

Regional
equities gained. Japan’s Nikkei was an outperformer, benefiting
from the weaker yen on the session.

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

The USD is trading higher across the major FX board.

Its particularly notable against the JPY.

USD/JPY is around 143.90, from lows in the session earlier aroudn142.00!

The dollar weakened in the lead up to the FOMC and has strengthened since. ‘Buy the fact’ indeed.

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

The latest from the Australian Bureau of Statistics for the Labour Force report, August 2024.

Employment +47.5k

• expected +25.0k, prior +58.2k

Unemployment Rate 4.2%

• expected 4.2%, prior 4.2%

Participation Rate 67.1%

• expected 67.1%, prior 67.1%

Full Time Employment -3.1k

• prior + 60.5k

The headline jobless rate has not disappointed. And the headline employment addition appears very strong indeed, once again. The shine will be subdued somewhat by the loss of full time employment, all jobs added in the month were part-time.

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

South Korea’s finance minister Choi Sang-mok

• said the government will closely coordinate with the central bank and regulators to deploy contingency plans for financial markets if needed as external uncertainties persist after the Fed lowered interest rates

• also said he expects South Korea’s household
  debt growth to gradually ease
• but stands ready to
  swiftly announce additional measures should borrowing pick up
  faster than expected

—

Lower Fed rates are a welcome development for reducing pressure on the KRW at least. USD/KRW chart:

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

The bill was to fund the government for 6 months. Its failed. There are 12 days until the government shuts down.

Reuters:

• The
  Republican-controlled U.S. House of Representatives on Wednesday
  voted to defeat a stopgap government funding bill brought
  forward by Republican Speaker Mike Johnson, as some members of
  his own party opposed the measure.
• It was unclear what next steps Johnson will take to avoid a
  partial government shutdown beginning on October 1, when money for
  many federal agencies would be depleted.

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