Global Markets:

•  Asian Stock Markets : Nikkei down 0.81%, Shanghai Composite up 0.79%, Hang Seng up 1.63% ASX up 0.14%
• Commodities : Gold at $2766.35 (0.24%), Silver at $35.20 (0.04%), Brent Oil at $75.64 (-0.16%), WTI Oil at $71.69 (-0.172%)
• Rates : US 10-year yield at 4.241, UK 10-year yield at 4.168, Germany 10-year yield at 2.317

News & Data:

• (CAD) IPPI m/m  -0.6% vs -0.4% expected
• (CAD) RMPI m/m  -3.1%  vs -1.7% expected

Markets Update:

Asia-Pacific markets mostly rose on Tuesday, diverging from major Wall Street benchmarks. A significant factor boosting investor optimism was the stellar market debut of Japanese subway operator Tokyo Metro. The company’s shares surged up to 47%, and were last seen trading nearly 45% higher.

Tokyo Metro, one of Japan’s leading subway operators and the largest in Tokyo, raised 348.6 billion yen in its initial public offering (IPO), marking Japan’s largest IPO since 2018. The offering was 15 times oversubscribed, with shares priced at 1,200 yen each, the top end of the pricing band.

Upcoming economic data from Asia includes September inflation figures from Singapore, which are expected to show a 1.9% increase, the slowest rise since March 2021, according to a Reuters poll. Singapore’s core consumer price index, excluding private transport and accommodation, grew by 2.8% year-on-year, slightly higher than the predicted 2.7%. Overall inflation rose by 2%, just above the expected 1.9%.

In Japan, the Nikkei 225 dipped 0.8% on Wednesday, while the Topix index fell 0.42%. South Korea’s Kospi rose 1.18%, with the Kosdaq gaining 0.45%. Australia’s S&P/ASX 200 traded near flat, while Hong Kong’s Hang Seng jumped 1.67%, and China’s CSI 300 edged up 0.57%.

In the U.S., the S&P 500 and Dow Jones Industrial Average closed Tuesday with slight losses, marking their second consecutive day of decline. The Nasdaq Composite, however, gained 0.18%.

Upcoming Events: 

• 01:45 PM GMT – CAD Overnight Rate
• 02:00 PM GMT – EUR ECB Lagarde Speaks
• 02:00 PM GMT – USD Existing Home sales
• 02:30 PM GMT – USD Crude oil Inventories

The post Wednesday 23rd October 2024: Asia-Pacific Markets Rise as Tokyo Metro’s IPO Boosts Investor Sentiment first appeared on IC Markets | Official Blog.

U.S. stock indices typically experience volatility around elections, both before and after the event. In 2024, the Nasdaq has led market movements, rising 25% over the year, outperforming the Dow, which is up nearly 14%, and the S&P, which has gained 22%. Currently, the Nasdaq is just below its record high, only a couple of weeks ahead of the November 5th election day. Traders are bracing for increased volatility in the days and weeks leading up to the election, as well as potential new trends emerging once the results are known.

The prevailing sentiment is that a Trump victory, especially if he sweeps the White House, Senate, and House of Representatives, would be negative for stock markets overall. Although some sectors may benefit, it could lead to significant corrections across indices, with the Nasdaq likely to be most affected, particularly if Trump enacts the tariffs he has proposed. His administration would also represent more inflationary conditions, potentially pressuring the Federal Reserve to maintain or raise interest rates, which is generally seen as negative for stocks.

A Democratic victory for Kamala Harris is perceived as less disruptive to the markets, partly because her party currently holds office. While her policies are also seen as inflationary, they are not viewed as having as severe a negative impact on the overall market. This scenario could present the best opportunity for the current bull run to continue post-election.

A split outcome, with different parties controlling the White House, Senate, and House of Representatives, could introduce more market uncertainty. Although this would likely be seen as a negative, it could also mean difficulty in implementing either candidate’s policies, possibly resulting in the continuation of current conditions. Regardless of the outcome, increased volatility appears to be the most likely scenario.

Resistance Levels:

• Resistance 2: 20,690.96 – All-Time High
• Resistance 1: 20,469.11 – Trendline Resistance

Support Levels:

• Support 1: 18,696.00 – 200-Day Moving Average
• Support 2: 18,426.88 – Trendline Support

The post Trade the Nasdaq on U.S. Election Volatility first appeared on IC Markets | Official Blog.

