• Services PMI 51.8 vs 52.4 expected and 52.4 prior.
• Manufacturing PMI 50.3 vs 51.4 expected and 51.5 prior.
• Composite PMI 51.7 vs 52.6 expected and 52.6 prior.

Key Findings:

• Flash UK PMI Composite Output Index(1) at 51.7 (Sep:
  52.6). 11-month low.
• Flash UK Services PMI Business Activity Index(2) at
  51.8 (Sep: 52.4). 11-month low.
• Flash UK Manufacturing Output Index(3) at 50.9
  (Sep: 53.6). 6-month low.
• Flash UK Manufacturing PMI(4) at 50.3 (Sep: 51.5).
  6-month low.

Comment:

Commenting on the flash PMI data, Chris Williamson,
Chief Business Economist at S&P Global Market
Intelligence said:

“Business activity growth has slumped to its lowest for
nearly a year in October as gloomy government rhetoric
and uncertainty ahead of the Budget has dampened
business confidence and spending. Companies await
clarity on government policy, with conflicts in the Middle
East and Ukraine, as well as the US elections, adding to
the nervousness about the economic outlook.

The early PMI data are indicative of the economy growing
at a meagre 0.1% quarterly rate in October, reflecting a
broad-based slowing of business activity, spending and
demand across both manufacturing and services.
Worryingly, the deterioration in business confidence in the
outlook has also prompted companies to reduce
headcounts for the first time this year.

Cleary, the policies announced in the Budget have the
potential to play a major role in steering the direction of the
economy in the months ahead.
Encouragingly, however, a further cooling of input cost
inflation to the lowest for four years opens the door for the
Bank of England to take a more aggressive stance towards
lowering interest rates, should the current slowdown
become more entrenched.”

This article was written by Giuseppe Dellamotta at www.forexlive.com.

• Prior 51.4
• Manufacturing PMI 45.9 vs 45.3 expected
• Prior 45.0
• Composite PMI 49.7 vs 49.8 expected
• Prior 49.6

The manufacturing sector in the region continues to keep in contraction territory while services activity is continuing to slow further going into Q4. At the balance, it reaffirms that the Eurozone economy is stuck in a rut as it faces up against stagnation in October. Looking at the details, demand conditions remain on the softer side while new orders were marked down for a fifth month running.

Besides that, business confidence is subdued while employment conditions also fell for a third straight month. Looking at price pressures, at least inflation is seen cooling slightly overall but there are some mixed signals. Input prices for services increased sharply on the month but at a lower pace at least than the series average.

HCOB notes that:

“The eurozone is stuck in a bit of a rut, with the economy contracting marginally for the second month running. The ongoing
slump in manufacturing is being mostly balanced out by small gains in the service sector. At the country level, it can be
noted that the deterioration of the situation in France was met by a slight moderation in the decline in Germany. For now, it is
not clear whether we will see a further deterioration or an improvement in the near future.

“The eurozone’s service sector continues to grow, but only slightly, helping to keep the broader economy near stability.
However, we shouldn’t expect too much in the near future. Companies in this sector are seeing fewer new orders, and the
backlog of work has been shrinking for six months straight. For the first time since early-2021, service sector hiring has
almost come to a halt. The real question is whether the combination of higher wages and lower inflation can revive
consumer spending, which would give service providers a much-needed boost.

“For the European Central Bank (ECB), the latest figures come with an unwelcome surprise. Inflation in the services sector
seems likely to stay elevated, as costs and selling prices in October rose faster than the previous month. This is probably
due to persistent wage pressure, which impacts service providers especially hard. All this backs the idea that the ECB is
likely to cut key interest rates by just 25 basis points in December, rather than the 50 basis points some have been talking
about.”

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

• France October flash services PMI 48.3 vs 49.9 expected
• Germany October flash manufacturing PMI 42.6 vs 40.8 expected

At the balance, not too much has changed. EUR/USD was holding around 1.0787 before the data and is now around 1.0792 currently. The stronger than expected showing in Germany is helping to offset downbeat numbers from France. However, both key economies in Europe are still showing a contraction to start Q4.

That reaffirms that the Eurozone economy is still leaning towards the softer side overall. But the good news is that it isn’t worsening at a much rapid pace, at least for now.

If anything, the data will serve to reaffirm another rate cut in December but perhaps not quite the 50 bps that some traders might be hoping for.

That being said, traders are pricing in some ~122 bps of rate cuts still over the next five meetings for the ECB. And that pricing is not likely to shift whatsoever based on the data so far today.

Going back to EUR/USD, the pair is now bouncing back up after a dip to 1.0771 earlier. But with large option expiries seen layered through to 1.0800, it should limit any major upside pull in the session ahead. In terms of technicals, the 100-hour moving average at 1.0818 will be one to add a key layer of resistance in the near-term.

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

• Manufacturing PMI 42.6 vs 40.8 expected and 40.6 prior.
• Services PMI 51.4 vs 50.6 expected and 50.6 prior.
• Composite PMI 48.4 vs 47.6 expected and 47.5 prior.

