IC Markets Europe Fundamental Forecast | 28 October 2024

What happened in the Asia session?

The yen depreciated sharply this morning as the ruling Liberal Democratic Party lost its majority in Sunday’s general election, plunging the country into political instability. The yen slumped to a three-month low as USD/JPY gapped higher at the open to trade around 153.25 after closing at 152.23 on Friday. 

What does it mean for the Europe & US sessions?

Bank of Canada (BoC) Governor Tiff Macklem will be participating in a fireside chat about the state of the Canadian economy at The Logic Summit in Toronto. The Loonie has depreciated significantly since the end of September causing USD/CAD to hit 1.3900 this morning – Governor Macklem’s statements and remarks could inject higher volatility for this currency later today.

The Dollar Index (DXY)

Key news events today

No major news events.

What can we expect from DXY today?

Demand for the greenback remains robust as the DXY rose strongly towards 104.50 as markets re-opened this morning. With an extremely quiet calendar on this brand new trading day, this index is likely to remain elevated.

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

Weak Bullish

Gold (XAU)

Key news events today

No major news events.

What can we expect from Gold today?

Spot prices for gold made its most recent all-time high of $2,758.45/oz on Wednesday 23rd of October before easing slightly to close at $2,747.39 on Friday. This precious metal notched its third week of gains. With demand for the dollar looking strong once again as re-opened this morning, gold could pull back slightly as the day progresses but prices are likely to remain elevated.

Next 24 Hours Bias

Weak Bearish

The Australian Dollar (AUD)

Key news events today

No major news events.

What can we expect from AUD today?

The Aussie fell for the fourth week in a row as it closed at 0.6604 last Friday. Overhead pressures remain in place for this currency pair and it was hovering above the threshold of 0.6600 as Asian markets came online – these are the support and resistance levels for today.

Support: 0.6590

Resistance: 0.6645

Central Bank Notes:

• The RBA kept the cash rate target unchanged at 4.35% on 24th September, marking the seventh 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 is still some way above the midpoint of the 2 to 3% target range.
• The trimmed-mean CPI was 3.9% YoY in the June quarter, broadly as forecast in the May Statement on Monetary Policy (SMP) while headline inflation declined in July as measured by the monthly CPI indicator.
• Headline inflation is expected to fall further temporarily but current forecasts do not see inflation returning sustainably to target until 2026.
• GDP data for the June quarter have confirmed that growth has been weak but growth in aggregate consumer demand, which includes spending by temporary residents such as students and tourists, remained more resilient.
• Broader indicators suggest that labour market conditions remain tight, despite some signs of gradual easing while wage pressures have eased somewhat.
• Data since then have reinforced the need to remain vigilant to upside risks to inflation and the Board is not ruling anything in or out while agreeing that policy will need to be sufficiently restrictive until the Board is confident that inflation is moving sustainably towards the target range.
• The Board will continue to rely upon the data and the evolving assessment of risks to guide its decisions and will pay close attention to developments in the global economy and financial markets, trends in domestic demand, and the outlook for inflation and the labour market.
• Next meeting is on 5 November 2024.

Next 24 Hours Bias

Weak Bearish

The Kiwi Dollar (NZD)

Key news events today

No major news events.

What can we expect from NZD today?

Just like its Pacific neighbour, the Kiwi has been one of the weakest currencies over the past four weeks as it closed at 0.5976 on Friday. This currency pair continues to face significant headwinds and was drifting lower towards 0.5950 at the beginning of the Asia session – these are the support and resistance levels for today.

Support: 0.5920

Resistance: 0.6010

Central Bank Notes:

• The Monetary Policy Committee agreed to reduce the OCR by 50 basis points, bringing it down to 4.75% in October as inflation converges to target.
• The Committee assesses that annual consumer price inflation is within its 1 to 3% inflation target range and converging on the 2% midpoint.
• Economic activity in New Zealand is subdued, in part due to restrictive monetary policy while business investment and consumer spending have been weak, and employment conditions continue to soften.
• The economy is now in a position of excess capacity, encouraging price- and wage-setting to adjust to a low-inflation economy; lower import prices have assisted the disinflation.
• High-frequency indicators point to continued subdued growth in the near term, mostly due to weak consumer spending and business investment while labour market conditions are expected to ease further, with filled jobs and advertised vacancy rates continuing to decline.
• The Committee confirmed that future changes to the OCR would depend on its evolving assessment of the economy.
• Next meeting is on 27 November 2024.

Next 24 Hours Bias

Weak Bearish

The Japanese Yen (JPY)

Key news events today

No major news events.

What can we expect from JPY today?

The yen depreciated sharply this morning as the ruling Liberal Democratic Party lost its majority in Sunday’s general election, plunging the country into political instability. The yen slumped to a three-month low as USD/JPY gapped higher at the open to trade around 153.25 after closing at 152.23 on Friday. This currency pair is likely to rise steadily towards 154 as the day progresses – these are the support and resistance levels for today.

Support: 151.85

Resistance: 154.87

Central Bank Notes:

• The Policy Board of the Bank of Japan decided, by a unanimous vote, to set the following guideline for money market operations for the intermeeting period:
  1. The Bank will encourage the uncollateralized overnight call rate to remain at around 0.25%.
  2. The Bank will embark 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 consumer price index (CPI, all items less fresh food) has been in the range of 2.5 to 3.0% recently, as services prices have continued to rise moderately, reflecting factors such as wage increases, although the effects of a passthrough to consumer prices of cost increases led by the past rise in import prices have waned.
• 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 of the July 2024 Outlook for Economic Activity and Prices, it is likely to be at a level that is generally consistent with the price stability target.
• Japan’s economy has recovered moderately, although some weakness has been seen in part, but it 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 31 October 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 fell for the fourth consecutive week as it closed at 1.0796 on Friday as demand for the dollar remains robust. This currency pair was floating around 1.0790 as Asian markets came online – these are the support and resistance levels for today.

