• Prior +2.2%
• Core CPI +3.6% vs +3.5% y/y expected
• Prior +3.3%

Coming into today, traders had been pricing in ~63% odds of the BOE keeping the bank rate unchanged tomorrow. And the inflation numbers here pretty much solidifies the notion that they will keep rates unchanged in September. That especially since services inflation ticked back higher from 5.2% in July to 5.6% in August.

The BOE has pointed to services inflation being stubborn and a key one they’re watching. So, with this report, it shouldn’t change the view that they are looking for more evidence of less sticky inflation before further loosening the restrictiveness of monetary policy.

GBP/USD is nudging just a little higher on the day to 1.3175 currently, up from around 1.3160 earlier.

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

But the key focus in markets today is of course the FOMC meeting decision. Will it be a 25 bps or 50 bps rate cut? That is the question.

As things stand, traders are still pricing in ~65% odds of a 50 bps rate cut for today. And therein lies the balance of risks ahead of the Fed policy decision.

The US retail sales yesterday helped to see the dollar recover back some ground alongside yields. However, it may end up being just a tentative response on the week. Will the Fed stay true to their communication since Jackson Hole and go with 25 bps? Or will they feel more comfortable in seeking a bit of insurance with a 50 bps move?

USD/JPY has already retraced a chunk of its overnight gains, being pushed back down to 141.30 levels currently. That’s the main mover so far today while other dollar pairs are holding more tentative awaiting the Fed.

Looking to European trading, inflation is back on the menu for the UK and Eurozone.

The former will offer some intrigue before the BOE decision tomorrow but at the balance, it should be a non-factor. Headline annual inflation in the UK is expected to remain at 2.2% while core annual inflation is expected to tick up to 3.5%. As such, that would see market expectations for the BOE to stay on hold tomorrow be vindicated.

As for the euro area figures, these will be the final readings for August so they won’t matter too much. The ECB has already signaled that they will be on pause in October anyway.

0600 GMT – UK August CPI figures0900 GMT – Eurozone August final CPI figures1100 GMT – US MBA mortgage applications w.e. 13 September

That’s all for the session ahead. I wish you all the best of days to come and good luck with your trading! Stay safe out there.

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

DXY (US Dollar Index):

Potential Direction: Bearish
Overall momentum of the chart: Bullish

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

Pivot: 2583.95
Supporting reasons: 61.80% Fibonacci Projection, indicating this level might act as resistance if the price retraces.

1st support: 2531.45
Supporting reasons: Pullback support, suggesting this level could hold as support if the price drops.

1st resistance: 2613.19
Supporting reasons: 78.60% Fibonacci Projection, indicating potential resistance if the price rises further.

EUR/USD:

Potential Direction: Bearish
Overall momentum of the chart: Bullish

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

Pivot: 1.1136
Supporting reasons: An Overlap resistance, suggesting it could act as a resistance level if the price retraces.

1st support: 1.1071
Supporting reasons: An Overlap support with 50% Fibonacci Retracement, indicating this level could hold as support if the price moves lower.

1st resistance: 1.1183
Supporting reasons: Swing high resistance, which may act as a barrier to upward movement if the price rises.

EUR/JPY:

Potential Direction: Bullish
Overall momentum of the chart: Bullish

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

Pivot: 157.54
Supporting reasons: Pullback 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 reaction off pivot and drop to 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: 1.3182
Supporting reasons: An overlap resistance combined with the 61.80% Fibonacci Projection, suggesting it may act as a strong resistance level.

1st support: 1.3104
Supporting reasons: An overlap support with 50% Fibonacci Retracement, which could serve as a key level for price to potentially find support.

1st resistance: 1.3303
Supporting reasons: 127.20% Fibonacci Extension, indicating a possible resistance level if the price rises.

GBP/JPY:

Potential Direction: Bullish
Overall momentum of the chart: Bullish

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

Pivot: 186.60
Supporting reasons: An overlap support, suggesting a potential level for price to bounce off.