The Japanese yen is the main mover as we look towards European trading, with key technical resistance levels starting to give way for yen pairs in general. That is keeping things interesting in an otherwise lackluster last two European morning sessions. From earlier: Yen pairs keeping things interesting on the week

Major currencies are lightly changed in general outside of the yen. And that comes as equities sentiment is seen rocking more back and forth during the week.

The bond market is also helping to keep some interest in broader markets, with yields continuing to hold higher. Similar to USD/JPY, 10-year Treasury yields are also taking a peek above its own 200-day moving average on the week. Yields are now seen at 4.235%, its highest since mid-July.

Looking to the session ahead, traders will be left to their own devices once again. There isn’t anything major in Europe, so expect there to be minimal headlines in general.

All eyes today will be on the Bank of Canada policy decision, with the central bank expected to cut rates by 50 bps to 3.75%. In terms of market pricing, the OIS market is showing ~85% odds of that with the remainder pinned to a 25 bps rate cut.

1100 GMT – US MBA mortgage applications w.e. 18 October

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.

USD/JPY looks to be in the mood as it surges higher and is now closing in on the 152.00 level. The pair is pushing higher with the yen sliding as Japanese stocks are also dragged lower on the day. The Nikkei is now down 1.4% with little other catalysts driving overall sentiment for the currency.

Of note, USD/JPY is now climbing to its highest levels since late July. And not only that, it is also breaching key resistance from its 200-day moving average (blue line). That level is seen at 151.35 currently. Hold above that and buyers will switch up the bias in the pair to being more bullish.

But it’s not just USD/JPY that is showing signs of a switch up in momentum. Other yen pairs are also telling a similar story. Here’s a look at GBP/JPY and AUD/JPY.

They’re both also showing similar undertones in breaking above their respective 100-day moving averages (red line). That sees price action looking to push above both the key daily moving averages, reaffirming a more bullish bias as well.

With the BOJ staying sidelined, it looks like traders are starting to go back to old habits again amid some quieter trading this week.

The technical plays are definitely a key consideration to the latest moves, so do continue to pay attention to that in the days ahead.

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

• Chinese Academy of Social Sciences calls for 2tln yuan bond issuance to stabilize stocks
• European Central Bank President Lagarde speaking today. Lane, Stournaras, Cipollone also
• Bank of England Deputy Governor Sarah Breeden speaking Wednesday, October 23, 2024
• Federal Reserve speakers today include Bowman, Barkin
• Tokyo Stock Exchange employee under investigation for suspected insider trading
• Bank of Japan Governor Ueda is scheduled to address IMF’s “Governors Talk” session
• Reserve Bank of New Zealand Governor Adrian Orr speaking at 1pm Washington DC time today
• TD analysts forecast Bank of Canada to lower rates by 25 basis points today
• USD/JPY above 151.60 / AUD and NZD lower vs. USD also
• PBOC sets USD/ CNY reference rate for today at 7.1245 (vs. estimate at 7.1262)
• Goldman Sachs says oil to average $76/bbl in 2025, sees two-sided risks
• IMF forecasts Australian CPI stays above 3% through 2025 – highest inflation in the world*
• Fed’s Daly says “work to achieve a soft landing is not fully done”
• Morgan Stanley says consumer confidence in China continues to gradually slide lower
• UK Pay Growth Stalls, Expected to Cool Further in 2024-25
• McDonald’s E-Coli outbreak update – 10 US states hit
• Senior Volkswagen executive deported from China
• Yellen says China stimulus efforts fail to address 2 key areas of shaky Chinese economy
• UBS cite fair value for USD/JPY beneath 148.00
• UBS forecast EUR/USD to as high as 1.16
• JP Morgan’s Dimon will not be joining either Administration
• Forexlive Americas FX news wrap: ECB members strike a more-dovish tone
• Private survey of oil inventories shows headline crude oil build greater than expected
• CDC: Severe E. Coli Outbreak Linked To McDonald’s (MCD)
• Another mixed close for major US indices
• Goldman Sachs expect EUR/USD under parity in scenario Trump wins US election
• Trade ideas thread – Wednesday, 23 October, insightful charts, technical analysis, ideas

Macro
news and data flow was extremely light today. Yen crosses filled the
vacuum, rising strongly.

USD/JPY
surged through 152.00 to highs around 152.80 before topping for the
session. We had no pertinent comments out of Japan aimed at
curtailing yen losses.

