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IC Markets Asia Fundamental Forecast | 28 November 2024

What happened in the U.S. session?

Yesterday several key U.S. economic indicators were released, influencing the market

Preliminary GDP (Q3): The U.S. economy grew at an annualized rate of 2.8% in the third quarter, matching initial estimates. This growth was driven by robust consumer spending and increased exports, indicating economic resilience. 

Unemployment Claims reported that initial unemployment claims for the week ending November 23 decreased by 2,000 to 213,000, reaching a seven-month low. reflecting a strong labor market and contributing to positive economic sentiment

The Core Personal Consumption Expenditures (PCE) price index, the Federal Reserve’s preferred inflation gauge, rose to 2.8% year-over-year, up from 2.7% in September. This increase suggests persistent inflationary pressures, potentially influencing future monetary policy decisions. 

What does it mean for the Asia Session?

The strong U.S. economic data reported—2.8% GDP growth, a seven-month low in unemployment claims, and a rise in the Core PCE Price Index to 2.8%—sets a bullish tone for the U.S. dollar heading into the Asia session. These indicators reflect a resilient U.S. economy and persistent inflationary pressures, reinforcing expectations of a cautious Federal Reserve. 

As a result, Asian currencies like the Japanese yen and Australian dollar may face downward pressure. Risk sentiment could be subdued as the strong dollar weighs on regional markets.

The Dollar Index (DXY)

Key news events today

No major news events.

What can we expect from DXY today?

Despite strong U.S. economic data, including 2.8% GDP growth, a seven-month low in unemployment claims, and a rise in the Core PCE Price Index to 2.8%, the U.S. Dollar Index (DXY) has declined. This unexpected drop may result from various factors. First, investors may have anticipated even stronger data, leading to profit-taking after the releases. 

Second, while inflation pressures could keep the Federal Reserve cautious, market participants might believe the Fed is nearing the end of its rate-hike cycle, prompting expectations of future rate cuts. 

Third, improved global risk sentiment may have driven demand for higher-yielding assets, reducing the appeal of the safe-haven dollar. Lastly, technical factors, such as resistance levels or stop-loss triggers, might have exacerbated selling pressure on the DXY. 

Overall, the decline reflects a mix of market expectations, sentiment, and technical trading dynamics, despite the robust U.S. economic backdrop.

Central Bank Notes:

• The Board of Governors of the Federal Reserve System voted unanimously to lower the Federal Funds Rate target range by 25 basis points to 4.50% to 4.75% on 7th November.
• The Committee seeks to achieve maximum employment and inflation at the rate of 2% over the longer run 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 labour market conditions have generally eased, 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.
• 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 17 to 18 December 2024.

Next 24 Hours Bias

Weak Bullish

Gold (XAU)

Key news events today

No major news events.

What can we expect from Gold today?

Gold prices declined today as strong U.S. economic data supported the dollar. Preliminary GDP growth of 2.8% in Q3, driven by strong consumer spending and exports, highlighted economic resilience. 

Unemployment claims fell to 213,000, a seven-month low, reflecting a robust labor market and boosting dollar strength. 

Additionally, the Core PCE Price Index rose to 2.8% year-over-year, signaling persistent inflationary pressures and reinforcing expectations of tighter Federal Reserve policy. 

These factors combined to strengthen the dollar and reduce gold’s appeal as a safe-haven and non-yielding asset, pressuring prices as investors anticipate continued U.S. economic strength and cautious monetary tightening.

Next 24 Hours Bias

Medium Bearish

The Australian Dollar (AUD)

Key news events today

RBA Gov Bullock Speaks  (8:55 am GMT)

What can we expect from AUD today?

Reserve Bank of Australia (RBA) Governor Michele Bullock’s speech at 8:55 AM GMT today could influence the Australian dollar (AUD). Markets will watch for her tone on monetary policy. A hawkish stance, signaling concerns about inflation and potential rate hikes, may strengthen the AUD, while a dovish tone, highlighting economic challenges or prolonged accommodative policy, could weaken it. A neutral stance might have minimal immediate impact but could guide future market expectations.