1st support: 183.74
Supporting reasons: Swing low support, which may act as a key level where the price could potentially find support if it moves lower.

1st resistance: 189.28
Supporting reasons: An overlap resistance combined with the 61.80% Fibonacci Retracement, indicating a possible level where the price might encounter resistance if it moves higher.

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, indicating a level where the price might find support and possibly 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: 0.8499
Supporting reasons: An overlap resistance, combined with 61.80% Fibonacci Retracement and 61.80% Fibonacci Projection, indicating 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 bounce off pivot and head towards 1st resistance.

Pivot: 141.01
Supporting reasons: Pullback support, which suggests 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: 143.70
Supporting reasons: An overlap resistance level, with additional resistance from the 50% Fibonacci Retracement, indicating a strong area where the price could face resistance.

USD/CAD:

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: 1.3549
Supporting reasons: Identified as an overlap support that aligns with a 38.2% Fibonacci retracement, suggesting a potential area where buying interests could pick up to stage a minor rebound.

1st support: 1.3492
Supporting reasons: Identified as a swing-low support that aligns close to a 61.8% Fibonacci retracement, indicating a key level where price has found strong support in the past.

1st resistance: 1.3615
Supporting reasons: Identified as an overlap resistance that aligns close to a 38.2% Fibonacci retracement, indicating a potential area that could halt any further upward movement.

AUD/USD:

Potential Direction: Bearish
Overall momentum of the chart: Neutral

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

Pivot: 0.6813
Supporting reasons: Identified as a swing-high resistance, suggesting a potential level where selling interests could intensify.

1st support: 0.6685
Supporting reasons: Identified as an overlap support, indicating a key level where price has recently found support.

1st resistance: 0.6859
Supporting reasons: Identified as a swing-high resistance that aligns close to a 127.2% Fibonacci extension, indicating a potential area that could halt any further upward movement.

NZD/USD

Potential Direction: Bearish
Overall momentum of the chart: Neutral

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

Pivot: 0.6236

Supporting reasons: Identified as an overlap resistance that aligns close to a 61.8% Fibonacci retracement, suggesting a potential level where selling interests could intensify.

1st support: 0.6155
Supporting reasons: Identified as an overlap support, indicating a potential level where price has found strong support in the past.

1st resistance: 0.6292
Supporting reasons: Identified as a swing-high resistance, 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 with a 38.2% 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 close to a 38.2% 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: Bearish
Overall momentum of the chart: Neutral

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

Pivot: 61,198.85
Supporting reasons: Identified as a multi-swing-high resistance, suggesting a potential level where selling pressures could intensify.

1st support: 56,640.93
Supporting reasons: Identified as an overlap 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: Bullish
Overall momentum of the chart: Neutral

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

Pivot: 2,218.93
Supporting reasons: Identified as a swing-low support that aligns with a 78.6% Fibonacci retracement, suggesting a potential level where buying interests could pick up to stage a rebound.

1st support: 2,044.47
Supporting reasons: Identified as a swing-low support, indicating a potential level where price has found support in the past.

1st resistance: 2,454.11
Supporting reasons: Identified as a multi-swing-high resistance that aligns close to a 50% 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 is falling towards the pivot and could 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 reaction off pivot and drop to 1st support.

Pivot: 2577.86
Supporting reasons: An overlap resistance, indicating that the price may face resistance here and could potentially reverse to the downside.

1st support: 2531.68
Supporting reasons: Pullback support and 61.80% Fibonacci Retracement, suggesting a strong level of support where the price might find buying interest.

1st resistance: 2589.74
Supporting reasons: Multi-swing high resistance, indicating a strong level where the price could face resistance if it moves higher.

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The post Wednesday 18th September 2024: Technical Outlook and Review first appeared on IC Markets | Official Blog.

IC Markets Asia Fundamental Forecast | 18 September 2024

What happened in the U.S. session?