The
USD strengthened elsewhere, notably against CHF, AUD,
NZD and CAD. While USD/CHF remains bid, the others have all retraced.

Fed’s Daly spoke (see bullets above).

China’s
pre-eminent ‘think tank’ the Party-backed Chinese Academy of
Social Sciences (CASS) called for the issuing 2 trillion yuan in
special government bonds. This would be help establish a stock market
stabilization fund.

Chinese stocks positive for the session:

USD/JPY surge:

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

The Institute of Finance at the Chinese Academy of Social Sciences (CASS) has published its latest Macroeconomic Financial Analysis Report, for Q3 2024,

The think tanks suggests issuing 2 trillion yuan in special government bonds. This would be help establish a stock market stabilization fund.

CASS is an organ of the PRC’s State Council.

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

DXY (US Dollar Index):

Potential Direction: Bullish
Overall momentum of the chart: Bullish

Price could potentially make a bullish breakthrough of pivot and rise to 1st resistance.

Pivot: 104.06
Supporting reasons: Identified as a pullback resistance with 61.8% Fibonacci retracement and 161.8% Fibonacci extension, indicating this level may act as a significant support point.

1st support: 103.33
Supporting reasons: Identified as an overlap support, suggesting this level could provide strong support if the price declines.

1st resistance: 104.79
Supporting reasons: Identified as a pullback resistance, marking a level where the price might encounter selling pressure if it attempts to rise.

Additionally, when the price remains above the Ichimoku cloud, it’s typically seen as a strong bullish signal, indicating upward momentum.

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, 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: 160.92
Supporting reasons: Identified as pullback resistance, indicating this level may act as resistance during price fluctuations.

1st support: 158.34
Supporting reasons: Identified as an overlap support, aligned with the 61.8% Fibonacci retracement, suggesting this level could provide strong support if the price declines.

1st resistance: 163.81
Supporting reasons: Identified as multi-swing high resistance, indicating this level may act as a significant resistance point where selling pressure could arise.

EUR/GBP:

Potential Direction: Bullish
Overall momentum of the chart: Bearish

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

Pivot: 0.8312
Supporting reasons: Identified as an overlap resistance, indicating potential resistance where price may encounter selling pressure.

1st support: 0.8294
Supporting reasons: Identified as a swing low support, suggesting this level could provide strong support if the price declines.

1st resistance: 0.8351
Supporting reasons: Identified as an overlap resistance close to 38.2% Fibonacci retracement, marking a possible level where the price might face resistance.

GBP/USD:

Potential Direction: Bearish
Overall momentum of the chart: Bearish

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

Pivot: 1.3034
Supporting reasons: Identified as a pullback resistance, indicating this level may act as a significant resistance point.

1st support: 1.2885

Supporting reasons: Identified as pullback support close to 127.2% Fibonacci extension, suggesting this level could provide strong support if the price declines.

1st resistance: 1.3156
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: Bearish

Overall momentum of the chart: Bullish

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

Pivot: 196.86

Supporting reasons: Identified as an overlap resistance with 61.8% Fibonacci retracement, indicating this level may act as a significant resistance point.

1st support: 193.09

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

1st resistance: 201.39

Supporting reasons: Identified as a pullback resistance with 78.6% Fibonacci retracement, marking a level where the price might face selling pressure if it rises.

USD/CHF:

Potential Direction: Bullish

Overall momentum of the chart: Bullish

Price could potentially make a bullish breakthrough of pivot and rise to 1st resistance.

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.

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: 152.08
Supporting reasons: Identified as pullback resistance with 78.6% Fibonacci retracement, 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: 155.03
Supporting reasons: Identified as a swing high 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: Neutral

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

Pivot: 0.6716
Supporting reasons: Identified as an overlap resistance that aligns close to a 23.6% Fibonacci retracement, indicating a potential level where selling pressures could intensify.

1st support: 0.6651
Supporting reasons: Identified as a multi-swing-low support, indicating a potential level where price could find support once again.

1st resistance: 0.6757
Supporting reasons: Identified as a swing-high resistance that aligns close to a 38.2% Fibonacci retracement, indicating a potential area that could halt any further upward movement.

NZD/USD

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: 0.6074

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

1st support: 0.6025
Supporting reasons: Identified as a swing-low support, indicating a potential level where price could find support once more.

1st resistance: 0.6114
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.