Key findings:

• HCOB Flash Germany Composite PMI Output Index(1) at 48.4 (Sep: 47.5). 2-month high.
• HCOB Flash Germany Services PMI Business Activity Index(2) at 51.4 (Sep: 50.6). 3-month high.
• HCOB Flash Germany Manufacturing PMI Output Index(4) at 42.4 (Sep: 41.3). 2-month high.
• HCOB Flash Germany Manufacturing PMI(3) at 42.6 (Sep: 40.6). 3-month high.

Comment:

Commenting on the flash PMI data, Dr. Cyrus de la Rubia, Chief Economist at Hamburg Commercial Bank, said:

“The start to the fourth quarter is better than expected. With services growing at a faster pace and manufacturing shrinking
not as quickly as in the previous month, growth in the fourth quarter is a distinctive possibility. Even so, GDP may stay flat
for the whole year as forecasted by the International Monetary Fund in its latest projection, after a 0.3% decline in 2023.

This
underscores the structural weaknesses of the German economy, such as high energy costs, the increased competition from
China and the labour market shortages which are all hitting the manufacturing sector hard.
It’s encouraging that services activity expanded at a faster pace than in September, after growth had slowed down for four
months straight. And even though services companies have trimmed employment more than they did in September,
business expectations have improved significantly.

This fits in with the perception that German consumers started to spend
more during the summer on the back of higher wages and lower inflation, indicated by official retail sales figures. This trend
seems to have continued. The services sector has resumed its role of stabilizing the whole economy.
The survey figures deliver tentative signs that we may start to see light at the end of the tunnel in manufacturing. To be
sure, output is still shrinking quickly and so is employment.

However, the speed of deterioration has slowed down a bit
compared to September. Most importantly, new orders, which fell like a stone over the last couple of months, have lost a bit
of their downward dynamic. Manufacturing will most probably continue to be in a recession in the fourth quarter, but it may
start the next year on a better footing, although this assessment based on a one-month improvement should be taken with
caution.”

This article was written by Giuseppe Dellamotta at www.forexlive.com.

• Prior 49.6
• Manufacturing PMI 44.5 vs 44.9 expected
• Prior 44.6
• Composite PMI 47.3 vs 49.0 expected
• Prior 48.6

The post-Olympic blues is continuing for France and this just reaffirms that underlying conditions remain poor to start Q4. Both services and manufacturing prints were a miss on estimates with the former definitely hurting more. Adding to the likelihood of the ECB stepping up the pace of the easing cycle is that the rate of input price inflation falling to its weakest in nearly four years.

EUR/USD is dragged lower, down from 1.0787 to 1.0773 currently. HCOB notes that:

“France remains trapped in economic decline as the fourth quarter begins, with the challenges from the third quarter
persisting. The HCOB Flash PMI for October stands at 47.3 points, clearly indicating a contracting economy. Despite early
elections four months ago, uncertainty continues to loom over the economic outlook. Prime Minister Michel Barnier is facing
a fragile political situation, and the 2025 budget remains unresolved, further undermining business confidence. A clear
strategy to tackle the ongoing deficit and debt issues is still lacking. The HCOB Nowcast predicts only slight growth as the
fourth quarter kicks off. Pressure is mounting on the government in Paris to take urgent measures to stabilise the economy
and address fiscal imbalances.

“The French industrial sector remains mired in a deep crisis. The HCOB Flash Manufacturing PMI for October stands at 44.5
points, confirming the ongoing downturn. A small silver lining amid the prolonged weakness is the beginning of a decline in
input prices, though demand has been contracting for some time. However, the outlook at the start of the fourth quarter
remains bleak. Both domestic and international order volumes show no signs of recovery. Particularly worrying is the further
drop in expected output for the next twelve months. The industry could benefit from greater political stability in Paris and
targeted investments to support the much-needed recovery.

“The French services sector continues to face tough conditions in October. The HCOB Flash PMI remains in contraction
territory at 48.3 points, signalling ongoing weakness in services activity. Despite this sluggish performance, input prices rose,
maintaining pressure on company costs. The outlook is mixed: in the short term, conditions are expected to worsen as both
domestic and international orders remain weak, and employment levels decline. However, there is a glimmer of hope as
business expectations for the next twelve months remain optimistic, suggesting the potential for a longer-term recovery in
the sector.”

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

• Eurostoxx +0.3%
• Germany DAX +0.2%
• France CAC 40 +0.4%
• UK FTSE +0.4%
• Spain IBEX -0.1%
• Italy FTSE MIB +0.3%

For European indices, they not only have to deal with overall equities sentiment on the day but also PMI data in the next hour. So, look out for that. In the meantime, US futures are keeping a little higher at the balance with S&P 500 futures up 0.3% and Nasdaq futures up 0.6%. That’s largely led by more positive sentiment in tech following Tesla’s earnings overnight. Dow futures are marginally lower by 0.1% for now though.