Support: 1.0768

Resistance: 1.0840

Central Bank Notes:

• The Governing Council today decided to reduce the three key ECB interest rates by 25 basis points on 17th October to mark the second successive rate cut.
• 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 3.40%, 3.65% and 3.25% respectively.
• The incoming information on inflation shows that the disinflationary process is well on track while the inflation outlook is also affected by recent downside surprises in indicators of economic activity.
• Inflation is expected to rise in the coming months, before declining to target in the course of next year. Domestic inflation remains high, as wages are still rising at an elevated pace. At the same time, labour cost pressures are set to continue easing gradually, with profits partially buffering their impact on inflation.
• The Eurosystem no longer reinvests all of the principal payments from maturing securities purchased under the pandemic emergency purchase programme (PEPP), reducing the PEPP portfolio by €7.5 billion per month on average and the Governing Council intends to discontinue reinvestments under the PEPP at the end of 2024.
• The Council is determined to ensure that inflation returns to its 2% medium-term target in a timely manner and will keep policy rates sufficiently restrictive for as long as necessary to achieve this aim and is not pre-committing to a particular rate path.
• Next meeting is on 12 December 2024.

Next 24 Hours Bias

Weak Bearish

The Swiss Franc (CHF)

Key news events today

No major news events.

What can we expect from CHF today?

A weak franc coupled with high demand for the dollar has lifted USD/CHF over the past few weeks. This currency pair was rising strongly towards 0.8700 at the beginning of the Asia session – these are the support and resistance levels for today.

Support: 0.8670

Resistance: 0.8730

Central Bank Notes:

• The SNB eased monetary policy by lowering its key policy rate by 25 basis points for the third consecutive meeting, going from 1.25% to 1.00% in September.
• Inflationary pressure has again decreased significantly compared to the previous quarter, reflecting the appreciation of the Swiss franc over the last three months.
• Inflation in the period since the last monetary policy assessment was lower than expected, standing at 1.1% in August compared to 1.4% in May.
• The new conditional inflation forecast is significantly lower than that of June: 1.2% for 2024, 0.6% for 2025 and 0.7% for 2026, based on the assumption that the SNB policy rate is 1.0% over the entire forecast horizon.
• Swiss GDP growth was solid in the second quarter of 2024 as momentum in the chemicals/pharmaceuticals industry was particularly strong.
• However, growth is likely to remain rather modest in the coming quarters due to the recent appreciation of the Swiss franc and the moderate development of the global economy.
• The SNB anticipates GDP growth of around 1% this year while currently expecting growth of around 1.5% for 2025.
• Further cuts in the SNB policy rate may become necessary in the coming quarters to ensure price stability over the medium term.
• Next meeting is on 12 December 2024.

Next 24 Hours Bias

Medium Bullish

The Pound (GBP)

Key news events today

No major news events.

What can we expect from GBP today?

The Cable fell for the fourth consecutive week as it closed at 1.2961 on Friday as demand for the dollar remains robust. This currency pair was sliding towards 1.2950 as Asian markets came online – these are the support and resistance levels for today.

Support: 1.2900

Resistance: 1.3000

Central Bank Notes:

• The Bank of England’s Monetary Policy Committee (MPC) voted by a majority of 8 to 1 to maintain Bank Rate at 5.0% while one member preferred to reduce Bank Rate by 25 basis points to 4.75%, on 19th September 2024.
• The MPC also voted unanimously to reduce the stock of UK government bond purchases held for monetary policy purposes, and financed by the issuance of central bank reserves, by £100B over the next 12 months to a total of £558B.
• Twelve-month CPI inflation had been 2.2% in August and July, slightly lower than August Report expectations. Consumer core goods and food price inflation had remained subdued as the cost pressures from previous global shocks had unwound further, and producer price levels had been broadly flat while energy prices had continued to drag on CPI inflation.
• Services price inflation had increased to 5.6% in August compared to 5.2% in July and 5.7% in June. This was slightly lower in August than had been expected at the time of the August Report. There had been volatility in a number of services sub-components in the July and August outturns, including accommodation and catering prices and airfares.
• GDP had increased by 0.6% in 2024 Q2, 0.1 percentage points lower than had been expected in the August Monetary Policy Report. That had followed 0.7% growth in Q1, but Bank staff judged that the underlying pace of growth had been somewhat weaker during the first half of the year. 
• Headline GDP growth was expected to return to its underlying pace of around 0.3% per quarter in the second half of the year. Based on a broad set of indicators, the MPC judged that the labour market continued to loosen but that it remained tight by historical standards.
• Monetary policy decisions have been guided by the need to squeeze persistent inflationary pressures out of the system so as to return CPI inflation to the 2% target both in a timely manner and on a lasting basis; policy has been acting to ensure that inflation expectations remain well anchored.
• In the absence of material developments, a gradual approach to removing policy restraint remains appropriate while 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 7 November 2024.

Next 24 Hours Bias

Weak Bearish

The Canadian Dollar (CAD)

Key news events today

BoC Gov Macklem Speaks (5:30 pm GMT)

What can we expect from CAD today?

Bank of Canada (BoC) Governor Tiff Macklem will be participating in a fireside chat about the state of the Canadian economy at The Logic Summit in Toronto. The Loonie has depreciated significantly since the end of September causing USD/CAD to hit 1.3900 this morning – Governor Macklem’s statements and remarks could inject higher volatility for this currency later today.

Central Bank Notes:

• The Bank of Canada reduced its target for the overnight rate by 50 basis points bringing it down to 3.75% while continuing its policy of balance sheet normalization on 23rd September; this marked the fourth consecutive meeting where rates were reduced.
• Canada’s economy grew at around 2% in the first half of the year and growth of 1.75% is expected in the second half; consumption has continued to grow but is declining on a per person basis while exports have been boosted by the opening of the Trans Mountain Expansion pipeline.
• Overall, the Bank forecasts GDP growth of 1.2% in 2024, 2.1% in 2025, and 2.3% in 2026 – as the economy strengthens, excess supply is gradually absorbed.
• The labour market remains soft with unemployment at 6.5% in September while wage growth remains elevated relative to productivity growth. Overall, the economy continues to be in excess supply.
• Headline CPI has declined significantly from 2.7% in June to 1.6% in September while shelter costs inflation remains elevated but has begun to ease; the preferred measures of core inflation are now below 2.5%.
• Excess supply elsewhere in the economy has reduced inflation in the prices of many goods and services while the drop in global oil prices has led to lower gasoline prices – these factors have all combined to bring inflation down.
• The Bank expects inflation to remain close to the target over the projection horizon, with the upward and downward pressures on inflation roughly balancing out; the upward pressure from shelter and other services gradually diminishes, and the downward pressure on inflation recedes as excess supply in the economy is absorbed.
• With inflation now back around the 2% target, the Governing Council decided to reduce the policy rate by 50 basis points to support economic growth and keep inflation close to the middle of the 1% to 3% range.
• If the economy evolves broadly in line with the latest forecast, further reduction of the policy rate can be expected but the timing and pace of additional reductions in the policy rate will be guided by incoming information and assessment of its implications for the inflation outlook.
• The Bank is committed to maintaining price stability for Canadians by keeping inflation close to the 2% target.
• Next meeting is on 11 December 2024.