After jumping 1.1% MoM in July to beat the market forecast of 0.3% by a wide margin, retail sales eked out a small gain of 0.1% in August but exceeded the forecast of a 0.2%-drop. Consumer spending remains quite resilient for now as categories such as miscellaneous stores, non-store retailers, and health and personal care stores saw the largest monthly increases. The dollar index (DXY) was withering around 100.65 for most parts of yesterday before retail sales provided it with a strong boost – this index briefly climbed above the 101-threshold by the end of this session.

What does it mean for the Asia Session?

Despite the marginally better-than-anticipated U.S. sales figures, overhead pressures for the greenback persist as FOMC day has finally arrived – the DXY slipped under 101 and was heading south towards 100.50 as Asian markets came online. Markets could tread cautiously for most parts of today before springing into high gear as Federal Reserve Chairman Jerome Powell takes centre stage later on.

The Dollar Index (DXY)

Key news events today

FOMC Statement (6:00 pm GMT)

FOMC Press Conference (6:30 pm GMT)

What can we expect from DXY today?

After beginning its rate hike cycle in March of 2022, the Federal Reserve is finally gearing up for its first interest rate cut since July of 2019. The Fed Funds rate currently stands at 5.25 to 5.5% and market estimates point to a 25-basis points (bps) cut. However, the CME FedWatch Tool has a target rate probability of 65% for a 50-bps cut as of 17th September. The market appears to be split on the size of this first cut and traders should proceed with caution as the countdown to the release of the statement inches closer while Fed Chair Jerome Powell’s subsequent press conference is bound to inject extreme volatility into the markets.

Central Bank Notes:

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

Next 24 Hours Bias

Weak Bearish

Gold (XAU)

Key news events today

FOMC Statement (6:00 pm GMT)

FOMC Press Conference (6:30 pm GMT)

What can we expect from Gold today?

After beginning its rate hike cycle in March of 2022, the Federal Reserve is finally gearing up for its first interest rate cut since July of 2019. The Fed Funds rate currently stands at 5.25 to 5.5% and market estimates point to a 25-basis points (bps) cut. However, the CME FedWatch Tool has a target rate probability of 65% for a 50-bps cut as of 17th September. The market appears to be split on the size of this first cut and traders should proceed with caution as the countdown to the release of the statement inches closer while Fed Chair Jerome Powell’s subsequent press conference is bound to inject extreme volatility into the markets.

Next 24 Hours Bias

Weak Bullish

The Australian Dollar (AUD)

Key news events today

No major news events.

What can we expect from AUD today?

Despite somewhat uplifting sales data from the U.S. overnight, the Aussie remained elevated. This currency pair was trading around 0.6770 as Asian markets came online – this morning and these are the support and resistance levels for today.

Support: 0.6650

Resistance: 0.6800

Central Bank Notes:

• The RBA kept the cash rate target unchanged at 4.35% on 6th August, marking the sixth consecutive pause.
• Inflation has fallen substantially since its peak in 2022, as higher interest rates have been working to bring aggregate demand and supply closer towards balance but it still remains above the midpoint of the 2 to 3% target range.
• The CPI rose by 3.9% over the year to the June quarter, demonstrating that inflation is proving persistent. In year-ended terms, underlying inflation has now been above the midpoint of the target for 11 consecutive quarters while quarterly underlying CPI inflation has fallen very little over the past year.
• The central forecasts set out in the latest SMP are for inflation to return to the target range of 2 to 3% in late 2025 and approach the midpoint in 2026. This represents a slightly slower return to target than forecast in May, based on estimates that the gap between aggregate demand and supply in the economy is larger than previously thought.
• Momentum in economic activity has been weak, as evidenced by slow growth in GDP, a rise in the unemployment rate and reports that many businesses are under pressure. In addition, there is a risk that household consumption picks up more slowly than expected, resulting in continued subdued output growth and a noticeable deterioration in the labour market.
• Inflation in underlying terms remains too high, and the latest projections show that it will be some time yet before inflation is sustainably in the target range while recent data have reinforced the need to remain vigilant to upside risks to inflation and the Board is not ruling anything in or out.
• Policy will need to be sufficiently restrictive until the Board is confident that inflation is moving sustainably towards the target range and will rely upon the incoming data and the evolving assessment of risks to guide its decisions.
• Next meeting is on 5 November 2024.