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

€STR futures are showing odds of a 50 bps rate cut to be ~20% currently. But as per money market pricing yesterday, those odds went up to as high as 40% following this report here. I’d say traders are pricing in something somewhere in between that, and perhaps closer to the latter than the former by the slightest.

However, the key takeaway here is that there is scope for that pricing to extend much more.

It goes without saying that the remainder is tied to odds of the ECB cutting rates by 25 bps in December instead. As such, if the PMI data later shows significant worsening in economic conditions in two of Europe’s largest economies, that’s a big signal for market players to take in and chase further odds of a 50 bps move.

That will be something to watch out for if it indeed plays out this way over the next few weeks especially. At this point, I’d say that the risks are asymmetrical and that softer data will fuel pricing for a 50 bps move. However, stronger data will not phase out rate cuts entirely for December unless there is an absolutely major, major upside surprise on data from both the economy and inflation.

That lays out the backdrop for the euro currency as we head towards the data in just a bit.

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

• Prior 98
• Manufacturing confidence 92
• Prior 99
• Services confidence 101
• Prior 98

The French business climate declined in October as a steep fall in manufacturing confidence outweighed a slight increase in morale in the services industry on the month. Of note, employment conditions also reflected a fall with the index there dropping to 97 – down from 99 previously. That suggests added softness to the overall economy and isn’t good news for the ECB.

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

Global Markets:

•  Asian Stock Markets : Nikkei up 0.2%, Shanghai Composite down 0.9%, Hang Seng down 0.93% ASX up 0.3%
• Commodities : Gold at $2740.35 (0.24%), Silver at $34.20 (0.84%), Brent Oil at $75.64 (1.16%), WTI Oil at $71.69 (1.29%)
• Rates : US 10-year yield at 4.221, UK 10-year yield at 4.201, Germany 10-year yield at 2.313

News & Data:

• (USD) Existing Home sales  3.84M vs 3.88M expected
• (USD) Crude oil Inventories  5.5M  vs 0.9M expected

Markets Update:

Asia-Pacific markets mostly declined on Thursday after U.S. stocks dropped overnight, with the Dow Jones Industrial Average experiencing its worst day in more than a month.

South Korea narrowly avoided a technical recession, with its third-quarter GDP growing 0.1% quarter-on-quarter, following a 0.2% contraction in the second quarter. However, this growth missed Reuters’ expectations of 0.5%. On a year-on-year basis, the economy grew by 1.5%, below the anticipated 2%.

Following the GDP report, South Korea’s Kospi dropped 0.15%, while the small-cap Kosdaq fell 0.65%. In Japan, the Nikkei 225 reversed earlier losses to rise 0.2%, though the Topix declined by 0.21%. Australia’s S&P/ASX 200 also managed to recover, gaining 0.31%.

In Hong Kong, the Hang Seng index fell 0.93%, and mainland China’s CSI 300 declined by 0.93%. Meanwhile, U.S. markets continued their losing streak, with the S&P 500 down 0.92%, the Dow falling 0.96%, and the Nasdaq Composite losing 1.6%, driven by higher Treasury yields.

Upcoming Events: 

• 12:30 PM GMT – USD Unemployment Claims
• 01:45 PM GMT – USD Flash Manufacturing PMI
• 01:45 PM GMT – USD Flash Services PMI

The post Thursday 24th October 2024: Asia-Pacific Markets Fall as U.S. Stocks Slump first appeared on IC Markets | Official Blog.

IC Markets Europe Fundamental Forecast | 24 October 2024

What happened in the Asia session?

Composite PMI activity in Australia stabilized in October as seen in this morning’s flash report. However, the latest reading pointed to a second consecutive month of contraction as manufacturing activity deepened further hitting a 53-month low. The services sector saw faster new business inflows which led to quicker growth in new orders while powering an acceleration of job creation. Despite the lacklustre flash PMI report, the Aussie climbed above 0.6650 by midday Asia which was mostly attributed to waning demand for the greenback.

After three months of expansion, the flash Composite PMI for Japan showed PMI activity falling into contraction with a reading of 49.4. Not only did it mark the first contraction since June but it was also the lowest reading since November 2020 as new order inflows were subdued, especially for the manufacturing sector. Poor demand conditions were not just limited to the domestic economy but to also export as international new orders fell at the quickest pace since February 2023. With demand for the dollar dissipating, USD/JPY fell rapidly towards 152 and a break below this level could materialize in the latter half of today.

What does it mean for the Europe & US sessions?

After six months of expansion, the Composite PMI for the Euro Area fell into contraction with a reading of 49.6 in September as the manufacturing sector deepened further into deflation. The flash readings for October are expected to show overall PMI activity contract for a second consecutive month – a result that could build further overheard pressures on the Euro before the start of the European trading hours.