Next 24 Hours Bias

Medium Bullish

Oil

Key news events today

No major news events.

What can we expect from Oil today?

The weekend saw geopolitical tensions in the Middle East come to the forefront once again with Israel carrying out strikes against Iran but steering clear of any oil and nuclear sites. This latest incident was less severe than originally feared while Iran downplayed the impact of the attack, causing oil prices to fall sharply as markets re-opened early this morning. After closing at $71.69 per barrel on Friday, WTI oil plunged nearly 5.5% to hit a low of $67.79 before stabilizing around $68.50. High volatility continues to surround this commodity and traders should brace themselves for wild fluctuations for crude prices.

Next 24 Hours Bias

Medium Bearish

The post IC Markets Europe Fundamental Forecast | 28 October 2024 first appeared on IC Markets | Official Blog.

The Japanese yen is hogging most of the attention to start the week, following the results of the weekend election. More on that here:

• ForexLive Asia-Pacific FX news wrap: Yen, oil both sharply lower
• Japanese yen in the spotlight after weekend election

However, just be wary that bond yields are still a key focus point for broader markets. And with yields sitting higher again today, that is helping to underpin the dollar as well. And that comes despite US futures looking to be on the up as oil prices sag amid better geopolitical developments here.

10-year Treasury yields are up nearly 4 bps to 4.28%, its highest in three months. And that’s also playing a key role in driving USD/JPY higher to start the week, with the pair up 0.9% to 153.65 currently.

Looking to European trading today, there’s not much on the data front to really shake things up. So, traders will be left in figuring out the factors above and letting that run in the early stages this week.

As a reminder though, the clocks have been set back by an hour in Europe as of the weekend with daylight savings concluding. Just a heads up especially to those unaffected by the change, as to the market timing for the open and data releases.

0900 GMT – SNB total sight deposits w.e. 25 October1100 GMT – UK October CBI retailing reported sales

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.

Weeks of speculating about how Israel would respond to Iran’s attacks had markets worried about strikes on energy infrastructure or something that would spark a broader war.

Instead, the attacks look to be measured and US President Biden immediately called for a halt to escalation.

Reports from Iran say the attacks caused only limited damage and Supreme Leader Ayatollah Ali Khamenei didn’t sound eager for a further fight, though the comments certainly didn’t rule it out.

“The evil committed by the Zionist regime (Israel) two nights ago should
neither be downplayed nor exaggerated”, IRNA cited Khamenei as saying.

The Iranian Foreign Ministry said Iran would respond to the airstrikes,
calling them a clear violation of international law and asserted the right to self-defense.

Missile factories were supposed targets along with other military sites, including air defense.

It’s hard to judge what will come next but I expect the oil market to take this at as a negative at the open. Crude was curiously bid on Friday despite the risk-off tone so I’d imagine about $2 of downside, though I also suspect the market had already sniffed out that energy infrastructure wouldn’t be hit.

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

It’s the first time in 15 years that Japan’s ruling coalition loses its majority, with the LDP seeing their number of seats erased from 247 coming into the election to just 191 seats. Together with their coalition partner, Komeito, they only managed 209 seats this time around and well short of the 233 seats needed for a majority to govern.

What a backfire for Ishiba, who dissolved the lower house just eight days into his tenure as prime minister at the start of the month.

Komeito chief, Keiichi Ishii, also lost his seat in what is the first time since 2009 that a Komeito leader did lose their seat in the election.

The result is a reflection of sentiment in Japan right now, with many voters feeling frustrated by the LDP’s handling of the economy and inflation pressures. The main opposition, Constitutional Democratic Party of Japan (CDP), were the biggest winners as such as they won 148 seats – up from 96 seats previously.

The election “uncertainty” has weighed on the Japanese yen currency as such to start the week. USD/JPY opened with a gap higher and is holding to that, trading up 0.9% to 153.50-60 levels currently.

That is keeping the upside momentum from the break higher last week, with price also creeping past the 61.8 Fib retracement level at 153.40 currently.

So, what’s next for Japan in terms of the election aftermath?

As much as the CDP were the biggest winners, they don’t present much of any threat in stealing a majority. They just don’t have the backing of the other smaller parties as well given their political leanings and the fragmented and diverse agenda among Japan’s other political parties.

As such, the likeliest outcome will just be LDP and Komeito teaming up with another one or two smaller players to reach the needed 233 seats to govern.

In all likelihood, they will be partnering with the Nippon Ishin no Kai party which may align with the LDP on certain economic policies. They are one to push for economic and regulatory reform but in a moderate manner. They aren’t bold enough to push their agenda at the risk of major disruptions to the economy and I think the LDP can live with that.

The only question then is what happens to pressure on monetary policy?

I don’t think any new partners to the coalition will make a significant enough difference to pressure the BOJ into acting quicker. The LDP will still hold the biggest sway in that regard. However, they now have to be more “open” into listening to the views of their potential coalition mates. But that’s about it.

The key question is now whether the BOJ will see fit to act in December to hike rates again. October is definitely off the table and more so given the drama here.

Policymakers might prefer more political stability before taking any drastic measures and that’s about the only reason I can think of in putting off the central bank from acting before year-end.

I reckon it’s now a case of waiting to see how quickly the drama dies down after the coalition majority is formed. Otherwise, the BOJ might have to look to January instead as the next possible time to finally move things along again.

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 reversal off the pivot and pull back towards the 1st support.

Pivot: 104.68
Supporting reasons: Identified as an overlap resistance that aligns close to a 78.6% Fibonacci retracement, indicating a potential level where selling pressures could intensify.

1st support: 103.67
Supporting reasons: Identified as a pullback support that aligns close to a 23.6% Fibonacci retracement, indicating a potential level where price could find support.

1st resistance: 105.51
Supporting reasons: Identified as an overlap resistance, indicating a potential area that could halt any further upward movement.

EUR/USD:

Potential Direction: Bullish
Overall momentum of the chart: Bearish

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

Pivot: 1.0768
Supporting reasons: Identified as an overlap support that aligns close to a 78.6% Fibonacci retracement, indicating a potential area where buying interests could pick up.