Central Bank Notes:

• The RBA kept the cash rate target unchanged at 4.35% on 5th November, marking the eighth consecutive pause.
• Inflation has fallen substantially since the peak in 2022, as higher interest rates have been working to bring aggregate demand and supply closer towards balance but the forecasts published in today’s Statement on Monetary Policy (SMP) do not see inflation returning sustainably to the midpoint of the target until 2026.
• Headline inflation was 2.8% over the year to the September quarter, down from 3.8% over the year to the June quarter; this was as expected due to declines in fuel and electricity prices in the September quarter.
• However, this decline reflects a temporary cost of living relief; abstracting from these effects, underlying inflation (as represented by the trimmed mean) was 3.5% over the year to the September quarter and is still some way from the 2.5% midpoint of the inflation target.
• Growth in output has been weak as past declines in real disposable incomes and the ongoing effect of restrictive financial conditions continue to weigh on household consumption, particularly discretionary consumption.
• However, growth in aggregate consumer demand, which includes spending by temporary residents such as students and tourists, has remained more resilient.
• A range of indicators suggest that labour market conditions remain tight, and while conditions have been easing gradually, some indicators have recently stabilised.
• Employment grew strongly over the three months to September, by an average of 0.4% per month but the unemployment rate was 4.1% in September, up from the trough of 3.5% in late 2022.
• While headline inflation has declined substantially and will remain lower for a time, underlying inflation is more indicative of inflation momentum, and it remains too high while the November SMP forecasts suggest that it will be some time yet before inflation is sustainably in the target range and approaching the midpoint.
• This reinforces the need to remain vigilant to upside risks to inflation and the Board is not ruling anything in or out.
• Policy will need to be sufficiently restrictive until the Board is confident that inflation is moving sustainably towards the target range and it will continue to rely upon the data and the evolving assessment of risks to guide its decisions.
• Next meeting is on 10 December 2024.

Next 24 Hours Bias

Medium Bullish

The Kiwi Dollar (NZD)

Key news events today

No major news events.

What can we expect from NZD today?

The Reserve Bank of New Zealand (RBNZ) reduced the Official Cash Rate (OCR) by 50 basis points to 4.25% on November 27, 2024, marking its third cut in 4 months. This move reflects easing inflation pressures and economic challenges, including weak investment, subdued consumer spending, and a soft labor market. The RBNZ hinted at further cuts, targeting a neutral rate of 2.5-3.5% by 2025. The dovish stance is likely to pressure the New Zealand dollar (NZD), reducing its yield appeal. Future OCR decisions will depend on evolving economic conditions, adding potential volatility to the NZD in the near term –  the support and resistance levels for today.

Support: 0.5867

Resistance: 0.5935

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

Medium Bullish

The Japanese Yen (JPY)

Key news events today

No major news events.

What can we expect from JPY today?

JPY is expected to trade within 149.42 – 151.42 today, influenced by key economic events that strengthen USD/JPY – the support and resistance levels for today.

Support: 150.26

Resistance: 152.42

Central Bank Notes:

• The Policy Board of the Bank of Japan decided on 31st October, 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) is likely to be at around 2.5% for fiscal 2024 and then be at around 2% for fiscal 2025 and 2026.
• While the effects of a pass-through to consumer prices of cost increases led by the past rise in import prices are expected to wane, 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.
• Comparing the projections with those presented in the previous Outlook for Economic Activity and Prices (Outlook Report), the projected real GDP growth rates are more or less unchanged. The projected year-on-year rate of increase in the CPI (all items less fresh food) for fiscal 2025 is somewhat lower due to factors such as the recent decline in crude oil and other resource prices.
• Japan’s economy 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 19 December 2024.

Next 24 Hours Bias

Weak Bullish

The Euro (EUR)

Key news events today

German Prelim CPI m/m ( All Day)

What can we expect from EUR today?

Germany’s preliminary CPI data for November, released today, will influence the euro (EUR). A higher-than-expected CPI could signal rising inflationary pressures, raising expectations of tighter European Central Bank (ECB) monetary policy and strengthening the EUR. Conversely, a lower-than-expected CPI may indicate subdued inflation, prompting expectations of prolonged accommodative policies, potentially weakening the EUR. As Germany is the largest economy in the Eurozone, this data is closely watched for its implications on regional inflation trends and ECB decisions.

Central Bank Notes:

• The Governing Council reduced 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

Medium Bearish

The Swiss Franc (CHF)

Key news events today

No major news events.