The flash Composite PMI for the month of October is expected to show this index registering a 12th successive month of expansion. Overall activity has been robust in the U.K. with the manufacturing sector expanding over the past five months while services have done so for 11 consecutive months. Should the flash readings surpass market expectations, it could function as a much-needed bullish catalyst for the Pound before the start of the European trading hours.

Following which, Bank of England (BoE) Governor Andrew Bailey will be speaking at the Mike Gill Memorial Lecture hosted by the Commodity Futures Trading Commission in Washington DC – an event that could create some volatility for the Pound.

The Dollar Index (DXY)

Key news events today

Unemployment Claims (12:30 pm GMT)

Composite PMI (1:45 pm GMT)

What can we expect from DXY today?

Following hurricane-related events in the Gulf of Mexico, unemployment claims have spiked higher over the last couple of weeks, averaging 250K over this period while the 4-week average currently stands at 236K. The latest estimate of 243K claims points to another week of elevated readings and should the result exceed this forecast, it could create near-term headwinds for the dollar.

Meanwhile, PMI activity has been robust since May with the services sector doing all the heavy lifting while manufacturing has contracted since July. The flash estimates for October point to a relatively unchanged output from the previous month and could continue to keep the dollar elevated later today.

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 Bearish

Gold (XAU)

Key news events today

Unemployment Claims (12:30 pm GMT)

Composite PMI (1:45 pm GMT)

What can we expect from Gold today?

Following hurricane-related events in the Gulf of Mexico, unemployment claims have spiked higher over the last couple of weeks, averaging 250K over this period while the 4-week average currently stands at 236K. The latest estimate of 243K claims points to another week of elevated readings and should the result exceed this forecast, it could create near-term headwinds for the dollar.

Meanwhile, PMI activity has been robust since May with the services sector doing all the heavy lifting while manufacturing has contracted since July. The flash estimates for October point to a relatively unchanged output from the previous month and could continue to keep the dollar elevated later today. Whatever the outcome, gold is likely to face wild swings during the U.S. session later today.

Next 24 Hours Bias

Weak Bullish

The Australian Dollar (AUD)

Key news events today

Composite PMI (10:00 pm GMT 23rd October)

What can we expect from AUD today?

Composite PMI activity in Australia stabilized in October as seen in this morning’s flash report. However, the latest reading pointed to a second consecutive month of contraction as manufacturing activity deepened further hitting a 53-month low. The services sector saw faster new business inflows which led to quicker growth in new orders while powering an acceleration of job creation. Despite the lacklustre flash PMI report, the Aussie climbed above 0.6650 by midday Asia which was mostly attributed to waning demand for the greenback.

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 Bullish

The Kiwi Dollar (NZD)

Key news events today

No major news events.

What can we expect from NZD today?

The Kiwi remains under intense overhead pressures as it dropped as low as 0.5991 overnight. This currency pair stabilized at the beginning of the Asia session to climb above the threshold of 0.6000 – these are the support and resistance levels for today.

Support: 0.5980

Resistance: 0.6025

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 Bullish

The Japanese Yen (JPY)

Key news events today

Composite PMI (12:30 am GMT)

What can we expect from JPY today?

After three months of expansion, the flash Composite PMI for Japan showed PMI activity falling into contraction with a reading of 49.4. Not only did it mark the first contraction since June but it was also the lowest reading since November 2020 as new order inflows were subdued, especially for the manufacturing sector. Poor demand conditions were not just limited to the domestic economy but to also export as international new orders fell at the quickest pace since February 2023. With demand for the dollar dissipating, USD/JPY fell rapidly towards 152 and a break below this level could materialize in the latter half of today.

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

Weak Bearish

The Euro (EUR)

Key news events today

Composite PMI (8:00 am GMT)

What can we expect from EUR today?

After six months of expansion, the Composite PMI fell into contraction with a reading of 49.6 in September as the manufacturing sector deepened further into deflation. The flash readings for October are expected to show overall PMI activity contract for a second consecutive month – a result that could build further overheard pressures on the Euro before the start of the European trading hours.

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 Bullish

The Swiss Franc (CHF)

Key news events today

No major news events.

What can we expect from CHF today?

As demand for the greenback eased overnight, USD/CHF retreated away from Wednesday’s high of 0.8686. This currency pair fell towards 0.8650 as Asian markets came online before stabilizing around this level to rebound slightly higher – these are the support and resistance levels for today.

Support: 0.8635

Resistance: 0.8710

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

Weak Bullish

The Pound (GBP)

Key news events today

Composite PMI (8:30 am GMT)

BoE Gov Bailey Speaks (7:45 pm GMT)

What can we expect from GBP today?

The flash Composite PMI for the month of October is expected to show this index registering a 12th successive month of expansion. Overall activity has been robust in the U.K. with the manufacturing sector expanding over the past five months while services have done so for 11 consecutive months. Should the flash readings surpass market expectations, it could function as a much-needed bullish catalyst for the Pound before the start of the European trading hours.