1st support: 1.0664
Supporting reasons: Identified as a multi-swing-low support, suggesting a potential area where price could find support once more.

1st resistance: 1.0867
Supporting reasons: Identified as a pullback resistance that aligns with a 23.6% Fibonacci retracement, indicating a potential area that could halt any further upward movement.

EUR/JPY:

Potential Direction: Bullish
Overall momentum of the chart: Bullish

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

Pivot: 164.59
Supporting reasons: Identified as a pullback support that aligns close to a 23.6% Fibonacci retracement, indicating a potential level where buying interests could pick up to resume the uptrend.

1st support: 162.38
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: 168.37
Supporting reasons: Identified as a pullback resistance that aligns close to a 61.8% Fibonacci retracement, indicating a potential area that could halt any further upward movement.

EUR/GBP:

Potential Direction: Bearish
Overall momentum of the chart: Neutral

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

Pivot: 0.8344
Supporting reasons: Identified as a pullback resistance that aligns close to a 38.2% Fibonacci retracement, indicating a potential area where selling pressures could intensify.

1st support: 0.8312
Supporting reasons: Identified as a multi-swing-low support, indicating a potential level where price could find support once more.

1st resistance: 0.8367
Supporting reasons: Identified as an overlap resistance that aligns with a 50% Fibonacci retracement, indicating a potential area that could halt any further upward movement.

GBP/USD:

Potential Direction: Bullish
Overall momentum of the chart: Bearish

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

Pivot: 1.2911
Supporting reasons: Identified as a pullback support that aligns close to a 127.2% Fibonacci extension, indicating a potential area where buying interests could pick up.

1st support: 1.2807

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

1st resistance: 1.3044
Supporting reasons: Identified as an overlap resistance that aligns close to a 23.6% Fibonacci retracement, indicating a potential area that could halt any further upward movement.

GBP/JPY:

Potential Direction: Bullish
Overall momentum of the chart: Bullish

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

Pivot: 197.55
Supporting reasons: Identified as a pullback support, indicating a potential level where buying interests could pick up to resume the uptrend.

1st support: 195.71

Supporting reasons: Identified as a pullback support that aligns with a 38.2% Fibonacci retracement, indicating a potential level where price could find support.

1st resistance: 200.59

Supporting reasons: Identified as an overlap resistance, indicating a potential area that could halt any further upward movement.

USD/CHF:

Potential Direction: Bearish

Overall momentum of the chart: Bullish

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

Pivot: 0.8725
Supporting reasons: Identified as a swing-high resistance, indicating a potential area where selling pressures could intensify.

1st support: 0.8641
Supporting reasons: Identified as an overlap support, indicating a potential level where price could find support once more.

1st resistance: 0.8826
Supporting reasons: Identified as a pullback resistance that aligns close to a 127.2% Fibonacci extension, indicating a potential area that could halt any further upward movement.

USD/JPY:

Potential Direction: Bullish
Overall momentum of the chart: Bullish

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

Pivot: 152.92
Supporting reasons: Identified as pullback support, indicating a potential level where buying interests could pick up to resume the uptrend.

1st support: 1450.77
Supporting reasons: Identified as an overlap support that aligns close to a 23.6% Fibonacci retracement, indicating a potential level where price could find support.

1st resistance: 157.41
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.

USD/CAD:

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: 1.3946
Supporting reasons: Identified as a swing-high resistance, indicating a potential area where selling pressures could intensify.

1st support: 1.3879
Supporting reasons: Identified as a pullback support, indicating a key level where price could find support once again.

1st resistance: 1.4004
Supporting reasons: Identified as a swing-high resistance, indicating a potential area that could halt any further upward movement.

AUD/USD:

Potential Direction: Bullish
Overall momentum of the chart: Bearish

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

Pivot: 0.6572
Supporting reasons: Identified as a pullback support, indicating a potential area where buying interests could pick up to stage a minor rebound.

1st support: 0.6488
Supporting reasons: Identified as a swing-low support, indicating a potential level where price could find support once again.

1st resistance: 0.6641
Supporting reasons: Identified as a pullback resistance, indicating a potential area that could halt any further upward movement.

NZD/USD

Potential Direction: Bullish
Overall momentum of the chart: Bearish

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

Pivot: 0.5923

Supporting reasons: Identified as a pullback support, indicating a potential level where buying interests could pick up to stage a minor rebound.

1st support: 0.5860
Supporting reasons: Identified as a multi-swing-low support, indicating a potential level where price could find support once more.

1st resistance: 0.5984
Supporting reasons: Identified as a pullback resistance, indicating a potential area that could halt any further upward movement.

US30 (DJIA):

Potential Direction: Bearish
Overall momentum of the chart: Neutral

Price could rise towards the pivot and potentially make a bearish reversal off this level to fall rise towards the 1st support.

Pivot: 42,747.66

Supporting reasons: Identified as a pullback resistance that aligns with a 50% Fibonacci retracement, indicating a potential level where selling pressures could intensify.

1st support: 41,895.87

Supporting reasons: Identified as a pullback support that aligns close to a 38.2% Fibonacci retracement, indicating a potential level where price could find support once more.

1st resistance: 43,330.76

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

DE40 (DAX):

Potential Direction: Bearish
Overall momentum of the chart: Neutral

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

Pivot: 19,670.10
Supporting reasons: Identified as a swing-high resistance that aligns with a 127.2% Fibonacci extension, indicating a potential level where selling pressures could intensify.

1st support: 19,354.80
Supporting reasons: Identified as a pullback support that aligns with a confluence of Fibonacci levels i.e. the 23.6% and 50% retracements, indicating a key level where price could find support once more.

1st resistance: 19,857.15
Supporting reasons: Identified as a resistance that aligns with a 161.8% Fibonacci extension, indicating a potential area that could halt any further upward movement.

US500 (S&P 500): 

Potential Direction: Bearish
Overall momentum of the chart: Neutral

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

Pivot: 5,872.60
Supporting reasons: Identified as a swing-high resistance that aligns close to a 65.8% Fibonacci projection, indicating a potential level where selling pressures could intensify.

1st support: 5,767.00
Supporting reasons: Identified as an overlap support that aligns with a confluence of Fibonacci levels i.e. the 23.6% and 50% retracements, indicating a potential level where price could find support once again.