Next 24 Hours Bias

Medium Bullish

The Kiwi Dollar (NZD)

Key news events today

No major news events.

What can we expect from NZD today?

The Kiwi climbed above the 0.6200-level momentarily yesterday before retreating towards 0.6180 by the end of the U.S. session. This currency pair was rising once more towards 0.6200 at the beginning of the Asia session – these are the support and resistance levels for today.

Support: 0.6120

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

Medium Bullish

The Japanese Yen (JPY)

Key news events today

No major news events.

What can we expect from JPY today?

Higher demand for the greenback lifted USD/JPY overnight as it came within a whisker of 142.50. This currency pair dipped under 142 as Asian markets came online and could edge lower 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

Weak Bearish

The Euro (EUR)

Key news events today

CPI (9:00 am GMT)

What can we expect from EUR today?

The final CPI reading for the month of August is expected to show headline CPI ease to 2.2% YoY while the core reading moderates to 2.8% YoY. Inflationary pressures have dissipated strongly in the Euro Area over the past 12 months and another round of cooler prices could limit the Euro’s recent gains in the interim.

Central Bank Notes:

• The Governing Council today decided to reduce the three key ECB interest rates on 12th September, after holding rates steady in July.
• Accordingly, the interest rate on the main refinancing operations and the interest rates on the marginal lending facility and the deposit facility will be decreased to 3.65%, 3.90% and 3.50% respectively.
• Recent inflation data have come in broadly as expected, and the latest ECB staff projections see headline inflation averaging 2.5% in 2024, 2.2% in 2025 and 1.9% in 2026.
• For core inflation, the projections for 2024 and 2025 have been revised up slightly, as services inflation has been higher than expected. At the same time, staff continue to expect a rapid decline in core inflation, from 2.9% this year to 2.3% in 2025 and 2.0% in 2026.
• ECB staff projections forecast that the economy will grow by 0.8% in 2024, rising to 1.3% in 2025 and 1.5% in 2026 which is a slight downward revision compared with the June projections, mainly owing to a weaker contribution from domestic demand over the next few quarters.
• The Eurosystem no longer reinvests all of the principal payments from maturing securities purchased under the pandemic emergency purchase programme (PEPP), reducing the PEPP portfolio by €7.5 billion per month on average and the Governing Council intends to discontinue reinvestments under the PEPP at the end of 2024.
• The Council is determined to ensure that inflation returns to its 2% medium-term target in a timely manner and will keep policy rates sufficiently restrictive for as long as necessary to achieve this aim and is not pre-committing to a particular rate path.
• Next meeting is on 17 October 2024.

Next 24 Hours Bias

Medium Bullish

The Swiss Franc (CHF)

Key news events today

No major news events.

What can we expect from CHF today?

With demand for the dollar picking up overnight, USD/CHF hit an overnight high of 0.8476. This currency pulled back towards 0.8450 as Asian markets came online and could edge lower as the day progresses – these are the support and resistance levels for today.

Support: 0.8400

Resistance: 0.8500

Central Bank Notes:

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

Next 24 Hours Bias

Weak Bearish

The Pound (GBP)

Key news events today

CPI (6:00 am GMT)

What can we expect from GBP today?

Inflation in the U.K. has moderated significantly lower in 2024 as headline and core CPI both slowed to 2.2% and 3.3% respectively YoY in July. However, the estimate for August points to an unchanged reading of 2.2% for headline CPI and suggests a temporary stall in progress towards the Bank of England’s target of 2%. Should inflationary pressures pick up unexpectedly, it could boost the Cable before the start of the European trading session.