Following which, Bank of England (BoE) Governor Andrew Bailey will be speaking at the Mike Gill Memorial Lecture hosted by the Commodity Futures Trading Commission in Washington DC – an event that could create some volatility for the Pound.

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 Bullish

The Canadian Dollar (CAD)

Key news events today

No major news events.

What can we expect from CAD today?

As highly anticipated, the Bank of Canada (BoC) moved ahead with a fourth consecutive rate cut on Tuesday with a 50-basis point (bps) cut to bring the overnight rate down to 3.75%. After reducing rates by 25 bps at each of the previous last three meeting, this latest decision to increase the pace of reduction aligns with the recent sharp slowdown in consumer inflation – headline CPI fell under the target of 2% for the first time in three years as it moderated to 1.6% YoY in September. The Governing Council also noted consumption slowed on a per capita basis and the labour market continued to soften as unemployment rose to over 6.5% for the first time in over two years. 

The Loonie depreciated quite sharply in the immediate aftermath of the rate cut announcement causing USD/CAD to rally nearly 31 pips to hit an overnight high of 1.3862 before fizzling out – it settled around 1.3840 by the end of the U.S. session. This currency pair is likely to remain elevated as the day progresses – these are the support and resistance levels for today.

Support: 1.3800

Resistance: 1.3860

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

Weak Bearish

Oil

Key news events today

No major news events.

What can we expect from Oil today?

Following a surprise build in the API stockpiles on Tuesday, the EIA inventories also followed suit by adding 5.5M barrels of crude to storage – much higher than the forecast of 0.8M – to hold back oil prices overnight. WTI oil reversed sharply from $71.50 to fall under the $71 mark before finding a floor around $70.40 per barrel – the much larger-than-anticipated build raised concerns of softer U.S. demand for crude. However, this benchmark rose strongly as Asian markets came online to climb above $71.50 but volatility continues to remain elevated.

Next 24 Hours Bias

Weak Bullish

The post IC Markets Europe Fundamental Forecast | 24 October 2024 first appeared on IC Markets | Official Blog.

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: 104.79
Supporting reasons: Identified as an overlap resistance with 78.6% Fibonacci retracement, indicating this level may act as a significant resistance point.

1st support: 103.87
Supporting reasons: Identified as an overlap support, suggesting this level could provide strong support if the price declines.

1st resistance: 106.04
Supporting reasons: Identified as a multi-swing high resistance, marking a level where the price might encounter selling pressure if it attempts to rise.

EUR/USD:

Potential Direction: Bullish
Overall momentum of the chart: Bearish

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

Pivot: 1.0777
Supporting reasons: Identified as an overlap support close to 78.6% Fibonacci retracement and 161.8% Fibonacci extension, indicating this level may act as a significant support point.

1st support: 1.0669
Supporting reasons: Identified as a swing low support, suggesting this level could provide strong support if the price declines.

1st resistance: 1.0871
Supporting reasons: Identified as an overlap resistance, marking a level where the price might encounter selling pressure if it attempts to rise.

EUR/JPY:

Potential Direction: bullish
Overall momentum of the chart: Bearish

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

Pivot: 163.49
Supporting reasons: Identified as pullback support, indicating this level may act as support during price fluctuations.

1st support: 160.85
Supporting reasons: Identified as an overlap support, suggesting this level could provide strong support if the price declines.

1st resistance: 166.38
Supporting reasons: Identified as a pullback resistance, indicating this level may act as a significant resistance point where selling pressure could arise.

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: 0.8359
Supporting reasons: Identified as an overlap resistance aligned with 127.2% Fibonacci extension and 50% Fibonacci retracement, indicating potential resistance where price may encounter selling pressure.

1st support: 0.8325
Supporting reasons: Identified as a pullback support, suggesting this level could provide strong support if the price declines.

1st resistance: 0.8394
Supporting reasons: Identified as a multi-swing high resistance, marking a possible level where the price might face resistance.

GBP/USD:

Potential Direction: Bullish
Overall momentum of the chart: Bearish

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

Pivot: 1.2885
Supporting reasons: Identified as a pullback resistance close to 127.2% Fibonacci extension and 78.6% Fibonacci projection, indicating this level may act as a significant support point.

1st support: 1.2721

Supporting reasons: Identified as pullback support close to 161.8% Fibonacci extension, suggesting this level could provide strong support if the price declines.

1st resistance: 1.2990
Supporting reasons: Identified as an overlap resistance, marking a level where the price might encounter selling pressure if it attempts to rise.

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: 196.01

Supporting reasons: Identified as a pullback support, indicating this level may act as a significant support point.

1st support: 193.15

Supporting reasons: Identified as an overlap support, indicating this level could act as a strong support point.

1st resistance: 199.26

Supporting reasons: Identified as an overlap resistance, marking a level where the price might face selling pressure if it rises.