1st resistance: 5,925.77
Supporting reasons: Identified as a resistance that aligns with a 78.6% Fibonacci projection, indicating a potential area that could halt any further upward movement.

BTC/USD (Bitcoin):

Potential Direction: Bearish
Overall momentum of the chart: Neutral

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

Pivot: 69,008.62
Supporting reasons: Identified as a swing-high resistance, indicating a potential level where selling pressures could intensify.

1st support: 65,857.98
Supporting reasons: Identified as an overlap support that aligns with a confluence of Fibonacci levels i.e. the 23.6% and 38.2% retracements, indicating a potential level where price could find support once more.

1st resistance: 71,470.28
Supporting reasons: Identified as a multi-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 make a bullish bounce off this level to rise towards the 1st resistance.

Pivot: 2,347.98
Supporting reasons: Identified as a swing-low support, indicating a potential level where buying interests could pick up to stage a minor rebound.

1st support: 2,223.09
Supporting reasons: Identified as a swing-low support, indicating a potential level where price could find support once again.

1st resistance: 2,768.21
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: 68.24
Supporting reasons: Identified as a swing-low support, indicating a potential level where buying interests could pick up to stage a minor rebound.

1st support: 66.66
Supporting reasons: Identified as a swing-low support, indicating a key level where price could find support once more.

1st resistance: 73.14
Supporting reasons: Identified as an overlap resistance, indicating a potential area that could halt any further upward movement.

XAU/USD (GOLD):

Potential Direction: Bullish
Overall momentum of the chart: Neutral

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

Pivot: 2,714.25
Supporting reasons: Identified as a pullback support, indicating a potential level where buying interests could pick up to resume the uptrend.

1st support: 2,672.23
Supporting reasons: Identified as a pullback support that aligns close to a 50% Fibonacci retracement, indicating a key level where price could find support.

1st resistance: 2,772.07
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.

The accuracy, completeness and timeliness of the information contained on this site cannot be guaranteed. IC Markets does not warranty, guarantee or make any representations, or assume any liability regarding financial results based on the use of the information in the site.

News, views, opinions, recommendations and other information obtained from sources outside of www.icmarkets.com, used in this site are believed to be reliable, but we cannot guarantee their accuracy or completeness. All such information is subject to change at any time without notice. IC Markets assumes no responsibility for the content of any linked site.

The fact that such links may exist does not indicate approval or endorsement of any material contained on any linked site. IC Markets is not liable for any harm caused by the transmission, through accessing the services or information on this site, of a computer virus, or other computer code or programming device that might be used to access, delete, damage, disable, disrupt or otherwise impede in any manner, the operation of the site or of any user’s software, hardware, data or property. 

The post Monday 28th October 2024: Technical Outlook and Review first appeared on IC Markets | Official Blog.

This serves as just a bit of a reminder and a heads up to the session ahead. For those unaffected, this will mean European markets opening an hour “later” than the time last week. The bright side at least is that there is a lesser lull in the handover to North America trading but only for this week.

The US and Canada will exit daylight savings in the upcoming Sunday on 3 November. So, do take note of that when adjusting your timing to the market calendar.

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

A strong gap higher at the open quickly turned into a day of disappointment for bulls. After surging nearly 50 points in early trading to hit 5860, sellers stepped in and methodically unwound those gains throughout the session. The late morning and early afternoon saw particularly steady selling pressure, though buyers did attempt to defend the 5820 level multiple times. A late-day drift lower saw the index ultimately close down just 2 points, a round trip that essentially erased virtually all of the day’s moves.

The weak close despite the strong open could be a warning sign for bulls heading into next week’s trading.

• S&P 500 flat
• NASDAQ Comp +0.6%
• Russell 2000 -0.5%
• Dow Jones Industrial Average -0.6%

On the week:

• S&P 500 -1.0%
• NASDAQ Comp +0.2%
• Russell 2000 -3.0%

This week’s decline in the S&P 500 breaks a six-week winning streak.

Next week is a huge one for the stock market with 5 of the Mag 7 reporting.

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

• Citi lowers its Q4 2024 Brent forecast to US$70/bbl (from $74/bbl)
• Bank of Canada Governor Tiff Macklem is speaking on Monday, October 28, 2024
• US election – Trump speaker calls Puerto Rico a pile of garbage, immediate backlash
• Reports that McDonald’s (MCD) is to resume selling Quarter Pounders in all restaurants
• PBOC sets USD/ CNY reference rate for today at 7.1307 (vs. estimate at 7.1311)
• China vice fin min says further stimulus details after National People’s Congress session
• ICYMI, People’s Bank of China open market outright reverse repo operations facility
• Weaker yen = stronger Nikkei relationship holding so far – Monday, October 28, 2024
• People’s Bank of China launches monthly reverse repo oerations to ensure liqudity
• More Asia FX verbal intervention – not the yen again (South Korea)
• Boeing said to be planning a US$15bn+ capital raising – as soon as Monday
• Japanese ruling coalition loses majority in election; USD/JPY reacts with volatility
• Asia FX verbal intervention comments – not on the yen! (South Korea)
• USD/JPY hits its highest since July 31
• Oil update – Brent (futures) circa $72
• Japan’s ruling coalition lost its majority in an election – yen lower to open the week
• China’s industrial profits collapse in September: -27.1% y/y (vs -17.8% y/y prior)
• Trade ideas thread – Monday, 28 October, insightful charts, technical analysis, ideas
• UK & European clocks changed over the weekend
• NZD traders heads up – New Zealand holiday today (Monday, October 28, 2024)
• ECB’s Knot says mkt maybe a bit over-enthusiastic on Bank rate cuts, on Dec: “we’ll see”
• Monday morning open levels – indicative forex prices – 28 October 2024 – YEN slammed lower
• USD/JPY is above 153 on the Japanese election result – yen plunge
• Israel strikes on Iran look designed to minimize the chance of retaliation
• Newsquawk Week Ahead: Highlights include US NFP, ISM Mfg, PCE, GDP, BoJ & UK Budget
• Weekly Market Outlook (28-01 November)

There
were two sharp moves in Asia today:

• the
  yen fell with Japan’s ruling party losing its majority
• oil
  slid on Middle East de-escalation

Since
this is ForexLive, first to JPY.

USD/JPY
(and yen crosses) opened higher in the very early hours of trade here
in Asia. It was a holiday today in New Zealand, which is the very
first major FX centre to open each week. USD/JPY was above 153.00
very quickly, chopping around there for a few hours before making its
way above 153.85 where it has topped out, so far at least.