Central Bank Notes:

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

Next 24 Hours Bias

Weak Bullish

The Canadian Dollar (CAD)

Key news events today

No major news events.

What can we expect from CAD today?

Demand for the Loonie has waned since the beginning of September causing USD/CAD to retrace higher and reach the threshold of 1.3600. This currency pair was floating around 1.3580 at the beginning of the Asia session – these are the support and resistance levels for today.

Support: 1.3500

Resistance: 1.3630

Central Bank Notes:

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

Next 24 Hours Bias

Weak Bearish

Oil

Key news events today

EIA Crude Oil Inventories (2:30 pm GMT)

What can we expect from Oil today?

After declining for three consecutive weeks, the API stockpiles surprised markets with a build of 1.96M barrels of crude oil. However, this latest inventory update did not prevent prices from climbing higher. WTI oil rose within a whisker of $72 per barrel as geo-political tensions in the Middle East escalated on Tuesday. However, this benchmark tumbled under $70 as Asian markets came online but higher volatility for this commodity continues to prevail.

Next 24 Hours Bias

Weak Bullish

The post IC Markets Asia Fundamental Forecast | 18 September 2024 first appeared on IC Markets | Official Blog.

• A JP Morgan strategist says a Federal Reserve rate cut is not needed
• Australia CPI preview – CBA expect “Headline inflation in August back within RBA’s target”
• FOMC forecasts from 28 bank analysts. Forecasts for today’s cut, dot plots, 2024 and 2025
• People’s Bank of China will be setting interest rates this week and next
• Australian August Monthly CPI preview – Westpac expect 2.7% y/y for the monthly read
• PBOC sets USD/ CNY reference rate for today at 7.0870 (vs. estimate at 7.0828)
• Australia leading index in August shows still very slow growth ahead
• El Erian cites ‘The Economist’ – Fed rate cuts “may disappoint “
• Japan August data shows a big miss for both exports and imports – recap
• Japan Machinery orders for July 2024: -0.1% m/m (expected +0.8%)
• Japan August exports +5.6% y/y (expected +10.0%) & imports +2.3% y/y (expected +16.6%)
• Asian markets holidays reminder – Hong Kong is closed today
• JP Morgan CEO Dimon says FOMC rate cut today is “not going to be earth-shattering.”
• New Zealand data – Current account deficit for Q2 comes in larger than expected
• A 50bp Federal Reserve rate cut coming today? History says ‘No’.
• Bank of Canada Rogers still sees work to do on inflation, but core shouold decline
• North Korea has fired off another ballistic missile
• US to buy 6 million barrels of oil for its Strategic Petroleum Reserve
• Most analysts expect a 25bp interest rate cut from the Federal Reserve today
• New Zealand data – Q3 consumer confidence 90.8 (prior 82.2)
• RBA Assistant Governor (Financial System) Jones speaking today, Wednesday, September 18
• Oil – private survey of inventory shows a headline crude oil build vs. draw expected
• Forexlive Americas FX news wrap: USD/JPY rebounds on solid US retail sales
• S&P squeezes out a small gain for the 7th consecutive higher close
• Trade ideas thread – Wednesday, 18 September, insightful charts, technical analysis, ideas

USD/JPY
swung lower through the session, retracing around 50% or so of its
gain on Tuesday during Europe and US time. We had data from Japan
that missed expectations but the yen strengthened regardless. The
move lower for the USD was reflected across some of major FX, albeit
in smaller ranges. EUR, AUD, NZD all gained a few tics.

Bank
of Canada’s Senior Deputy Governor Carolyn Rogers spoke
late in the Canadian day. She said while the yearly headline
inflation rate has come back to target officials at the Bank want to
see even more progress
on inflation. USD/CAD
has done little through the session.