What can we expect from CHF today?

With no major Swiss economic releases today, the Swiss Franc (CHF) is influenced by external factors, particularly U.S. economic data from November 27. Strong U.S. GDP growth (2.8%) and a decline in unemployment claims (213,000) highlight a resilient U.S. economy, supporting the dollar and pressuring the CHF. Additionally, the Core PCE Price Index rose to 2.8%, reinforcing expectations of tighter Federal Reserve policy, which may further weaken the CHF against the USD – the support and resistance levels for today.

Support: 0.8765

Resistance: 0.8855

Central Bank Notes:

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

Next 24 Hours Bias

Medium Bearish

The Pound (GBP)

Key news events today

No major news events.

What can we expect from GBP today?

The release of Germany’s preliminary Consumer Price Index (CPI) can indirectly influence the British Pound (GBP) through its impact on the Euro (EUR). As Germany is the Eurozone’s largest economy, significant deviations in its CPI can affect EUR value. A higher-than-expected German CPI may strengthen the EUR, potentially leading to a weaker GBP against the EUR. Conversely, a lower-than-expected CPI could weaken the EUR, possibly resulting in a stronger GBP relative to the EUR. However, the direct impact on GBP/USD is likely to be limited, as this pair is more directly influenced by UK and U.S. economic data – the support and resistance levels for today.

Support: 1.2615

Resistance: 1.2834

Central Bank Notes:

• The Bank of England’s Monetary Policy Committee (MPC) voted by a majority of 8 to 1 to reduce the Bank Rate by 25 basis points, to 4.75% on 7th November 2024 – one member preferred to maintain the Bank rate at 5.0%.
• 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, starting in October 2024.
• Twelve-month CPI inflation fell to 1.7% in September but is expected to increase to around 2.5% by the end of the year as weakness in energy prices falls out of the annual comparison; services consumer price inflation has declined to 4.9%.
• CPI inflation is expected to increase to around 2.75% by the second half of 2025 as weakness in energy prices falls out of the annual comparison, revealing more clearly the continuing persistence of domestic inflationary pressures.
• The MPC’s latest projections for activity and inflation are also set out in the accompanying November Report; this forecast is based on the second case where CPI inflation is projected to fall back to around the 2% target in the medium term as a margin of slack emerges later in the forecast period that acts against second-round effects in domestic prices and wages.
• GDP had grown by 0.5% in 2024 Q2, 0.2% weaker than had been expected in the August Report, and 0.1% weaker than the earlier outturn had indicated at the time of the MPC’s previous meeting. Through the second half of 2024, GDP was projected to grow at a somewhat slower rate than in Q2 – headline GDP growth is expected to fall back to its recent underlying pace of around 0.25% per quarter over the second half of this year.
• The combined effects of the measures announced in Autumn Budget 2024 are provisionally expected to boost the level of GDP by around 0.75% at their peak in a year’s time, relative to the August projections, while the Budget is provisionally expected to boost CPI inflation by just under 0.5% at the peak.
• Annual private sector regular average weekly earnings growth has continued to fall but remained elevated at 4.8% in the three months to August; the MPC judges that the labour market continues to loosen, although it appears relatively tight by historical standards.
• Based on the evolving evidence, a gradual approach to removing policy restraint remains appropriate but 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 19 December 2024.

Next 24 Hours Bias

Medium Bullish

The Canadian Dollar (CAD)

Key news events today

No major news events.

What can we expect from CAD today?

With no major Canadian economic data releases scheduled for today, the Canadian dollar (CAD) is likely to be influenced by external factors, particularly developments in the U.S. economy and global commodity markets. Recent U.S. economic indicators, such as robust GDP growth and a strong labor market, have bolstered the U.S. dollar, which may exert downward pressure on the CAD. Additionally, fluctuations in oil prices, a key Canadian export, can significantly impact the CAD’s value – the support and resistance levels for today.

Support: 1.4013

Resistance: 1.4088

Central Bank Notes:

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

Next 24 Hours Bias

Weak Bullish

Oil

Key news events today

No major news events.

What can we expect from Oil today?