The
news of note was the Japanese election. In (very) brief:

• 233
  seats in the lower house of the Diet are required to form a majority
• Japan’s
  ruling coalition lost its majority, with the latest I have seen
  showing the
  ruling LDP with its coalition partner Komeito on a combined
  215
• Most
  likely now is that LDP/K will bring a third party into the coalition
  and continue to govern

But
the yen has been hit due to

• a
  perception that policy normalisation may face political pressure to
  proceed more slowly. Cost-of-living pressures in Japan are an
  important political issue and its thought that a slowing of policy
  normalisation (rate hikes) may be a price extracted by a third party
  for agreement to support the LDP.
• straight
  up political instability until a new government is formed, and given
  a 3-way agreement now required any government will have a higher
  potential for instability

As
a reminder, Prime Minister Shigeru Ishiba dissolved the Lower House
only eight days after assuming office. Which seems was poor
judgement. Can he last?

The
lower yen played a role in Japanese stocks rising.

As
for oil, the Israeli strikes
on Iran targeted only military sites, sparing oil facilities, which
allowed Iran’s oil operations to remain unaffected. That’s the
very brief and simplified version of events, and very valid. Further,
there are reports that Iran’s air defence is now completely
compromised. Further still,
the demonstrated
stark reality
of the huge disparity between Israeli (Western-backed) capability and
Iran’s (Russia-backed) capabilities will also dissuade Iran from
escalation. Oil prices were slashed on a perception
that threats to supply have diminished. As I update Brent is under
USD72.50.

Elsewhere in FX moves have been subdued. As I post the USD is gaining a little. EUR, AUD, GBP, CAD, NZD – all a little lower against the big dollar. ——————

In
other market news:

• Boeing
  is said to be planning a US$15bn+ capital raising as soon as today.
• The
  People’s Bank of China launched a new monthly reverse repo facility
  (see bullets above)

In
US election news:

• The Trump campaign has faced a backlash from
  high-profile Puerto Ricans and other Latins, due to a comment at
  Trump’s New York rally from a warm up act calling Puerto Rico
  “literally a floating island of garbage”. With the election so
  close and the race so tight the risk of alienating a large swath of
  voters (circa 5 million people of Puerto Rican origin live on the
  mainland USA can vote) like this could be impactful.
• Some Republican heavyweights have taken to social media to disavow the comments in a sign of how seriously this is being taken by those in the party with nous &/or in areas with a strong Latin presence.

See
bullets above for more on all of these.

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

IC Markets Asia Fundamental Forecast | 28 October 2024

What happened in the U.S. session?

Following a surge of 9.8% in orders in July, new orders for durable goods were flat in August pointing to weak conditions surrounding manufacturing activity. September’s orders fell 0.8% MoM, less than the forecast of a 1.1% decline as transportation equipment drove the decrease along with machinery and capital goods. Meanwhile, the University of Michigan’s consumer sentiment survey showed optimism inching higher for the third consecutive month to hit its highest reading since April 2024. Easing interest rates have led to modest improvements in consumer sentiment but the upcoming U.S. elections on 5th November loom large over expectations. The dollar index (DXY) rose strongly on Friday to close at 104.31 as it registered a fourth successive week of gains, rising almost 4% over this period.

What does it mean for the Asia Session?

The yen depreciated sharply this morning as the ruling Liberal Democratic Party lost its majority in Sunday’s general election, plunging the country into political instability. The yen slumped to a three-month low as USD/JPY gapped higher at the open to trade around 153.25 after closing at 152.23 on Friday. 

The weekend saw geopolitical tensions in the Middle East come to the forefront once again with Israel carrying out strikes against Iran but steering clear of any oil and nuclear sites. This latest incident was less severe than originally feared while Iran downplayed the impact of the attack, causing oil prices to fall sharply as markets re-opened early this morning. After closing at $71.69 per barrel on Friday, WTI oil plunged nearly 5.5% to hit a low of $67.79 before stabilizing around $68.50. High volatility continues to surround this commodity and traders should brace themselves for wild fluctuations for crude prices.

The Dollar Index (DXY)

Key news events today

No major news events.

What can we expect from DXY today?

Demand for the greenback remains robust as the DXY rose strongly towards 104.50 as markets re-opened this morning. With an extremely quiet calendar on this brand new trading day, this index is likely to remain elevated.

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

Weak Bullish

Gold (XAU)

Key news events today

No major news events.

What can we expect from Gold today?

Spot prices for gold made its most recent all-time high of $2,758.45/oz on Wednesday 23rd of October before easing slightly to close at $2,747.39 on Friday. This precious metal notched its third week of gains. With demand for the dollar looking strong once again as re-opened this morning, gold could pull back slightly as the day progresses but prices are likely to remain elevated.

Next 24 Hours Bias

Weak Bearish

The Australian Dollar (AUD)

Key news events today

No major news events.

What can we expect from AUD today?

The Aussie fell for the fourth week in a row as it closed at 0.6604 last Friday. Overhead pressures remain in place for this currency pair and it was hovering above the threshold of 0.6600 as Asian markets came online – these are the support and resistance levels for today.

Support: 0.6590

Resistance: 0.6645

Central Bank Notes:

• The RBA kept the cash rate target unchanged at 4.35% on 24th September, marking the seventh 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 is still some way above the midpoint of the 2 to 3% target range.
• The trimmed-mean CPI was 3.9% YoY in the June quarter, broadly as forecast in the May Statement on Monetary Policy (SMP) while headline inflation declined in July as measured by the monthly CPI indicator.
• Headline inflation is expected to fall further temporarily but current forecasts do not see inflation returning sustainably to target until 2026.
• GDP data for the June quarter have confirmed that growth has been weak but growth in aggregate consumer demand, which includes spending by temporary residents such as students and tourists, remained more resilient.
• Broader indicators suggest that labour market conditions remain tight, despite some signs of gradual easing while wage pressures have eased somewhat.
• Data since then have reinforced the need to remain vigilant to upside risks to inflation and the Board is not ruling anything in or out while agreeing that policy will need to be sufficiently restrictive until the Board is confident that inflation is moving sustainably towards the target range.
• The Board will continue to rely upon the data and the evolving assessment of risks to guide its decisions and will pay close attention to developments in the global economy and financial markets, trends in domestic demand, and the outlook for inflation and the labour market.
• Next meeting is on 5 November 2024.

