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Gold rallied to a fresh high yesterday then quickly fell $25 on profit taking. It steadied in Asia and began the climb again and has just broken to a fresh record.

I fear there is some pre-election buying of gold that could unwind after the decision, particularly if Congress is split (which should somewhat restrain deficits). Seasonally, the tailwinds blow from November through January so I don’t think we’re at the top but I’m starting to see more mainstream talk about gold and the eye-watering predictions that often accompany tops.

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

The US major indices are all lower at the open with the NASDAQ leading the way to the downside:

a snapshot of market currently shows:

• Dow industrial average down -86 72 points or -0.20% at 42844.88
• S&P index down -26.09 points or -0.45% at 5827.89
• NASDAQ index down -90.43 points are -0.49% at 18449.58

the small-cap Russell 2000 is down -5.722 points or -0.26% at 2233.98.

The three major indices are coming off six consecutive weeks. The Dow and S&P are on pace for lower closes in the first two trading days of the week. The NASDAQ rose by about 50 points yesterday, but is down more today.

Yields are lower now with two year yield now down -1.2 basis points. The 10 year is down -1.4 basis points any 30 year is down -1.8 basis points.

This article was written by Greg Michalowski at www.forexlive.com.

• China stimulus measures announced by the PBOC are not sufficient to lift growth in a substantially material way

Goldman Sachs and others have been highlighting this as well. There are certainly some things for the stock market but it’s tough to disconnect the stock market from the real economy, especially with the risk of Trump tariffs just weeks away.

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

• Global growth 3.2% vs 3.2% in July forecast
• US growth seen at 2.3% for 2024 vs 2.6% in July
• US 2025 growth seen at 2.2% for 2025 vs 1.9% in July
• China growth at 4.8% for 2024 vs 5.0% in July
• Euro Zone growth at 0.8% for 2024 vs 0.9% in July, 1.2% for 2025 vs 1.5% in July
• German economy expected to stagnate this year vs 0.2% growth forecast previously
• German GDP expected to grow by 0.8% in 2025 vs 1.3% forecast previously
• BOJ expected to maintain gradual rate hiking path
• Japan’s growth outlook cut to 0.3% for 2024 (prev. 0.7%)
• Forecasts India growth at 7.0% for 2024, 6.3% for 2025, both unchanged from July

The IMF said the inflation battle ‘has largely been won,’ on track to return to 2% target in 2025 in advanced economies. The downside risks include too-tight monetary policy, spiking commodity prices due to escalation of wars and a further correction in Chinese property market.

They highlight adverse scenario including 10% tariffs between US, China, and Eurozone, tighter financial conditions could reduce global output by 0.8% by 2024, 1.3% by 2026 vs base forecasts.

As for the forecasts, they highlight that Germany is struggling and the US is doing remarkably well. But if you strip out the US, there is a lot of disappointment here. But so long as the US can hold up, the US dollar can outperform.

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

Treasury yields are still marginally higher after hitting the highest since late July. US 10s are up 1 basis point to 4.19% now and the stock market doesn’t like it or yesterday’s rise.

Breadth was terrible in equities yesterday as Nvidia carried the market and the Russell 2000 fell 1.5%

S&P 500 futures are down 32 points, or 0.5%.

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

• Prior was -0.8%
• Producer prices -0.9% y/y vs +0.2% prior
• Raw materials price index -3.1% vs -3.1% prior
• Raw materials price index -8.8% y/y

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

The forex markets are showing ups and downs after the USD moved higher yesterday helped by rising interest rates . Currently rates are of modestly higher the front end and down modestly near the end of the yield curve. US stocks are lower as geopolitical risks of tensions between Iran and Israel increase. Oil is higher. Gold is on pace for a record close.

Fed speakers in the early week have expressed a desire to recalibrate, but how far and how fast is still a question for debate.

Feds Harker speaks later today at 10 AM. The return Fed manufacturing index will also be released at that time. Canada producer price data will kick things off at 8:30 AM ET with expectations of -0.5% versus -0.8%.

BOE’s Bailey and MPC Greene are scheduled to speak at 9:25 AM ET and 9:45 respectively.