US30 (DJIA):

Potential Direction: Bullish
Overall momentum of the chart: Neutral

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

Pivot: 42,747.66

Supporting reasons: Identified as a multi-swing-low support that aligns with a 38.2% Fibonacci retracement, indicating a potential level where buying interests could pick up to stage a rebound.

1st support: 42,410.05

Supporting reasons: Identified as an overlap support that aligns with a 61.8% Fibonacci retracement, indicating a potential level where price could find support once more.

1st resistance: 43,347.01

Supporting reasons: Identified as a swing-high resistance, 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 make rise towards the 1st resistance.

Pivot: 19,407.80
Supporting reasons: Identified as a swing-low support that aligns close to a 38.2% Fibonacci retracement, indicating a potential level where buying interests could pick up to stage a rebound.

1st support: 19,292.10
Supporting reasons: Identified as a pullback support that aligns with a 50% Fibonacci retracement, indicating a key level where price could find support.

1st resistance: 19,668.40
Supporting reasons: Identified as a swing-high resistance that aligns close to a 61.8% Fibonacci projection, 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 could fall towards the pivot and potentially make a bullish bounce off this level to rise towards the 1st resistance.

Pivot: 5,808.23
Supporting reasons: Identified as a swing-low support that aligns close to a 38.2% Fibonacci retracement, indicating a potential level where buying interests could pick up to stage a rebound.

1st support: 5,767.00
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: 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: 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: 66,764.45
Supporting reasons: Identified as a swing-low support that aligns close to a 23.6% Fibonacci retracement, indicating a potential level where buying interests could pick up to stage a rebound.

1st support: 65,365.62
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: 69,008.62
Supporting reasons: Identified as a swing-high resistance, indicating a potential area that could halt any further upward movement.

ETH/USD (Ethereum):

Potential Direction: Bullish
Overall momentum of the chart: Neutral

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

Pivot: 2,593.88
Supporting reasons: Identified as a pullback support that aligns with a 38.2% Fibonacci retracement indicating a potential level where buying interests could pick up to stage a rebound.

1st support: 2,528.98
Supporting reasons: Identified as an overlap support that aligns close to a 50% Fibonacci retracement, indicating a potential level where price could find support.

1st resistance: 2,745.12
Supporting reasons: Identified as a swing-high resistance, indicating a potential area that could halt any further upward movement.

WTI/USD (Oil):

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: 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 a pullback support that aligns with a 38.2% Fibonacci retracement, indicating a key level where price could find support.

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: 2747.76
Supporting reasons: Identified as a resistance, aligned with the 127.2% Fibonacci extension, indicating this level could act as a significant resistance during price fluctuations.

1st support: 2686
Supporting reasons: Identified as pullback support close to 38.2% Fibonacci retracement, suggesting this level could offer strong support if the price declines.

1st resistance: 2757
Supporting reasons: Aligns with 161.8% Fibonacci extension, indicating this level may act as a key resistance point where selling pressure could emerge.

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The post Wednesday 23rd October 2024: Technical Outlook and Review first appeared on IC Markets | Official Blog.

IC Markets Asia Fundamental Forecast | 23 October 2024

What happened in the U.S. session?

During his speech at the Annual Fintech Conference, Philadelphia Federal Reserve President Patrick Harker steered well clear of any reference on inflation, the labour market and especially monetary policy actions by the Fed. With no other major data releases overnight, demand for the greenback remained firmly in place lifting the dollar index (DXY) above 104 to hit a session high of 104.12. Meanwhile, spot prices for gold made a new all-time high of $2,748.90 on Tuesday before retreating away from this level as a stronger dollar weighed on this precious metal.

What does it mean for the Asia Session?

It is a quiet calendar during the Asian trading hours and the ongoing direction for the DXY and gold are likely to extend further as the day progresses – the DXY was rising towards 104.20 while spot gold fell towards $2,740/oz.

The Dollar Index (DXY)

Key news events today

FOMC Member Bowman Speaks (1:00 pm GMT)

What can we expect from DXY today?

Federal Reserve Governor Michelle Bowman will be delivering her opening remarks at the Annual Fintech Conference hosted by the Federal Reserve Bank of Philadelphia. Following ‘balanced’ views from other Fed officials earlier this week, markets will be looking to Governor Bowman to see if she shares a similar viewpoint. Her statements could have a much higher impact on the dollar given her position in the Committee and the fact that she was the first voting member to dissent at the FOMC meeting that took place on 18th September where she preferred to reduce rates by a smaller amount.