Next 24 Hours Bias

Weak Bearish

The Kiwi Dollar (NZD)

Key news events today

No major news events.

What can we expect from NZD today?

Just like its Pacific neighbour, the Kiwi has been one of the weakest currencies over the past four weeks as it closed at 0.5976 on Friday. This currency pair continues to face significant headwinds and was drifting lower towards 0.5950 at the beginning of the Asia session – these are the support and resistance levels for today.

Support: 0.5920

Resistance: 0.6010

Central Bank Notes:

• The Monetary Policy Committee agreed to reduce the OCR by 50 basis points, bringing it down to 4.75% in October as inflation converges to target.
• The Committee assesses that annual consumer price inflation is within its 1 to 3% inflation target range and converging on the 2% midpoint.
• Economic activity in New Zealand is subdued, in part due to restrictive monetary policy while business investment and consumer spending have been weak, and employment conditions continue to soften.
• The economy is now in a position of excess capacity, encouraging price- and wage-setting to adjust to a low-inflation economy; lower import prices have assisted the disinflation.
• High-frequency indicators point to continued subdued growth in the near term, mostly due to weak consumer spending and business investment while labour market conditions are expected to ease further, with filled jobs and advertised vacancy rates continuing to decline.
• The Committee confirmed that future changes to the OCR would depend on its evolving assessment of the economy.
• Next meeting is on 27 November 2024.

Next 24 Hours Bias

Weak Bearish

The Japanese Yen (JPY)

Key news events today

No major news events.

What can we expect from JPY today?

The yen depreciated sharply this morning as the ruling Liberal Democratic Party lost its majority in Sunday’s general election, plunging the country into political instability. The yen slumped to a three-month low as USD/JPY gapped higher at the open to trade around 153.25 after closing at 152.23 on Friday. This currency pair is likely to rise steadily towards 154 as the day progresses – these are the support and resistance levels for today.

Support: 151.85

Resistance: 154.87

Central Bank Notes:

• The Policy Board of the Bank of Japan decided, by a unanimous vote, to set the following guideline for money market operations for the intermeeting period:
  1. The Bank will encourage the uncollateralized overnight call rate to remain at around 0.25%.
  2. The Bank will embark 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 consumer price index (CPI, all items less fresh food) has been in the range of 2.5 to 3.0% recently, as services prices have continued to rise moderately, reflecting factors such as wage increases, although the effects of a passthrough to consumer prices of cost increases led by the past rise in import prices have waned.
• 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 of the July 2024 Outlook for Economic Activity and Prices, it is likely to be at a level that is generally consistent with the price stability target.
• Japan’s economy has recovered moderately, although some weakness has been seen in part, but it 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 31 October 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 fell for the fourth consecutive week as it closed at 1.0796 on Friday as demand for the dollar remains robust. This currency pair was floating around 1.0790 as Asian markets came online – these are the support and resistance levels for today.

Support: 1.0768

Resistance: 1.0840

Central Bank Notes:

• The Governing Council today decided to reduce the three key ECB interest rates by 25 basis points on 17th October to mark the second successive rate cut.
• 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 3.40%, 3.65% and 3.25% respectively.
• The incoming information on inflation shows that the disinflationary process is well on track while the inflation outlook is also affected by recent downside surprises in indicators of economic activity.
• Inflation is expected to rise in the coming months, before declining to target in the course of next year. Domestic inflation remains high, as wages are still rising at an elevated pace. At the same time, labour cost pressures are set to continue easing gradually, with profits partially buffering their impact on inflation.
• The Eurosystem no longer reinvests all of the principal payments from maturing securities purchased under the pandemic emergency purchase programme (PEPP), reducing the PEPP portfolio by €7.5 billion per month on average and the Governing Council intends to discontinue reinvestments under the PEPP at the end of 2024.
• The Council is determined to ensure that inflation returns to its 2% medium-term target in a timely manner and will keep policy rates sufficiently restrictive for as long as necessary to achieve this aim and is not pre-committing to a particular rate path.
• Next meeting is on 12 December 2024.

Next 24 Hours Bias

Weak Bearish

The Swiss Franc (CHF)

Key news events today

No major news events.

What can we expect from CHF today?

A weak franc coupled with high demand for the dollar has lifted USD/CHF over the past few weeks. This currency pair was rising strongly towards 0.8700 at the beginning of the Asia session – these are the support and resistance levels for today.

Support: 0.8670

Resistance: 0.8730

Central Bank Notes:

• The SNB eased monetary policy by lowering its key policy rate by 25 basis points for the third consecutive meeting, going from 1.25% to 1.00% in September.
• Inflationary pressure has again decreased significantly compared to the previous quarter, reflecting the appreciation of the Swiss franc over the last three months.
• Inflation in the period since the last monetary policy assessment was lower than expected, standing at 1.1% in August compared to 1.4% in May.
• The new conditional inflation forecast is significantly lower than that of June: 1.2% for 2024, 0.6% for 2025 and 0.7% for 2026, based on the assumption that the SNB policy rate is 1.0% over the entire forecast horizon.
• Swiss GDP growth was solid in the second quarter of 2024 as momentum in the chemicals/pharmaceuticals industry was particularly strong.
• However, growth is likely to remain rather modest in the coming quarters due to the recent appreciation of the Swiss franc and the moderate development of the global economy.
• The SNB anticipates GDP growth of around 1% this year while currently expecting growth of around 1.5% for 2025.
• Further cuts in the SNB policy rate may become necessary in the coming quarters to ensure price stability over the medium term.
• Next meeting is on 12 December 2024.

Next 24 Hours Bias

Medium Bullish

The Pound (GBP)

Key news events today

No major news events.

What can we expect from GBP today?

The Cable fell for the fourth consecutive week as it closed at 1.2961 on Friday as demand for the dollar remains robust. This currency pair was sliding towards 1.2950 as Asian markets came online – these are the support and resistance levels for today.