Mainland
China returned from holidays today (Hong Kong was out). The People’s
Bank of China set the USD/CNY reference rate at its strongest (for
CNY) since January, and injected a hefty 568bn yuan into the banking
system. However, this was more than offset by 487 bn yuan of reverse repo and
591 bn yuan of MLF loans expiring today for a 500bn+ yuan net drain.

Still
to come today is the rate cut from the Federal Reserve’s Federal
Open Market Committee (FOMC). Most analysts expect a 25bp rate cut
while market pricing is leaning towards a 50bp rate cut. The
announcement is due at 1800 GMT, 1400 US Eastern time.

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

US Markets Steady Ahead of Fed – Nasdaq Up 0.2%

US markets experienced a relatively calm day yesterday as investors awaited today’s crucial rate decision from the Federal Reserve. The Dow finished marginally lower, down 0.04%, while the S&P 500 edged up 0.03%. The Nasdaq gained 0.20%, as markets braced for the Federal Open Market Committee’s (FOMC) pivotal announcement. US Treasury yields recouped some ground, with the 2-year yield climbing 4.4 basis points to 3.598%, and the benchmark 10-year yield rising 2.3 basis points to close at 3.621%. The US dollar also regained some of its recent losses, moving 0.28% higher on the DXY, following slightly better-than-expected Retail Sales data. Oil prices advanced once again, with Brent crude rising 1.31% to $73.70 per barrel, and WTI gaining 1.57% to reach $71.19. Meanwhile, gold prices retreated from all-time highs, slipping 0.51% to close at $2,569.51.

Markets Brace for FOMC Decision

Although the Federal Reserve’s meeting has been widely anticipated for what seems like weeks, today is indeed a pivotal moment for markets. Investors are prepared for significant volatility following the FOMC’s decision later today. The odds now stand at approximately 65% in favour of a 50-basis-point rate cut, a sharp rise from just 25% a few days ago. Whatever decision comes from Jerome Powell and his colleagues, the market is likely to experience substantial shifts. The US dollar saw a modest rally last night, but it remains vulnerable after recent declines. A more cautious Fed stance or a 25-basis-point cut could prompt further corrections in what is currently a sensitive market environment.

A Huge Day for Traders

Today marks a critical day for traders across global markets, with the Federal Reserve expected to deliver its first interest rate cut in years. While the macroeconomic calendar is relatively quiet during Asian trading hours, attention will turn to the UK once European markets open, with UK CPI data due to be released. Expectations are for a year-on-year figure around 2.2%, and any deviation from this could trigger movement in the pound. However, all eyes will be on the US session as markets largely overlook tier-2 Building Permits data ahead of the Fed’s crucial update towards the end of the session. Traders are expecting significant market movements following the announcement, which are likely to carry through into the Asian session tomorrow, with particular focus on the yen as the Bank of Japan delivers its own rate decision just a few hours after the Fed.

The post General Market Analysis – 18/09/24 first appeared on IC Markets | Official Blog.

Australia Westpac Leading Index for August 2024 -0.05% m/m

• prior –0.03%

Westpac note, in summary:

• The six-month annualised growth rate in the Westpac-Melbourne Institute Leading Index, which indicates the likely pace of economic activity relative to trend three to nine months into the future, declined from +0.04% in July to -0.27% in August.
• Commodity price fall a significant drag on momentum.
• Other components stable rather than weak.
• Signal points to activity remaining subdued through first half of 2025.

–

The index signalling a potential slowdown in economic activity is troubling news. Australian economic growth is already extremely sluggish.

We have jobs and inflation data due in the next week from Australia. Early CPI previews I am seeing show expectations of the y/y rate moving down towards the centre of the RBA 2 – 3% target bad. Rate cuts maye may be on the horizon.

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

An incredible attack occurred in Lebanon today with 2800 members of Hezbollah and other Iranian-linked individuals wounded and 200 in critical condition.