With no major events today, oil prices are influenced by ongoing market dynamics. Analysts note oil is undervalued by around $5 per barrel, with factors like global reserve restocking, OPEC+ production cuts, and risks to Iran’s supply providing support. Brent crude is projected to peak at $78 per barrel by mid-2025 before easing. OPEC+ compliance has improved, with production from Iraq, Kazakhstan, and Russia declining by 0.5 million barrels per day in November, reducing market oversupply – the support and resistance levels for today.

Support: 67.59

Resistance: 69.09

Next 24 Hours Bias

Medium Bearish

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

Post for the futures traders out there!

The CME Group has adjusted trading hours for various products during the Thanksgiving holiday period in 2024. Below is a summary of the schedule for Equity Products, Cryptocurrency, Interest Rate Products, and NYMEX & COMEX Products:

Equity Products:

• Wednesday, November 27, 2024:

  • Regular trading hours.

• Thursday, November 28, 2024 (Thanksgiving Day):

  • Trading halted at 12:00 PM CT. (CT is Central Time, add1 for US Eastern time. That is 12pm CT is 1PM US Eastern time)

• Friday, November 29, 2024:

  • Trading resumes at 5:00 PM CT.

Cryptocurrency:

• Wednesday, November 27, 2024:

  • Regular trading hours.

• Thursday, November 28, 2024 (Thanksgiving Day):

  • Trading halted at 12:00 PM CT.

• Friday, November 29, 2024:

  • Trading resumes at 5:00 PM CT.

Interest Rate Products:

• Wednesday, November 27, 2024:

  • Regular trading hours.

• Thursday, November 28, 2024 (Thanksgiving Day):

  • Trading halted at 12:00 PM CT.

• Friday, November 29, 2024:

  • Trading resumes at 5:00 PM CT.

NYMEX & COMEX Products:

• Wednesday, November 27, 2024:

  • Regular trading hours.

• Thursday, November 28, 2024 (Thanksgiving Day):

  • Trading halted at 12:00 PM CT.

• Friday, November 29, 2024:

  • Trading resumes at 5:00 PM CT.

Please note that these schedules are subject to change. For the most current information, refer to the CME Group’s official Holiday Calendar.

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

This is with regards to the Japanese Association of Metal, Machinery, and Manufacturing Workers (JAM) trade union, which mainly comprises of small and medium-sized manufacturing firms across Japan. It is being reported that they will be demanding a base salary hike of ¥15,000 or more in the upcoming spring wage negotiations.

For some context, that will be at least an increase of ¥3,000 compared to what was demanded this year. And that will make it the highest ever wage hike from the industry union. It is being reported that the target though, will be to call for a total wage increase of more than ¥19,500.

The backdrop here will be another positive for the Japanese government and the BOJ. That especially as the central bank will look to this as “proof” of rising price pressures to normalise monetary policy further.

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

The post Ex-Dividend 28/11/2024 first appeared on IC Markets | Official Blog.

US Markets Tepid Ahead of Thanksgiving – Nasdaq Off 0.6%

US stocks suffered a mild setback ahead of today’s Thanksgiving Day break after Core PCE data came in largely as expected, increasing anticipation of a 25-basis-point rate cut from the Federal Reserve in December. The Nasdaq dropped 0.6% on the day as tech stocks bore the brunt of the selling, followed by the S&P, which closed down 0.38%, and the Dow, which ended 0.31% lower. The dollar saw a notable decline, with the DXY down 0.73%. Treasury yields also fell, with the 2-year yield losing 3.1 basis points to settle at 4.223% and the 10-year yield dropping 5.4 basis points to 4.248%. Oil and gold prices had an unusually subdued session, with Brent inching up by just 0.01% to $72.83, WTI edging down 0.02% to $68.72, and gold adding 0.35% to close at $2,638.23.

Fed Cut Bets to Come into Focus in the Coming Weeks

Expectations of a 25-basis-point rate cut by the Federal Reserve in December were slightly reinforced yesterday after PCE data aligned with forecasts, with markets now pricing in a 65% probability of the cut. However, traders anticipate increased volatility in this pricing – and consequently the market – over the next 20 days leading up to the decision. Minutes from the last meeting reaffirmed that FOMC members remain divided, and stronger US economic data, particularly from next week’s critical jobs report or the following week’s CPI release, could prompt a pause on 18 December. Such an outcome would likely drive the dollar significantly higher. With several trading sessions remaining before the decision, focus on the potential rate cut is expected to intensify as we approach the December trading period.

