In most cases, yields will tend to trend lower in the early stages of the Fed’s rate cutting cycle. But this isn’t like those cases, at least for the time being. There is something driving yields back higher and that is catching the market attention again since the start of the month. Is it the economy? Is it inflation? Is it the election?

As mentioned earlier, I’m sympathetic to the final point but it could also be a mix of reasons: Rising bond yields erode the risk trade, but what’s driving it?

In any case, the technicals are also starting to intrigue now. 10-year Treasury yields are passing a crucial point, nudging above its 200-day moving average (blue line). It’s the first time since early July that yields are holding both above that and the 100-day moving average (red line).

The next few weeks will be interesting to watch to see if this is really just all about the election. Or perhaps there is some other underlying driver that is getting traders worked up.

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

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

SAP announced a better outlook at its earnings report after the close yesterday and that’s helping to lift the DAX a little. Besides that, the overall mood is a little on the softer side with US futures also keeping lower. S&P 500 futures are down 0.2% as we look to start the session. As bond yields push higher, that’s also a key consideration for equities sentiment.

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

This is something I’ve highlighted with each and every UK labour market report, as seen with the latest one here. And it is something that has persisted for a year already now. In case you missed some of the posts about that:

• Heads up: UK labour market data later this month will have a similar caveat (November 2023)
• ONS says January labour market data to continue to use recent adjusted series (January 2024)
• There are still issues plaguing labour market data transformation – ONS (July 2024)

In a time when the BOE is trying to make key decisions on policy, the lack of accuracy in something as crucial as labour market data is rather damning.

That has now seen BOE chief economist, Huw Pill, be rather vocal about the issue. He laments a lack of improvement despite the ONS’ efforts. Adding that it “remains uncertain whether the credibility” of the data will improve in the near future.

This was remarked in a private letter to the ONS as Pill notes that the increased uncertainty of the data has made things “more difficult to gauge the underlying state of the labour market”.

So, again. This is just a reminder that there will continue to be a major caveat attached to the UK labour market report. Keep that in your consideration when trying to interpret the numbers.

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

DXY (US Dollar Index):

Potential Direction: Bearish
Overall momentum of the chart: Bullish

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

Pivot: 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.

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: 1.1.0871
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: 0.8324
Supporting reasons: Identified as an overlap resistance, indicating potential resistance where price may encounter selling pressure.

1st support: 0.8296
Supporting reasons: Identified as a swing low support, suggesting this level could provide strong support if the price declines.

1st resistance: 0.8356
Supporting reasons: Identified as an overlap resistance close to 50% 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: Bullish

Overall momentum of the chart: Bullish

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

Pivot: 193.09

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

1st support: 190.36

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

1st resistance: 196.86

Supporting reasons: Identified as a pullback 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 continuation toward 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.

USD/JPY:

Potential Direction: Bullish
Overall momentum of the chart: Bullish

Price could potentially make a bullish continuation towards 1st resistance.

Pivot: 148.94
Supporting reasons: Identified as an overlap support., indicating this level may act as a significant support during retracements.

1st support: 147.14
Supporting reasons: Identified as a pullback support, suggesting this level could provide additional support if the price moves lower.

1st resistance: 152.08
Supporting reasons: Identified as a pullback resistance aligned with 78.6% Fibonacci retracement, indicating a potential area where selling pressure may emerge.

USD/CAD:

Potential Direction: Bearish
Overall momentum of the chart: Bullish

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

Pivot: 1.3843
Supporting reasons: Identified as a multi-swing-high resistance, indicating a potential level where selling pressures could intensify.

1st support: 1.3797
Supporting reasons: Identified as an overlap support that aligns with a 50% Fibonacci retracement, indicating a key level where price could find support once more.

1st resistance: 1.3889
Supporting reasons: Identified as a multi-swing-high resistance that aligns close to a 161.8% Fibonacci extension, 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: 0.6027
Supporting reasons: Identified as a swing-low support that aligns close to a 127.2% Fibonacci extension, 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 is falling towards the pivot and could potentially make a bullish bounce off this level to rise towards the 1st resistance.

