Clyde Russell at Reuters takes a look at a few scenarios for global markets in 2025 and how they will play out. It’s a good time to think through some different ideas, even if you disagree with some of the takes here. Not surprisingly, the list is dominated by the uncertainty of how Trump and Republicans will govern.

1. Trump Better Than Expected

• Trade threats yield concessions
• US economy leads global growth
• China recovers
• Peace deals reached
• Bullish: copper
• Bearish: oil, gas

2. Trump Worse Than Feared

• Major trade barriers erected
• Global economy suffers
• Higher inflation
• Bearish: copper, iron ore, oil, LNG
• Bond markets punish Treasuries

3. China Recovery

• Property/local govt cleanup succeeds
• Consumer spending rebounds
• New markets for green tech
• Bullish: copper, iron ore, LNG, coal
• Limited oil impact due to EVs

4. OPEC+ Fractures

• Unity breaks under US production surge
• UAE may increase output
• $75/bbl support threatened
• EV adoption pressures oil outlook

5. Energy Transition Ex-US

• China floods market with cheap green tech
• US isolates itself
• Global adoption accelerates
• Bullish: copper, lithium, minor metals, silver

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

• Prices up 4.2% y/y vs +4.6% prior
• Prices down 0.2% m/m vs -0.4% prior non-seasonally adjusted
• Prices up 0.3% vs +0.2% expected, seasonally adjusted

Separate housing data from the FHFA:

• Prices +0.4% m/m vs +0.7% prior
• Prices +4.5% y/y vs +4.5% prior

Home builders have been one of the worst-performing sectors in Q4 as rates have risen.

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

With only one day left to go, let’s take a look and what were the best and worst performers in each asset class during the year. Were there any standouts and/or surprises that might catch your eye?

Here’s a look at the major currencies space with the dollar as a benchmark:

• GBP -1.4%
• CNY -2.8%
• EUR -5.7%
• CHF -7.3%
• CAD -8.3%
• AUD -8.7%
• JPY -10.8%
• NZD -10.9%

Upshot: The dollar is king of the hill with the US economy holding up better than its peers. A Trump election win and a more hawkish Fed going into the turn of the year has definitely helped quite significantly as well. 👑

And here’s a look at major indices in Asia, Europe, and the US:

• Nasdaq +29.8%
• S&P 500 +23.8%
• Nikkei +19.2%
• DAX +18.9%
• Hang Seng +17.7%
• CSI 300 +17.3%
• Shanghai Composite +14.3%
• IBEX +14.2%
• Dow Jones +13.0%
• FTSE MIB +12.6%
• Russell 2000 +10.7%
• UK FTSE +5.0%
• CAC 40 -3.0%

Upshot: Tech stocks dominated the scene with Nvidia being the biggest carry and that permeated elsewhere too. French stocks are the worst among the bunch amid political woes with the Paris Olympics also not enough to bolster the economy. 🤖

And here’s a look at the some other major asset classes of interest:

• Cocoa +187.3%
• Bitcoin +118.3%
• Natural gas spot +66.9%
• Ethereum +46.0%
• Gold +26.4%
• Silver +21.4%
• Copper +5.1%
• WTI crude oil +0.4%
• Brent crude oil -3.2%
• Platinum -9.5%
• Soybean -23.0%

Upshot: Bitcoin’s surge to hit six figures is one that will steal the spotlight but gold prices having rallied for ten months out of the year is arguably worth a mention. Will we see more of the same next year? 🚀

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

Global Markets:

•  Asian Stock Markets : Nikkei down 0.96%, Shanghai Composite down 0.85%, Hang Seng up 0.09% ASX down 0.92%
• Commodities : Gold at $2615.35 (-0.14%), Silver at $29.24 (-0.58%), Brent Oil at $74.49 (0.86%), WTI Oil at $71.64 (0.85%)
• Rates : US 10-year yield at 4.516, UK 10-year yield at 4.608, Germany 10-year yield at 2.359

News & Data:

• (USD) Pending Home Sales m/m  2.2% vs 0.9% expected

Markets Update:

Asia-Pacific markets mostly declined on the final trading day of the year as investors weighed China’s manufacturing growth, which fell short of expectations. China’s December purchasing managers’ index (PMI) was 50.1, slightly below the anticipated 50.3, signaling Beijing’s stimulus measures failed to significantly boost its slowing economy. A PMI above 50 indicates expansion, while below 50 suggests contraction.

Hong Kong’s Hang Seng Index closed marginally higher at 20,059.95 in a shortened trading session, while Mainland China’s CSI 300 dipped 0.6%. Australia’s S&P/ASX 200 slid 0.92% to 8,159.1, and Taiwan’s Taiex fell 0.67%. Japan and South Korea’s markets remained closed for the New Year’s Eve holiday. South Korea reported December consumer inflation rising 1.9% year-on-year, up from 1.5% in November, with monthly prices increasing 0.4%.