In the forex, a summary with key technial levels:

• EURUSD: The EURUSD held below the 200 day MA and 61.8% of the move up from the June low near 1.0874 yesterday (bearish). The price low yesterday and today is pushing toward the low from last week at 1.0810. Move below would target 1.07767.
• GBPUSD: Traders have been targeting the 100 day MA and the 61.8% of the move up from the August low at 1.2962 and 1.2958. The low price today reached within 3 pips of the 100 day MA at 1.2965 and bounced to 1.2984. Break below targets 1.2938 followed by 1.2844 to 1.2867. The overhead resistance is at 1.3000 where the low from September 11 bottomed (before bouncing). PS the price did break above the 1.3000 but the high price today also stalled at the falling 100 hour MA. That level come comes in at 1.3010 so 1.3000 to 1.3010 is really my best topside resistance/bias defining level.
• USDJPY:The USDJPY has broken above the 100 day MA at 150.75 and the 50% of the move down from the July high at the same level. The price trades at 150.83. Staying above keeps the buyers in firm control (look for more upside probing – the 200 day MA is up at 151.345 as an intermediate target). Move below with momentum and we should see buyers turn to sellers.
• USDCHF: The USDCHF remains above the 38.2% of the move down from the July high at 0.86318. Yesterday support buyers came in against the level increasing its importance going forward. Stay above is bullish. Move below and I would expect some selling on the disappointment. On the topside, the highs from last week remain a hurdle at 0.86684. Get above and traders will look toward the falling 100 day MA at 0.8698 as the next key target.
• USDCAD: The USDCAD reached a swing area target between 1.38337 and 1.3847 and stalled. The price trades just below that level with a low today at 1.3820. The range today is only 17 pips versus 1 month average of 56 pips. There is room to roam higher or lower. The buyers have been in control but overbought. Nevertheless if get above 1.3847 don’t mess with the trend. I would rather wait for a failure if can’t buy USDCAD, but buyers are in control folks.
• AUDUSD: The 50% midpoint of the move up from the August low comes in at 0.6645 and the low reached 0.6650 at the start of the new trading day today. The bounce higher has moved to a swing area between 0.6685 to 0.6695. At the 0.6695 level is also the key 100 day MA. The price needs to stay below that level today and going forward if the sellers are to remain more in control. The high today reached 0.66918. So support and resistance held the range today.
• NZDUSD: The NZDUSD broken below a swing area target between 0.60313 and 0.60387. The failed break turned sellers into buyers with the pair moving back above the broken 61.8% at 0.60509. The price is trading above and below that level as traders ponder the next move.

In geopolitics ,concerns remain a focus after Israeli Prime Minister Benjamin Netanyahu was the target of an assassination attempt involving a drone launched from Iran, as reported by various sources, including Saudi Al-Hadath. Israeli security officials are conducting investigations to confirm Iran’s involvement in the incident. Hezbollah is claiming “full responsibility for the attack.

Additionally, Netanyahu held consultations with specific cabinet ministers at the Ministry of Defense in Tel Aviv, according to reports from Al Jazeera and Israeli media. Netanyhu and U.S. Secretary of State Antony Blinken are meeting now.

In earnings released this morning:

• Lockheed Martin (LMT) Q3 2024: EPS 6.84 vs estimate of 6.50 (BEAT), Revenue 17.10bn vs estimate of 17.35 bn – MISS
• Fiserv Inc (FI) Q3 2024: EPS 2.30 versus estimate of 2.26 (BEAT), Revenue 5.215bn versus estimate of 4.91bn – BEAT
• Sherwin-Williams Co (SHW) Q3 2024: EPS 3.37 versus estimate of 3.54 (MISS), Revenue 6.16bn versus estimate of 6.20bn – MISS
• Philip Morris Inc (PM) Q3 2024: EPS 1.91 versus estimate of 1.82 (BEAT), Revenue 9.91bn versus estimate of 9.69bn – BEAT
• Invesco Ltd (IVZ) Q3 2024: EPS 0.44 versus estimate of 0.83 (MISS), Revenue 1.51bn versus estimate of 1.61bn – MISS
• RTX Corp (RTX) Q3 2024: EPS 1.45 versus estimate of 1.34 (BEAT), Revenue 20.6bn versus estimate of 19.08bn – BEAT
• Quest Diagnostics Inc (DGX) Q3 2024: EPS 2.00 versus estimate of 2.28 (MISS), Revenue 2.49bn versus estimate of 2.42bn – MISS
• General Motors Co (GM) Q3 2024: EPS 2.06 versus estimate of 2.43 (MISS), Revenue 48.76bn versus estimate of 44.88bn – MISS
• PulteGroup Inc (PHM) Q3 2024: EPS 3.35 versus estimate of 3.31 (BEAT), Revenue 4.31bn versus estimate of 4.26bn – BEAT
• 3M Co (MMM) Q3 2024: EPS 1.98 versus estimate of 1.90 (BEAT), Revenue 8.04bn versus estimate of 8.05bn – MET
• GE Aerospace (GE) Q3 2024: EPS 1.15 versus estimate of 1.14 (BEAT), Revenue 9.84bn versus estimate of 9.02bn – BEAT
• Danaher Corp (DHR) Q3 2024: EPS 1.71 versus estimate of 1.57 (BEAT), Revenue 8.58bn versus estimate of 8.50bn – BEAT

A snapshot of the other markets as the North American session begins shows:

• Crude oil is trading up $0.53 or 0.77% at $70.58. At this time yesterday, the price was at $70.20.
• Gold is trading up $14.73 or 0.54% had $2734.11. Is on target for a new record close. At this time yesterday, the price was at $2735.
• Silver is trading up $0.63 or 1.88% at $34.38. At this time yesterday, the price is at $34.01. Silver is trading at the highest level since December 2012
• Bitcoin is trading at $67,191. At this time yesterday, the price was at sea thousand $200
• Ethereum is trading at $2634.90. At this time yesterday, the price was at $2703.10

In the premarket, the snapshot of the major indices are lower after mixed results yesterday with the NASDAQ index rising, but the Dow industrial average falling on the back of AMEX, Merck, Goldman, Home Depot each falling over 2%. The NASDAQ closed at its highest level (at 18540.01) since its all time high close on July 10 (at 18647.45). Today the price is lower in premarket trading.

• Dow Industrial Average futures are implying a decline of -140.60 points. Yesterday, the index fell -344.31 or -0.80% at 42931.60
• S&P futures are implying a loss of -20.50 points points. Yesterday, the index fell -10.69 points or -0.18% at 5853.98
• Nasdaq futures are implying a loss of -84.10 points. Yesterday, the index rose 50.45 points or 0.27% at 18540.01

European stock indices are trading mixed:

• German DAX, -0.04% %
• France CAC, -0.30%
• UK FTSE 100, -0.54% %
• Spain’s Ibex, -0.95%
• Italy’s FTSE MIB, -1.00% (delayed by 10 minutes)

Shares in Asian Pacific session shares were mostly lower:

• Japan’s Nikkei 225, -1.39%
• China’s Shanghai Composite Index, +0.54%
• Hong Kong’s Hang Seng index, +0.10%
• Australia S&P/ASX index, -1.66%

Looking at the US debt market, yields are trading modestly higher

• 2-year yield 4.034%, +1.0 basis points. At this time yesterday, the yield was at 3.989%
• 5-year yield 3.986%, +1.1 basis points. At this time yesterday, the yield was at 3.931%
• 10-year yield 4.187%, +0.6 basis points. At this time yesterday, the yield was at 4.134%
• 30-year yield 4.488%, +0.0 basis points. At this time yesterday, the yield was at 4.442%

Looking at the treasury yield curve close steeper on Friday. At the close

• The 2-10 year spread is at +14.5 basis points. At this time Friday morning, the yield spread was +15.3 basis points.
• The 2-30 year spread is at +45.3 basis points. At this time Friday morning, the yield spread was +45.2 basis points.

This article was written by Greg Michalowski at www.forexlive.com.