USD/CHF:

Potential Direction: Bearish

Overall momentum of the chart: Bullish

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

Pivot: 0.8669
Supporting reasons: Identified as multi-swing high resistance with 78.6% Fibonacci retracement, indicating this level may provide significant resistance during price fluctuations.

1st support: 0.8608
Supporting reasons: Identified as an overlap support with 23.6% Fibonacci retracement, suggesting this level could offer strong support if the price declines.

1st resistance: 0.8731
Supporting reasons: Identified as a swing high resistance, indicating a potential resistance level where selling pressure may arise.

Additionally, bearish divergence indicates that the trend is weakening, and the upward direction will soon reverse.

USD/JPY:

Potential Direction: Bearish
Overall momentum of the chart: Bullish

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

Pivot: 153.38
Supporting reasons: Identified as pullback resistance, indicating this level may act as a significant resistance during retracements.

1st support: 149.38
Supporting reasons: Identified as an overlap support, suggesting this level could provide additional support if the price moves lower.

1st resistance: 155.67
Supporting reasons: Identified as a pullback resistance, indicating a potential area where selling pressure may emerge.

USD/CAD:

Potential Direction: Bullish
Overall momentum of the chart: Bullish

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

Pivot: 1.3797
Supporting reasons: Identified as a pullback support that aligns with a 50% Fibonacci retracement, indicating a potential level where buying interests could pick up to stage a rebound.

1st support: 1.3764
Supporting reasons: Identified as a pullback support that aligns close to a 78.6% Fibonacci retracement, indicating a key level where price could find support.

1st resistance: 1.3849
Supporting reasons: Identified as a multi-swing-high resistance, indicating a potential area that could halt any further upward movement.

AUD/USD:

Potential Direction: Bearish
Overall momentum of the chart: Bearish

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

Pivot: 0.6651
Supporting reasons: Identified as a pullback resistance that aligns close to a 38.2% Fibonacci retracement, indicating a potential level where selling pressures could intensify.

1st support: 0.6589
Supporting reasons: Identified as a swing-low support, indicating a potential level where price could find support once again.

1st resistance: 0.6693
Supporting reasons: Identified as an overlap resistance that aligns with a 23.6% Fibonacci retracement, indicating a potential area that could halt any further upward movement.

NZD/USD

Potential Direction: Bearish
Overall momentum of the chart: Bearish

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

Pivot: 0.6025

Supporting reasons: Identified as a pullback resistance that aligns close to a 23.6% Fibonacci retracement, indicating a potential level where selling pressures could intensify.

1st support: 0.5981
Supporting reasons: Identified as an overlap support, indicating a potential level where price could find support once more.

1st resistance: 0.6074
Supporting reasons: Identified as an overlap resistance that aligns with a confluence of Fibonacci levels i.e. the 23.6% and 61.8% retracements, indicating a potential area that could halt any further upward movement.

US30 (DJIA):

Potential Direction: Bullish
Overall momentum of the chart: Neutral

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

Pivot: 42,410.05

Supporting reasons: Identified as an overlap support that aligns with a confluence of Fibonacci levels i.e. a 61.8% retracement and a 161.8% extension, indicating a potential level where buying interests could pick up to stage a rebound.

1st support: 41,895.87

Supporting reasons: Identified as a pullback support, indicating a potential level where price could find support once more.

1st resistance: 42,747.66

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

DE40 (DAX):

Potential Direction: Bullish
Overall momentum of the chart: Neutral

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

Pivot: 19,292.10
Supporting reasons: Identified as an overlap support that aligns with a 50% Fibonacci retracement, indicating a potential level where buying interests could pick up to stage a rebound.

1st support: 19,182.10
Supporting reasons: Identified as a pullback support that aligns close to a 61.8% Fibonacci retracement, indicating a key level where price could find support.

1st resistance: 19,543.90
Supporting reasons: Identified as an overlap resistance that aligns with a 61.8% Fibonacci retracement, indicating a potential area that could halt any further upward movement.

US500 (S&P 500): 

Potential Direction: Bullish
Overall momentum of the chart: Neutral

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

Pivot: 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 buying interests could pick up to stage a rebound.

1st support: 5,690.60
Supporting reasons: Identified as a pullback support that aligns with a 38.2% Fibonacci retracement, indicating a potential level where price could find support once again.

1st resistance: 5,872.60
Supporting reasons: Identified as a multi-swing-high resistance level that aligns close to the all-time high, indicating a potential area that could halt any further upward movement.

BTC/USD (Bitcoin):

Potential Direction: Bearish
Overall momentum of the chart: Neutral

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

Pivot: 68,062.66
Supporting reasons: Identified as a pullback resistance that aligns close to a 61.8% Fibonacci retracement, indicating a potential level where selling pressures could intensify.

1st support: 66,088.70
Supporting reasons: Identified as an overlap support that aligns close to a 38.2% Fibonacci retracement, indicating a potential level where price could find support once more.

1st resistance: 69,406.52
Supporting reasons: Identified as a swing-high resistance, indicating a potential area that could halt any further upward movement.