Pivot: 42,747.66

Supporting reasons: Identified as a 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 is falling towards the pivot and could potentially make a bullish bounce off this level to 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 is falling towards the pivot and could 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: 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: 69.16
Supporting reasons: Identified as a swing-low support, indicating a potential level where buying interests could pick up to stage a rebound.

1st support: 67.74
Supporting reasons: Identified as a multi-swing-low support, indicating a key level where price could find support once more.

1st resistance: 71.22
Supporting reasons: Identified as a pullback resistance, 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: 2736.81
Supporting reasons: Identified as a resistance, aligned with the 161.8% Fibonacci extension and 61.8% Fibonacci projection, indicating this level could act as a significant resistance during price fluctuations.

1st support: 2685.15
Supporting reasons: Identified as a pullback support, suggesting this level could offer strong support if the price declines.

1st resistance: 2772
Supporting reasons: Aligns with 78.68% Fibonacci projection, indicating this level may act as a key resistance point where selling pressure could emerge.

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If anything, the chart shows that the mood music is more pensive as investors are likely waiting on more action by Beijing. That especially a follow through on the fiscal side of things. The CSI 300 index is up 0.5% today but it’s not really noticeable from the charts.

It seems to be that investors are still hanging on to the leftover enthusiasm from before the Golden Week holiday. It’s a good first step in trying to convince of a turnaround in sentiment. The surge higher shows much appetite and money waiting on the sidelines to bet on a China recovery.

The fear is that Chinese officials might leave this sort of mood hanging for too long, again.

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

IC Markets Asia Fundamental Forecast | 22 October 2024

What happened in the U.S. session?

There were not one but three Federal Reserve officials delivering their respective speeches on Monday – Federal Reserve Bank of Dallas President Lorie Logan, Minneapolis President Neel Kashkari and Kansas City President Jeffrey Schmid. All three officials reiterated their views that they see the Fed gradually lowering interest rates, giving the central bank time to assess any uncertainties associated with incoming data on the labour market and inflation. Here are a couple of excerpts from these officials:

“If the economy evolves as I currently expect, a strategy of gradually lowering the policy rate toward a more normal or neutral level can help manage the risks and achieve our goals,” Dallas President Logan said in a speech at the Securities Industry and Financial Markets Association annual meeting in New York.

“Lowering rates in a gradual fashion would provide time to observe the economy’s reaction to our interest rate adjustments and give us the space to assess at what level interest rates are neither restricting nor boosting the economy,” Kansas City President Schmid added in a speech titled, “How far and how fast.”

The ‘balanced’ views of the above Fed officials caused the dollar index (DXY) to briefly breach 104 towards the end of this session before falling under this level while spot prices for gold retreated from its latest intraday all-time high of $2,740.58/oz to stabilize around $2,720/oz.

What does it mean for the Asia Session?

As Asian markets digest the latest statements from these Fed officials, the DXY continued to slide lower as it edged down towards 103.90 while gold was rising steadily towards $2,730/oz. With no major news events scheduled for release during this session, it could be a relatively quiet period as markets take a breather.

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 Asia Fundamental Forecast | 22 October 2024 first appeared on IC Markets | Official Blog.

10-year Treasury yields have now climbed back up to 4.20% and looking to push past its own 200-day moving average. Is it the economy trade? The inflation trade? Or perhaps the election trade? I’m quite sympathetic to the final reasoning to be honest. And that sort of ties in with inflation, should Trump come out on top and reignite trade wars.

But as yields surge higher, it is underpinning USD/JPY as the pair pushes to its highest levels since end July. The 151.00 mark is within touching distance now as the pair contests key technical levels on the chart.

The 50.0 Fib retracement level and 100-day moving average (red line) near 150.76 is being challenged now. And just above that, the 200-day moving average (blue line) is sitting close by at 151.33. That makes for a key resistance region for sellers to try and pin down price action and limit further upside.

A break of those levels though, will allow much breathing room for buyers. But at this stage, a lot of it will be driven by what will happen in the bond market as well.

It’s a tricky one to get the full picture there as traders will have to balance the mix of economic data against the election backdrop going into November.

But for today at least, the technicals are going to be one to provide some clues as to how things will play out next.