• Stocks dribble lower in European morning trade
• Major currencies not doing much so far on the session
• Bonds under the spotlight with little else to focus on
• European equities mostly a touch softer at the open today
• What are the main events for today?
• Eurostoxx futures +0.1% in early European trading
• FX option expiries for 22 October 10am New York cut
• BOE chief economist lambasts ONS over poor jobs data quality
• Chinese equities continue to look more pensive this week
• USD/JPY underpinned by higher yields, faces up against key resistance levels now
• BOJ Executive Director Kato – not targeting FX levels
• USD/JPY above 150.90 again after meek comments from Japan

Markets:

• NZD leads, JPY lags on the day
• European equities lower;
  S&P 500 futures down 0.45%
• US 10-year yields up 1 bps to 4.206%
• Gold
  up 0.61% to $2,735
• WTI
  crude up 0.94% to $71.22
• Bitcoin
  down 0.08% to $67,300

It’s been
another slow session as the lack of key economic releases and limited news flow
kept the price action pretty rangebound.

The US
Dollar continues to get some support from higher Treasury yields and if the
recent days is something to go by, we might see some more legs higher in the US
session.

Gold erased
all of the yesterdays’ decline and it’s now trading right near the all-time
high. It’s been ignoring the rise in real yields, so it will be interesting to
see who gives in.

In the equity
markets, we continue to see some consolidation around the highs as the markets
are probably looking for catalysts to push into new highs and for now are
getting pressures by higher yields.

Unfortunately,
we have to wait until Thursday to get some market moving data with the releases
of the Flash US PMIs and the US Jobless Claims.

For now, it’s
more about capital preservation until we get to one of the most important
events of the year in November, that is the US election. There’s a good
argument that the markets have been already positioning into a Trump victory.

Time will
tell.

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

European indices are also all in negative territory, with the DAX also down by 0.1% after a decent open earlier. Other major indices in the region are down some 0.6% to 0.8% with the negative mood also reflected in US futures. S&P 500 futures are down 0.5% with Nasdaq futures down 0.6% currently.

In the bigger picture, it’s a case of shaving some off the top for equities. And investors can look to the bond market as a likely reason for that. 10-year Treasury yields are up again today, touching 4.21% currently.

The technical focus here is starting to get traders to stand up and take notice. And that means broader markets are also going to have to pay attention to that too.

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

The dollar is keeping more mixed with light changes being observed overall. There’s not much appetite or follow through, as traders are keeping a watchful eye on the bond market for anything. USD/JPY is one to pay attention to as such but is running up against a key resistance region as outlined here.

Besides that, all the other major currencies are stuck in narrower ranges on the day. The antipodeans are up slightly but it’s not really saying a lot after the fall yesterday. AUD/USD is up 0.3% to 0.6678 but is still keeping below its own 100-day moving average of 0.6695.

Just be wary though that the risk mood is starting to shift a little with US futures now trending lower. S&P 500 futures are down 0.5% with 10-year Treasury yields keeping higher at around 4.21%.

That might eventually lead to some spillover moves in FX later on in the day.

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

The post Ex-Dividend 23/10/2024 first appeared on IC Markets | Official Blog.

IC Markets Europe Fundamental Forecast | 22 October 2024

What happened in the Asia session?

With no major data releases this morning, the dollar index (DXY) was relatively unchanged as it hovered above 103.90 while spot prices for gold were rising strongly towards the most recent all-time high of $2,740.58/oz that was formed this Monday. Demand for this precious metal remains intact and it should come as no surprise for a new all-time to be formed over the next 24 hours or so.

What does it mean for the Europe & US sessions?

Bank of England (BoE) Governor Andrew Bailey will be speaking at the Bloomberg Global Regulatory Forum in New York. Although his speech will not be focusing on monetary policy, 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.

ECB President Christine Lagarde will be participating in a panel discussion titled “The Future of Cross-Border Payments: Faster Safer Together – Safe and Inclusive Fast Payments Across Borders” at the Annual Meetings of the International Monetary Fund and the World Bank Group in Washington DC. Following last week’s monetary announcement and press conference, markets will be looking to see if President Lagarde will use this platform to drop further insights into the outlook on future monetary policy action. Higher volatility could be expected for the Euro during this panel discussion.

The Dollar Index (DXY)

Key news events today

FOMC Member Harker Speaks (2:00 pm GMT)

What can we expect from DXY today?