Support: 1.2900

Resistance: 1.3000

Central Bank Notes:

• The Bank of England’s Monetary Policy Committee (MPC) voted by a majority of 8 to 1 to maintain Bank Rate at 5.0% while one member preferred to reduce Bank Rate by 25 basis points to 4.75%, on 19th September 2024.
• The MPC also voted unanimously to reduce the stock of UK government bond purchases held for monetary policy purposes, and financed by the issuance of central bank reserves, by £100B over the next 12 months to a total of £558B.
• Twelve-month CPI inflation had been 2.2% in August and July, slightly lower than August Report expectations. Consumer core goods and food price inflation had remained subdued as the cost pressures from previous global shocks had unwound further, and producer price levels had been broadly flat while energy prices had continued to drag on CPI inflation.
• Services price inflation had increased to 5.6% in August compared to 5.2% in July and 5.7% in June. This was slightly lower in August than had been expected at the time of the August Report. There had been volatility in a number of services sub-components in the July and August outturns, including accommodation and catering prices and airfares.
• GDP had increased by 0.6% in 2024 Q2, 0.1 percentage points lower than had been expected in the August Monetary Policy Report. That had followed 0.7% growth in Q1, but Bank staff judged that the underlying pace of growth had been somewhat weaker during the first half of the year. 
• Headline GDP growth was expected to return to its underlying pace of around 0.3% per quarter in the second half of the year. Based on a broad set of indicators, the MPC judged that the labour market continued to loosen but that it remained tight by historical standards.
• Monetary policy decisions have been guided by the need to squeeze persistent inflationary pressures out of the system so as to return CPI inflation to the 2% target both in a timely manner and on a lasting basis; policy has been acting to ensure that inflation expectations remain well anchored.
• In the absence of material developments, a gradual approach to removing policy restraint remains appropriate while 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 7 November 2024.

Next 24 Hours Bias

Weak Bearish

The Canadian Dollar (CAD)

Key news events today

BoC Gov Macklem Speaks (5:30 pm GMT)

What can we expect from CAD today?

Bank of Canada (BoC) Governor Tiff Macklem will be participating in a fireside chat about the state of the Canadian economy at The Logic Summit in Toronto. The Loonie has depreciated significantly since the end of September causing USD/CAD to hit 1.3900 this morning – Governor Macklem’s statements and remarks could inject higher volatility for this currency later today.

Central Bank Notes:

• The Bank of Canada reduced its target for the overnight rate by 50 basis points bringing it down to 3.75% while continuing its policy of balance sheet normalization on 23rd September; this marked the fourth consecutive meeting where rates were reduced.
• Canada’s economy grew at around 2% in the first half of the year and growth of 1.75% is expected in the second half; consumption has continued to grow but is declining on a per person basis while exports have been boosted by the opening of the Trans Mountain Expansion pipeline.
• Overall, the Bank forecasts GDP growth of 1.2% in 2024, 2.1% in 2025, and 2.3% in 2026 – as the economy strengthens, excess supply is gradually absorbed.
• The labour market remains soft with unemployment at 6.5% in September while wage growth remains elevated relative to productivity growth. Overall, the economy continues to be in excess supply.
• Headline CPI has declined significantly from 2.7% in June to 1.6% in September while shelter costs inflation remains elevated but has begun to ease; the preferred measures of core inflation are now below 2.5%.
• Excess supply elsewhere in the economy has reduced inflation in the prices of many goods and services while the drop in global oil prices has led to lower gasoline prices – these factors have all combined to bring inflation down.
• The Bank expects inflation to remain close to the target over the projection horizon, with the upward and downward pressures on inflation roughly balancing out; the upward pressure from shelter and other services gradually diminishes, and the downward pressure on inflation recedes as excess supply in the economy is absorbed.
• With inflation now back around the 2% target, the Governing Council decided to reduce the policy rate by 50 basis points to support economic growth and keep inflation close to the middle of the 1% to 3% range.
• If the economy evolves broadly in line with the latest forecast, further reduction of the policy rate can be expected but the timing and pace of additional reductions in the policy rate will be guided by incoming information and assessment of its implications for the inflation outlook.
• The Bank is committed to maintaining price stability for Canadians by keeping inflation close to the 2% target.
• Next meeting is on 11 December 2024.

Next 24 Hours Bias

Medium Bullish

Oil

Key news events today

No major news events.

What can we expect from Oil today?

The weekend saw geopolitical tensions in the Middle East come to the forefront once again with Israel carrying out strikes against Iran but steering clear of any oil and nuclear sites. This latest incident was less severe than originally feared while Iran downplayed the impact of the attack, causing oil prices to fall sharply as markets re-opened early this morning. After closing at $71.69 per barrel on Friday, WTI oil plunged nearly 5.5% to hit a low of $67.79 before stabilizing around $68.50. High volatility continues to surround this commodity and traders should brace themselves for wild fluctuations for crude prices.

Next 24 Hours Bias

Medium Bearish

The post IC Markets Asia Fundamental Forecast | 28 October 2024 first appeared on IC Markets | Official Blog.

Info comes via Reuters, updating the Citi outlook for oil.

• Lowers
  0-3 month Brent oil target price to $70/bbl (from $74/bbl)

• Lowers
  Q4 2024 Brent forecast to $70/bbl (from $74/bbl)

• Recent
  Israel military action is unlikely to be seen by the market as
  leading to an escalation that impacts oil supply

• We
  expect a lower geopolitical risk premium in our base case, than we
  previously assumed

Oil gapped lower in Sunday evening (US time) futures trade:

• Oil update – Brent (futures) circa $72

• Israel strikes on Iran look designed to minimize the chance of retaliation

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

The US election is very tight with different polls showing different results. Alienating a large swath of voters so close to the election does seem to be risky.

A speaker at Trump’s rally in New York on Sunday referred to Puerto Rico as a “floating pile of garbage”:

• “There’s literally a floating island of garbage in the middle of the ocean right now. I think it’s called Puerto Rico.”
• He said it was a joke.

On the other side, Harris has released policy proposals to support the island.

The combination of the two different approaches has led to a string of endorsements for Harris from high-profile Puerto Ricans and other Latins including:

• Luis Fonsi
• JLo
• Ricky Martin
• Bad Bunny
• Geraldo Rivera

Note that residents of Puerto Rico cannot vote in U.S. presidential elections despite being American citizens. More than 5 million people of Puerto Rican origin living on the mainland can vote.

—

I didn’t quite have to Google Bad Bunny. Heard of him, but he’s not as big in Australia as he is in the Americas.

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

Yen weakened immediately in early hours Asia.

Summary here:

• Japanese ruling coalition loses majority in election; USD/JPY reacts with volatility

Nikkei gained:

• Weaker yen = stronger Nikkei relationship holding so far – Monday, October 28, 2024

USD/JPY update:

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