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

I gave an alert for comments today:

• Eyes and ears open today – “Verbal intervention threat rises as USD/JPY rises above 150”

What we got was meek indeed, barely anything:

• Japan government Aoki says no comment on FX moves

Will there be anything else? USD/JPY is nearly at 151.00 and I’m surprised we’ve heard so little.

Trend is your friend in full effect today

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

• Federal Reserve Bank of Philadelphia President Patrick Harker speaks on Tuesday
• European Central Bank President Lagarde speaks twice on Tuesday, Lane *2 also
• Bank of England Governor Andrew Bailey speaking Tuesday, Greene and Breeden also
• Japan government Aoki says no comment on FX moves
• China’s $120bn effort to prop up the yuan
• ICYMI – Saudi Aramco CEO is bullish on China’s oil consumption
• Eurozone Rate Cuts Forecast: Franklin Templeton
• PBOC sets USD/ CNY reference rate for today at 7.1223 (vs. estimate at 7.1229)
• Where are the yen intervention comments?
• China’s Loan Prime Rate (LPR) cuts on Monday – is the glass half full, or half empty?
• ECB Rate Cut Impact Analysis: Inflation Concerns Forward, Policy Tightening Ahead
• Eyes and ears open today – “Verbal intervention threat rises as USD/JPY rises above 150”
• Fed’s Daly says the recent rate cut was a ‘close call’
• Fidelity International (fund manager) cuts 500 jobs in China
• US stock market, the party is over say Goldman Sachs
• UBS say the US election result may not be known for more than a month after November 5
• New Zealand September exports higher than August, imports down a touch
• Fed’s Schmid: Very strong commitment at the Fed for 2% inflation
• Forexlive Americas FX news wrap 21 Oct; The 10 year yield moves above 200 day MA
• Fed’s Schmid calls for cautious, gradual, deliberate approach to rate cuts
• Apollo’s Slok says increasing chance Fed rates hold in November – 10 tailwinds for economy
• Trade ideas thread – Tuesday, 22 October, insightful charts, technical analysis, ideas

We
had Federal Reserve officials Schmid (Federal Reserve Bank of Kansas
City President) and Daly (Federal Reserve Bank of San Francisco
President) speaking in early Asia time on Tuesday. They followed
Logan (Dallas) and Kashkari (Minneapolis) who spoke on Monday, US
time.

All
four expressed support for further Federal
Reserve interest-rate
cuts, but while Schmid, Logan and Kashkari tilted towards going slow
on rate cuts (‘modest’, ‘gradual’, ‘avoid outsize moves’),
citing the strong US economy and an uncertain outlook, Daly was more
gung-ho, saying her perception is that current Fed monetary policy is
“very tight” and that a strong economy should not prevent
pacy rate cuts as long as inflation continues to fall.

Apart
from Fed speakers there was little news nor data of impact. We did
have some (very mild) verbal intervention from Japanese authorities.
USD/JPY is barely off its session highs. Major
FX was otherwise subdued.

China’s
trade weighted yuan basket rose to its highest since July 11.

Gold
jumped on the session but has not approached its recent (record)
high.

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

Aoki is Deputy Chief Cabinet Secretary:

• No comment on FX moves

Hayashi adds:

• yen moves have positive and negative aspects

–

These are very mild comments.

USD/JPY is circa 150.75 and barely off its session high

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

China’s FX regulator is the State Administration of Foreign Exchange (SAFE).

They’ve published data for year-to-date sales of foreign currency by commercial banks

• 121.3bn net FX sold January – September

SAFE adds:

• yuan exchange is basiclly stable at reasonable and balanced levels
• FX mkt shows relatively strong resilience

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

Saudi Aramco Chief Executive Officer Amin H. Nasser says the firm is bullish on China’s oil consumption

Citing

• government stimulus measures
• jet fuel demand is a bright spot
• sees global oil demand at more than 100 million barrels per day through 2050

Bloomberg carried his comments, but also poured some cold water on them:

• other market commentators forecast that China’s demand for fuels like gasoline & diesel has already peaked or will be peaking soon, backed by the nation’s rapid electrification of its passenger vehicle fleet
• In recent months, parts of the country’s trucking sector have also seen a jump in orders for commercial vehicles that run on liquefied natural gas

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