Federal Reserve Bank of Philadelphia President Patrick Harker will be speaking at the Annual Fintech Conference hosted by the Federal Reserve Bank of Philadelphia where markets will be anticipating a similar view and outlook from him. There should not be any major deviation on the outlook for future monetary policy action from President Harker and demand for the dollar could pick up at the beginning of the U.S. session.

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

FOMC Member Harker Speaks (2:00 pm GMT)

What can we expect from Gold today?

Federal Reserve Bank of Philadelphia President Patrick Harker will be speaking at the Annual Fintech Conference hosted by the Federal Reserve Bank of Philadelphia where markets will be anticipating a similar view and outlook from him. There should not be any major deviation on the outlook for future monetary policy action from President Harker and demand for the dollar could pick up at the beginning of the U.S. session, potentially placing some near-term downward pressure on this precious metal.

Next 24 Hours Bias

Medium Bullish

The Australian Dollar (AUD)

Key news events today

No major news events.

What can we expect from AUD today?

Higher demand for the greenback drove the Aussie to an overnight low of 0.6653. This currency pair stabilized around 0.6650 before rising quite strongly towards 0.6670 as Asian markets came online – these are the support and resistance levels for today.

Support: 0.6650

Resistance: 0.6715

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 plunged under 0.6050 as demand for the dollar picked up strongly overnight. This currency pair continued to slide lower at the beginning of the Asia session before stabilizing around 0.6020 to retrace higher – these are the support and resistance levels for today.

Support: 0.5980

Resistance: 0.6050

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

No major news events.

What can we expect from JPY today?

Robust demand for the greenback lifted USD/JPY to an overnight high of 150.88 before pulling pack slightly as Asian markets came online. This currency pair steadied around 150.59 and could remain elevated as the day progresses – these are the support and resistance levels for today.

Support: 150.20

Resistance: 150.90

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

ECB President Lagarde Speaks (7:15 pm GMT)

What can we expect from EUR today?

ECB President Christine Lagarde will be participating in a panel discussion titled “The Future of Cross-Border Payments: Faster Safer Together – Safe and Inclusive Fast Payments Across Borders” at the Annual Meetings of the International Monetary Fund and the World Bank Group in Washington DC. Following last week’s monetary announcement and press conference, markets will be looking to see if President Lagarde will use this platform to drop further insights into the outlook on future monetary policy action. Higher volatility could be expected for the Euro during this panel discussion.

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?

Persistent demand for the dollar has kept USD/CHF elevated since mid-October. This currency pair hit an overnight high of 0.8663 on Monday before pulling away from this level before dipping under 0.8650 as Asian markets came online – these are the support and resistance levels for today.

Support: 0.8635

Resistance: 0.8670

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 Bearish

The Pound (GBP)

Key news events today

BoE Gov Bailey Speaks (1:25 pm GMT)

What can we expect from GBP today?

Bank of England (BoE) Governor Andrew Bailey will be speaking at the Bloomberg Global Regulatory Forum in New York. Although his speech will not be focusing on monetary policy, 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

No major news events.

What can we expect from CAD today?

The Loonie has depreciated significantly since the beginning of October causing USD/CAD to hit an overnight high of 1.3850 on Monday. However, this currency pair looks to have run out of steam at the beginning of the Asia session and was drifting lower towards 1.3820 – these are the support and resistance levels for today.

Support: 1.3820

Resistance: 1.3850

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

API Crude Oil Stock (8:30 pm GMT)

What can we expect from Oil today?

Crude oil prices remain under pressure as geo-political tensions in the Middle East scale back while lower demand from China continues to be a concern despite a slew of economic stimulus packages. WTI oil hit a high of $70.39 per barrel on Monday before pulling away from this level to dip under $70. Moving over to U.S. inventories, the API stockpiles registered a surprise drawdown in last week’s data release and should markets receive a second consecutive week of a higher draw; it could provide much-need support for this commodity.

Next 24 Hours Bias

Weak Bearish

The post IC Markets Europe Fundamental Forecast | 22 October 2024 first appeared on IC Markets | Official Blog.