Thanksgiving Day Holiday to Dominate Markets Today

A more subdued trading session is anticipated today, with only a couple of tier-one macroeconomic events on the calendar and liquidity expected to thin as the Thanksgiving Day holiday begins to take effect. The Asian session is relatively quiet, although Australian traders may note RBA Governor Michele Bullock’s evening address. During the European session, German CPI data will be released throughout the day as individual states report separately. However, activity and liquidity are likely to decline significantly as the New York session opens and the holiday mood sets in.

The post General Market Analysis – 28/11/24 first appeared on IC Markets | Official Blog.

• Japan extraordinary parliamentary session to discuss plans for an extra budget (and more)
• JP Morgan says Bank of Japan will hike to 1.5% (but not soon)
• South Korea will extend its fuel tax cuts by another 2 months
• Bank of Korea cut benchmark interest rates for a second straight meeting – a surprise move
• The US has reduced its travel advisory level for China from 3 down to 2
• PBOC sets USD/ CNY mid-point today at 7.1894 (vs. estimate at 7.2227)
• Business sentiment in UK services sector is falling at the fastest rate in two years
• Bank of Korea unexpectedly cuts its base rate by 25bp
• Australian data: Q3 Capex headline rose 1.1% vs. +0.9% expected & -2.2% prior
• Plan to overhaul the RBA including splitting the board in two could be back on the agenda
• Mexico has agreed to stop migration into the US (closes southern border)
• US expected to announce further AI chip sanctions against China on Monday
• New Zealand data – ANZ November Business Confidence 64.9 (prior 65.7)
• Data from New Zealand today confirms signs of still-rising unemployment
• HSBC forecasts EUR/USD to 0.99 by the end of 2025
• MUFG with two reasons for the yen rise … and a word of caution
• Forexlive Americas FX news wrap 27 Nov: Core PCE inflation remains sticky but as expected
• Citi analysts warn Trump’s tariffs could impact S&P 500 earnings
• Trade ideas thread – Thursday, 28 November, insightful charts, technical analysis, ideas

Yen
was the mover for the session. USD/JPY rose towards 151.75, back near
its US session high, recovering from opening levels here in early
Asia around 151.00. There was little news nor data of note for it.

What
we did get was an announcement from Trump saying that he had spoken
with Mexico’s President Sheinbaum. Sheinbaum agreed to stop
migration through Mexico into the US, effectively closing the US
southern border. This should remove Trump’s punitive tariff threat
made earlier in the week.

We
had data from New Zealand:

• employment
  data indicated still rising unemployment
• business
  confidence slipped a touch, activity improved

and
from Australia

• headline
  capex beat

On
the central bank front, the Bank of Korea cut is benchmark rate to 3%
from 3.25 in a surprise move:

• first
  time since 2009 the central bank cut interest rates for two
  consecutive meetings
• BoK
  also lowered its forecasts for economic growth and inflation

Apart from yen major FX traded in subdued ranges ahead of the US holiday.

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

South Korea’s finance ministry said that it will extend the tax cut on fuel for two more months

• Out to February 2025

South Korea has implemented a series of fuel tax cuts since 2021 to alleviate the financial burden on consumers amid fluctuating global oil prices and inflationary pressures. Extensions to the cuts have been ongoing.

Timeline of Fuel Tax Adjustments:

• November 2021: The government introduced a temporary fuel tax cut to mitigate the impact of rising oil prices on consumers.

• June 2024: The tax cut was extended by two months, with reductions adjusted to 20% for gasoline and 30% for diesel and liquefied petroleum gas (LPG) butane.

• August 2024: Amid rising crude oil prices, the government extended the tax cuts through October, maintaining the existing reduction rates.

• October 2024: The tax cuts were extended for an additional two months until the end of December, with the reduction rates scaled back to 15% for gasoline and 23% for diesel and LPG butane.

Impact on Consumers and Economy:

These tax adjustments have been instrumental in stabilizing domestic fuel prices and controlling inflation. However, they have also led to concerns about reduced tax revenues and potential long-term fiscal implications. The government has indicated that future adjustments will consider global oil price trends, inflation rates, and overall economic conditions.