ETH/USD (Ethereum):

Potential Direction:  Bearish
Overall momentum of the chart: Neutral

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

Pivot: 2,593.88
Supporting reasons: Identified as a pullback resistance that aligns close to a 50% Fibonacci retracement, indicating a potential level where selling pressures could intensify.

1st support: 2,493.39
Supporting reasons: Identified as an overlap support that aligns close to a 61.8% Fibonacci retracement, indicating a potential level where price could find support once again.

1st resistance: 2,652.84
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.

WTI/USD (Oil):

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: 72.48
Supporting reasons: Identified as an overlap resistance that aligns close to a 50% Fibonacci retracement, indicating a potential level where selling pressures could intensify.

1st support: 71.22
Supporting reasons: Identified as an overlap support that aligns with a 38.2% Fibonacci retracement, indicating a key level where price could find support once more.

1st resistance: 73.75
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.

XAU/USD (GOLD):

Potential Direction: Bearish
Overall momentum of the chart: Bullish

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

Pivot: 2739.51
Supporting reasons: Identified as a pullback resistance, aligned with the 61.8 Fibonacci retracement indicating this level could act as a significant resistance during price fluctuations.

1st support: 2685
Supporting reasons: Identified as pullback support close to 50% Fibonacci retracement and 161.8% Fibonacci extension, suggesting this level could offer strong support if the price declines.

1st resistance: 2758.59
Supporting reasons: Identified as a swing high resistance, indicating this level may act as a key resistance point where selling pressure could emerge.

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The post Thursday 24th October 2024: Technical Outlook and Review first appeared on IC Markets | Official Blog.

IC Markets Asia Fundamental Forecast | 24 October 2024

What happened in the U.S. session?

As highly anticipated, the Bank of Canada (BoC) moved ahead with a fourth consecutive rate cut on Tuesday with a 50-basis point (bps) cut to bring the overnight rate down to 3.75%. After reducing rates by 25 bps at each of the previous last three meeting, this latest decision to increase the pace of reduction aligns with the recent sharp slowdown in consumer inflation – headline CPI fell under the target of 2% for the first time in three years as it moderated to 1.6% YoY in September. The Governing Council also noted consumption slowed on a per capita basis and the labour market continued to soften as unemployment rose to over 6.5% for the first time in over two years. 

During his press conference, Governor Tiff Macklem stated there was “clear consensus” among the Governing Council that it was appropriate to take a larger step in cutting rates while communicating a pretty dovish tone and outlook with the following statements:

“It’s been a long fight against inflation but it has worked. We’re coming out the other side, and I think Canadians can breathe a sigh of relief. It’s a good news story.”

“We’re back to low inflation, now we need to keep it there… With inflation staying close to two per cent, Canadians don’t have to worry about big changes in their cost of living.”

The Loonie depreciated quite sharply in the immediate aftermath of the rate cut announcement causing USD/CAD to rally nearly 31 pips to hit an overnight high of 1.3862 before fizzling out – it settled around 1.3840 by the end of this session.

What does it mean for the Asia Session?

Composite PMI activity in Australia has swung between expansion and contraction since June with the most recent reading falling into contraction in September. Services activity has pulled up overall output but the pace of expansion has slowed in recent months. If the services sector disappoints in October, the flash Composite PMI could register a second successive month of contraction and place the Aussie under overhead pressures.

Japan’s Composite PMI has expanded over the last three months with a robust services sector pulling up overall output as the manufacturing sector contracted over the same period. The flash readings for October are expected to indicate another month of expansion, albeit at a slower pace. The yen has weakened considerably since mid-September driving USD/JPY beyond 152 – a level last seen since the end of July.

The Dollar Index (DXY)

Key news events today

Unemployment Claims (12:30 pm GMT)

Composite PMI (1:45 pm GMT)

What can we expect from DXY today?

Following hurricane-related events in the Gulf of Mexico, unemployment claims have spiked higher over the last couple of weeks, averaging 250K over this period while the 4-week average currently stands at 236K. The latest estimate of 243K claims points to another week of elevated readings and should the result exceed this forecast, it could create near-term headwinds for the dollar.

Meanwhile, PMI activity has been robust since May with the services sector doing all the heavy lifting while manufacturing has contracted since July. The flash estimates for October point to a relatively unchanged output from the previous month and could continue to keep the dollar elevated later today.

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 Bearish

Gold (XAU)

Key news events today

Unemployment Claims (12:30 pm GMT)

Composite PMI (1:45 pm GMT)

What can we expect from Gold today?

Following hurricane-related events in the Gulf of Mexico, unemployment claims have spiked higher over the last couple of weeks, averaging 250K over this period while the 4-week average currently stands at 236K. The latest estimate of 243K claims points to another week of elevated readings and should the result exceed this forecast, it could create near-term headwinds for the dollar.