The pagers they were using exploded at the same time in what was surely some kind of long-planned attack.

Hezbollah had been using cell phones to coordinate but evidently switched to pagers due to phone security risks. However the pagers must have been intercepted with small explosives placed inside.

It’s perhaps the greatest-ever example of a technological, targeted attack. It’s also some Black Mirror-level stuff.

Lebanon’s heath authority said so far 8 people are confirmed dead.

Here is a video of one of the explosions.

This article was written by Adam Button at www.forexlive.com.

A miss for the data – but do note this is a choppy data series.

—

The core machinery orders data is a highly volatile series

• its used as a leading indicator of capital spending in the coming six to nine months

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

Japan trade data for August 2024 … dreadful misses for both exports and imports.

The ‘adjusted’ trade balance (not shown in the screen shot above) is -0.6tln yen

• expected -0.96tln
• prior -0.76tln yen

Exports to:

• China +5.2% y/y
• the EU -8.1% y/y
• the US -0.7% y/y

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

It’s a Hong Kong public holiday for the day following the Chinese Mid-Autumn Festival

• Hong Kong Market is closed
• Both Northbound and Southbound Stock Connect trading is closed

—

China / Hong Kong Stock Connect is a mutual market access program that allows investors in mainland China and Hong Kong to trade and invest in each other’s stock markets. This initiative aims to facilitate cross-border trading, broadening market access for international investors and providing more liquidity to both markets. Here’s a breakdown:

1. Two Main Programs:

   • Shanghai-Hong Kong Stock Connect (launched in 2014): Connects the Shanghai Stock Exchange (SSE) with the Hong Kong Stock Exchange (HKEX).
   • Shenzhen-Hong Kong Stock Connect (launched in 2016): Connects the Shenzhen Stock Exchange (SZSE) with HKEX.

2. Northbound Trading: Allows international and Hong Kong investors to buy eligible shares listed on the Shanghai and Shenzhen exchanges through the HKEX.

3. Southbound Trading: Enables mainland Chinese investors to trade eligible shares listed on the Hong Kong Stock Exchange through the SSE or SZSE.

4. Quota Systems: The program initially had daily and aggregate quotas for trading to ensure controlled market access, though the aggregate quota was later removed in 2018. Daily quotas still limit the amount of money that can flow in and out each day.

   In summary:

   • Provides foreign investors access to China’s A-share market.
   • Allows mainland Chinese investors to diversify their portfolio with Hong Kong-listed stocks.
   • Promotes market integration and opens up new opportunities for both retail and institutional investors.

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

NZD/USD not showing much response. Currently up a few wee tics around 0.6189.

The data focus for the week is Q2 GDP due Thursday local NZ time.

The current account represents the most comprehensive gauge of a nation’s international financial interactions. It encapsulates not just the exchange of goods and services, but also earnings from foreign investments and payments made on investments from abroad within NZ. In addition, it covers transfers like overseas aid and remittances.

—

More on the “current account”

• refers to a component of a country’s balance of payments that measures the flow of goods, services, investment income, and unilateral transfers (such as remittances and foreign aid) between the country and the rest of the world.
• The current account is divided into several categories:
• Trade Balance: The value of exported goods minus the value of imported goods.
• Net Exports/Imports of Services: Such as tourism, software services, etc.
• Net Investment Income: Includes income from assets held overseas, such as dividends and interest, minus similar payments made to foreign investors who own assets in the country.
• Unilateral Transfers: Transfers that don’t involve a quid pro quo, such as remittances, foreign aid, grants, etc.
• A positive current account balance indicates that a country is exporting more than it is importing, effectively lending to the rest of the world. Conversely, a negative current account balance means that a country is importing more than it is exporting and is thus borrowing from other countries. The current account, together with the capital and financial accounts, make up a country’s balance of payments, providing a comprehensive view of a country’s economic transactions with the rest of the world.

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