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

FOMC Member Bowman Speaks (1:00 pm GMT)

What can we expect from Gold today?

Federal Reserve Governor Michelle Bowman will be delivering her opening remarks at the Annual Fintech Conference hosted by the Federal Reserve Bank of Philadelphia. Following ‘balanced’ views from other Fed officials earlier this week, markets will be looking to Governor Bowman to see if she shares a similar viewpoint. Her statements could have a much higher impact on the dollar (and gold) given her position in the Committee and the fact that she was the first voting member to dissent at the FOMC meeting that took place on 18th September where she preferred to reduce rates by a smaller amount.

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 was relatively unmoved around 0.6685 on Tuesday before falling quite sharply as Asian markets came online. This currency pair dived towards 0.6660 before stabilizing to retrace higher – these are the support and resistance levels for today.

Support: 0.6650

Resistance: 0.6700

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?

The Kiwi floated around 0.6050 for most part of Tuesday before falling at the beginning of the Asia session. This currency pair dropped to a low of 0.6030 before rebounding slightly higher – these are the support and resistance levels for today.

Support: 0.6020

Resistance: 0.6060

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 combination of a stronger dollar and depreciating yen propelled USD/JPY above 151 as Asian markets came online. This currency pair was rising strongly towards 151.80 and is likely to remain elevated today – these are the support and resistance levels for today.

Support: 151.00

Resistance: 152.00

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

ECB President Lagarde Speaks (2:00 pm GMT)

What can we expect from EUR today?

ECB President Christine Lagarde will speak about Europe’s financial challenges at the Atlantic Council in Washington DC where she could use this platform to drop further insights into the outlook on future monetary policy action. Higher volatility could be expected for the Euro during her speech later today.

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?

Persistent demand for the dollar has kept USD/CHF elevated since mid-October and it was rising strongly towards 0.8670 as Asian markets came online. This currency pair will likely continue to climb higher as the day progresses – 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

BoE Gov Bailey Speaks (6:45 pm GMT)

What can we expect from GBP today?

Bank of England (BoE) Governor Andrew Bailey will be participating in a moderated discussion at the Annual Meetings of the International Monetary Fund and the World Bank Group in Washington DC. Governor Bailey could use this opportunity to drop further insights on the current state of the British economy and how it may shape the central bank’s view on future policy actions – the pound has depreciated significantly in recent weeks and could face higher volatility during this speech later today.

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

BoC Monetary Policy Statement (1:45 pm GMT)

BoC Press Conference (2:30 pm GMT)

What can we expect from CAD today?

The Bank of Canada (BoC) is widely expected to move ahead with a second successive rate cut after reducing their overnight rate by 25 basis points (bps) in September. Not only would this mark the fourth consecutive rate cut, but it would also be the largest so far with market consensus pointing to a reduction of 50 bps. With economic activity looking sluggish and inflation moderating significantly lower over the past eight to ten months, the Governing Council was concerned about undershooting inflation targets at the previous meeting, adding to their worries of overtightening and causing further deterioration from an economic standpoint. The BoC will be hoping that a larger reduction of 50 bps will kick start its economy – the Loonie is likely to face significant headwinds following this announcement and during Governor Tiff Macklem’s press conference.

Central Bank Notes:

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

Next 24 Hours Bias

Medium Bullish

Oil

Key news events today

EIA Crude Oil Inventories (2:30 pm GMT)

What can we expect from Oil today?

Crude oil prices rose strongly for the second successive day as WTI oil rose 2% on Tuesday to bring this week’s gain to almost 4.6% at its highest point as traders downplayed hopes of a ceasefire in the Middle East and improving demand out of China. However, the API stockpiles unexpectedly increased by 1.6M barrels of crude versus a smaller gain of 0.7M which caused prices to slip at the end of the U.S. session. After hitting a high of $72.09 per barrel, WTI oil dipped to hover around $71.50.

Next 24 Hours Bias

Weak Bullish

The post IC Markets Asia Fundamental Forecast | 23 October 2024 first appeared on IC Markets | Official Blog.

Canadian dollar traders are gearing up for a busy trading session ahead, as the Bank of Canada is set to release its latest rate decision and update the market on its current thinking. The USD/CAD has the potential for significant moves in the weeks ahead, given the differing paths of Canadian and U.S. interest rates.