Meanwhile, PMI activity has been robust since May with the services sector doing all the heavy lifting while manufacturing has contracted since July. The flash estimates for October point to a relatively unchanged output from the previous month and could continue to keep the dollar elevated later today. Whatever the outcome, gold is likely to face wild swings during the U.S. session later today.

Next 24 Hours Bias

Weak Bullish

The Australian Dollar (AUD)

Key news events today

Composite PMI (10:00 pm GMT 23rd October)

What can we expect from AUD today?

Composite PMI activity has swung between expansion and contraction since June with the most recent reading falling into contraction in September. Services activity has pulled up overall output but the pace of expansion has slowed in recent months. If the services sector disappoints in October, the flash Composite PMI could register a second successive month of contraction and place the Aussie under overhead pressures.

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 Bullish

The Kiwi Dollar (NZD)

Key news events today

No major news events.

What can we expect from NZD today?

The Kiwi remains under intense overhead pressures as it dropped as low as 0.5991 overnight. This currency pair stabilized at the beginning of the Asia session to climb above the threshold of 0.6000 – these are the support and resistance levels for today.

Support: 0.5980

Resistance: 0.6025

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 Bullish

The Japanese Yen (JPY)

Key news events today

Composite PMI (12:30 am GMT)

What can we expect from JPY today?

Japan’s Composite PMI has expanded over the last three months with a robust services sector pulling up overall output as the manufacturing sector contracted over the same period. The flash readings for October are expected to indicate another month of expansion, albeit at a slower pace. The yen has weakened considerably since mid-September driving USD/JPY beyond 152 – a level last seen since the end of July.

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

Weak Bearish

The Euro (EUR)

Key news events today

Composite PMI (8:00 am GMT)

What can we expect from EUR today?

After six months of expansion, the Composite PMI fell into contraction with a reading of 49.6 in September as the manufacturing sector deepened further into deflation. The flash readings for October are expected to show overall PMI activity contract for a second consecutive month – a result that could build further overheard pressures on the Euro before the start of the European trading hours.

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 Bullish

The Swiss Franc (CHF)

Key news events today

No major news events.

What can we expect from CHF today?

As demand for the greenback eased overnight, USD/CHF retreated away from Wednesday’s high of 0.8686. This currency pair fell towards 0.8650 as Asian markets came online before stabilizing around this level to rebound slightly higher – these are the support and resistance levels for today.

Support: 0.8635

Resistance: 0.8710

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

Weak Bullish

The Pound (GBP)

Key news events today

Composite PMI (8:30 am GMT)

BoE Gov Bailey Speaks (7:45 pm GMT)

What can we expect from GBP today?

The flash Composite PMI for the month of October is expected to show this index registering a 12th successive month of expansion. Overall activity has been robust in the U.K. with the manufacturing sector expanding over the past five months while services have done so for 11 consecutive months. Should the flash readings surpass market expectations, it could function as a much-needed bullish catalyst for the Pound before the start of the European trading hours.

Following which, Bank of England (BoE) Governor Andrew Bailey will be speaking at the Mike Gill Memorial Lecture hosted by the Commodity Futures Trading Commission in Washington DC – an event that could create some volatility for the Pound.

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 Bullish

The Canadian Dollar (CAD)

Key news events today

No major news events.

What can we expect from CAD today?

As highly anticipated, the Bank of Canada (BoC) moved ahead with a fourth consecutive rate cut on Tuesday with a 50-basis point (bps) cut to bring the overnight rate down to 3.75%. After reducing rates by 25 bps at each of the previous last three meeting, this latest decision to increase the pace of reduction aligns with the recent sharp slowdown in consumer inflation – headline CPI fell under the target of 2% for the first time in three years as it moderated to 1.6% YoY in September. The Governing Council also noted consumption slowed on a per capita basis and the labour market continued to soften as unemployment rose to over 6.5% for the first time in over two years. 

The Loonie depreciated quite sharply in the immediate aftermath of the rate cut announcement causing USD/CAD to rally nearly 31 pips to hit an overnight high of 1.3862 before fizzling out – it settled around 1.3840 by the end of the U.S. session. This currency pair is likely to remain elevated as the day progresses – these are the support and resistance levels for today.

Support: 1.3800

Resistance: 1.3860

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

Weak Bearish

Oil

Key news events today

No major news events.

What can we expect from Oil today?

Following a surprise build in the API stockpiles on Tuesday, the EIA inventories also followed suit by adding 5.5M barrels of crude to storage – much higher than the forecast of 0.8M – to hold back oil prices overnight. WTI oil reversed sharply from $71.50 to fall under the $71 mark before finding a floor around $70.40 per barrel – the much larger-than-anticipated build raised concerns of softer U.S. demand for crude. However, this benchmark rose strongly as Asian markets came online to climb above $71.50 but volatility continues to remain elevated.

Next 24 Hours Bias

Weak Bullish

The post IC Markets Asia Fundamental Forecast | 24 October 2024 first appeared on IC Markets | Official Blog.