Its all happening in SK today!

• Bank of Korea unexpectedly cuts its base rate by 25bp
• Bank of Korea cut benchmark interest rates for a second straight meeting – a surprise move

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

US advice to travelers to mainland China changed from Level 3, “reconsider travel”, to Level 2, “exercise increased caution”.

The the advisory still warned that US citizens in China “may be subjected to interrogations and detention without fair and transparent treatment under the law”.

The trimming of the warning level comes as:

• China has released United States citizens Mark Swidan, Kai Li and John Leung, the White House said on Wednesday (Nov 27), concluding years of diplomacy over Americans that Washington says were wrongfully detained in China.
  
• The Biden administration also upgraded its travel advisory for China, a move long sought by Beijing that US officials have tied to China’s detention of American nationals.

  The National Security Council said in a statement the three men’s release meant all Americans it deemed wrongfully detained in China had now been released.

  “Soon they will return and be reunited with their families for the first time in many years,” it said.

• Politico, which first reported the release, said a number of Chinese citizens detained in the US would also be released.

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

USD/JPY has risen in morning Asia trade.

News and data flow from Japan has been sparse.

We did have this from the US:

• Mexico has agreed to stop migration into the US (closes southern border)

And this:

• US expected to announce further AI chip sanctions against China on Monday

Whether those are smoking gun catalysts I’ll leave you to decide. A bit underwhelming IMO though.

For the technical analysis folks, back to a wee resistance area? Comments welcome!

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

The CBI survey shows UK services sector sentiment falling at its fastest pace in two years, driven partly by tax increases in Finance Minister Rachel Reeves’ October 30 budget, according to the Confederation of British Industry (CBI).

The decline is most severe in consumer services, where a £25 billion payroll tax hike heavily impacts large employers.

• Sentiment among consumer services firms dropped sharply to -55 in November from -19 in August, while business and professional services fell to -29 from +9.

CBI Deputy Chief Economist Alpesh Paleja attributes the drop in optimism, weaker hiring intentions, and rising cost pressures to the forthcoming increase in employer National Insurance Contributions. Profitability among business and professional services firms fell to its lowest since August 2020, and investment intentions have declined across the board.

Low business investment, already a factor in Britain’s weaker productivity compared to international peers, has worsened. The CBI’s findings align with other indicators, including the S&P Global PMI, which showed economic contraction for the first time in over a year. The survey, based on responses from 441 firms between October 29 and November 14, highlights growing economic challenges in the UK.

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

A small beat for the headline.

• Total new capital expenditure rose by 1.1%
• Buildings and structures rose by 1.1%
• Equipment, plant and machinery rose by 1.1%
• Estimate 4 for 2024-25 is $178.2b. This is 5.1% higher than Estimate 3 for 2024-25

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Background to this.

The Australian Bureau of Statistics (ABS) publishes data on private new capital expenditure (capex). This quarterly report provides insights into the actual capital expenditures by businesses on buildings, structures, equipment, plant, and machinery, as well as their future investment intentions. Today we’ll get the Q3 2024 data. The previous 2024 quarter summaries:

June 2024 Quarter Highlights:

• Total New Capital Expenditure: Decreased by 2.2% to $39,834 million.
• Buildings and Structures: Fell by 3.8% to $20,866 million.
• Equipment, Plant, and Machinery: Slight decline of 0.5% to $18,967 million.
• Estimate 3 for 2024-25: Projected at $170.7 billion, marking a 10.3% increase from Estimate 2.

March 2024 Quarter Highlights:

• Total New Capital Expenditure: Rose by 1.0% to $40,487 million.
• Buildings and Structures: Decreased by 0.9% to $21,449 million.
• Equipment, Plant, and Machinery: Increased by 3.3% to $19,038 million.
• Estimate 2 for 2024-25: Estimated at $155.4 billion, a 6.8% rise from Estimate

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

Trump says he spoke with Mexico’s Sheinbaum:

• agreed to stop migration through Mexico into the US
• effectively closing the US southern border

If so this will mean Turmp’s threats if big tariffs on Mexico won’t go ahead.

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Claudia Sheinbaum Pardo is president of Mexico

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The threat of tariffs on Mexico, Canada and China sent the USD surging earlier this week.

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