Expectations are for the Bank of Canada to reduce rates by 50 basis points later today, as recent data suggests the need for more aggressive easing than we saw at their September meeting, when they cut by 25 basis points. Inflation is currently sitting at 1.6%, well below the 2% target, and overall employment data remains weak—despite a positive report last time—with the unemployment rate at 6.5%. Additionally, sentiment surveys have increased concern levels regarding the economy.

The USD/CAD is currently just below long-term resistance levels on the daily chart, having risen from under 1.3450 to 1.3850 in the past few weeks. This movement aligns with a stronger dollar across the board. Some traders now believe there is potential for more upward moves, especially if we see either a larger cut—unlikely, but suggested by some Canadian banks—or a more dovish stance from the Bank of Canada, which recent data could prompt. On top of this, the U.S. dollar will, as usual, significantly influence the next trend for the pair. Higher inflation in the U.S., which could be strongly affected by a Trump victory in the election—also negative for CAD from a tariff perspective—could lead to a longer-term upward trend. There is, of course, a similar argument for the contrary trade; however, many are still looking for the ‘trend to remain their friend’ and are preparing to trade breaks of those resistance levels. Whatever the outcome today, traders are bracing for more volatility over the coming days and weeks in the loonie.

Resistance 2: 1.3946 – 2024 High
Resistance 1: 1.3910 – Trendline Resistance

Support 1: 1.3623 – 220-Day Moving Average
Support 2: 1.3456 – Trendline Support

The post Trade the USD/CAD on the Bank of Canada Rate Decision first appeared on IC Markets | Official Blog.

Key Points:

• Forecasts $76/bbl average for 2025 on moderate surplus
• Maintains $70-85/bbl range view
• Risks skewed to downside due to high spare capacity, potential trade tariffs
• Brent spreads may be underpricing near-term physical tightness

Geopolitical factors:

• Limited risk premium despite Israel-Iran tensions
• High OPEC+ spare capacity providing buffer
• Iran oil production remains undisrupted
• Mid East conflict keeps supply risks in play

Bottom line: While Goldman sees downside risks dominating, they note 2025 supply glut isn’t guaranteed and year-end could see some upward price pressure.

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

US Markets Consolidate Ahead of Earnings – Nasdaq up 0.2%

US stock markets consolidated near recent highs as investors await key earnings reports this week. The Nasdaq made a late move to finish in positive territory, closing up 0.18% on the day, while the Dow and S&P remained flat, losing 0.02% and 0.05%, respectively. US Treasury yields continued their upward trend, with the 2-year rising by one basis point to 4.035%, and the 10-year gaining 2.2 basis points, closing at 4.204%. Meanwhile, the dollar edged higher, reaching a 10-week high against a basket of currencies, trading at 104.04 on the index. Oil prices surged once again, driven by concerns over the ongoing conflict in the Middle East. Brent and WTI both gained 2.2%, closing at $75.90 and $72.10, respectively. Gold remained a standout performer, gaining another 0.9% to reach a record level, closing the day at $2,746.69.

Stars Align for Gold Bulls

Gold surged to yet another fresh high in trading yesterday, having now risen over 33% this year, with some analysts predicting further gains into 2025. Gold, traditionally considered one of the safest haven assets, is benefiting from an almost perfect trading environment for bulls. Geopolitical concerns have been front and centre for investors throughout the year, with markets moving from one flashpoint to another on a near-monthly basis. Uncertainty surrounding the upcoming US election is also likely being priced into the metal, with Kamala Harris now holding a slight lead in some polls. As the race remains tight, traders are anticipating further potential gains in the weeks and months ahead.

Bank of Canada in Focus Today

It has been a relatively quiet week on the macroeconomic front, but that could change later today with the Bank of Canada set to announce its latest rate decision. There is little on the agenda during the Asian session, but emerging market traders will be keeping an eye on updates from the BRICS summit as day two unfolds. The action is expected to pick up once New York opens, with a 25-basis point rate cut anticipated from the Bank of Canada. Volatility is expected around the event, with the accompanying statement and press conference likely to provide further forward guidance. Additionally, tier 2 US data, including Existing Home Sales and Oil Inventory figures, will be released. Several central bank speakers, including ECB President Christine Lagarde and the RBNZ’s Adrian Orr, are also scheduled to speak.

The post General Market Analysis – 23/10/24 first appeared on IC Markets | Official Blog.

No fresh news to report out of Japan.

No intervention type comments. Its only just pasty 9am in Tokyo though so maybe later.

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