In the U.S., stocks retreated as the year concluded on a negative note. The Dow Jones Industrial Average dropped 418.48 points, or 0.97%, closing at 42,573.73. The S&P 500 declined 1.07% to 5,906.94, and the Nasdaq Composite lost 1.19% to 19,486.78. Trading was volatile, with the Dow plunging over 700 points during the session, though no significant news drove the declines. Light trading was expected due to the holiday-shortened week.

The subdued performance reflects investors’ concerns over global economic growth and mixed market conditions as 2023 draws to a close.

Upcoming Events: 

• 02:00 PM GMT – USD HPI m/m

The post Tuesday 31st December 2024: Global Markets End Year on a Subdued Note Amid Economic Concerns first appeared on IC Markets | Official Blog.

DXY (US Dollar Index):

Potential Direction: Bullish
Overall momentum of the chart: Bullish

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

Pivot: 107.49
Supporting reasons: Identified as a pullback support that aligns close to the 38.2% Fibonacci retracement. indicating a potential area where buying interests could pick up to resume the uptrend.

1st support: 106.58
Supporting reasons: Identified as an overlap support that aligns with the 61.8% Fibonacci retracement, indicating a potential level where price could find support once more.

1st resistance: 108.48
Supporting reasons: Identified as a swing-high resistance, indicating a potential area that could halt any further upward movement.

EUR/USD:

Potential Direction: Bearish

Overall momentum of the chart: Bearish

Price could potentially make a bearish reversal off the pivot and fall towards the 1st support.

Pivot: 1.0460
Supporting reasons: Identified as a pullback resistance that aligns close to the 38.2% Fibonacci retracement, indicating a potential area where selling pressures could intensify.

1st support: 1.0333

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

1st resistance: 1.0598
Supporting reasons:  Identified as a multi-swing-high resistance, indicating a potential area that could halt any further upward movement.

EUR/JPY:

Potential Direction: Bullish
Overall momentum of the chart: Bullish

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

Pivot: 162.23
Supporting reasons: Identified as an overlap support. indicating a potential area where buying interests could pick up to resume the uptrend.

1st support: 160.14

Supporting reasons: Identified as a swing-low support that aligns close to a 50 Fibonacci retracement, indicating a potential level where price could find support once more.

1st resistance: 164.69
Supporting reasons: Identified as a swing-high resistance, indicating a strong level of resistance.

EUR/GBP:

Potential Direction: Bearish

Overall momentum of the chart: Neutral

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

Pivot: 0.8321
Supporting reasons: Identified as a multi-swing-high resistance that aligns close to a 50% Fibonacci retracement, indicating a potential area where selling pressures could intensify.

1st support: 0.8224

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

1st resistance: 0.8359
Supporting reasons: Identified as a swing-high resistance that aligns close to a 61.8% Fibonacci retracement, indicating a potential area that could halt any further upward movement.

GBP/USD:

Potential Direction: Bearish

Overall momentum of the chart: Bearish

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

Pivot: 1.2614
Supporting reasons: Identified as a pullback resistance that aligns close to the 38.2% Fibonacci retracement, indicating a potential area where selling pressures could intensify

1st support: 1.2486

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

1st resistance: 1.2729
Supporting reasons: Identified as an overlap resistance that aligns close to the 78.6% Fibonacci retracement, indicating a potential area that could halt any further upward movement.

GBP/JPY:

Potential Direction: Bullish

Overall momentum of the chart: Bullish

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

Pivot: 194.29
Supporting reasons: Identified as an overlap support that aligns close to the 50% Fibonacci retracement, indicating a potential area where buying interests could pick up to resume the uptrend.

1st support: 189.28
Supporting reasons: Identified as a swing-low support, indicating a key level where price could find support once more.

1st resistance: 198.37
Supporting reasons: Identified as a swing-high resistance, indicating a potential area that could halt any further upward movement.

USD/CHF:

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: 0.9040
Supporting reasons: Identified as an overlap resistance that aligns with the 78.6% Fibonacci retracement, indicating a potential area where selling pressures could intensify.

1st support: 0.8904

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

1st resistance: 0.9158
Supporting reasons: Identified as a swing-high resistance, indicating a potential area that could halt any further upward movement.

USD/JPY:

Potential Direction: Bullish

Overall momentum of the chart: Bullish

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

Pivot: 156.24
Supporting reasons: Identified as an overlap support that aligns close to a 23.6% Fibonacci retracement, indicating a potential area where buying interests could pick up to resume the uptrend.

1st support: 154.28
Supporting reasons: Identified as an overlap support that aligns close to a 38.2% Fibonacci retracement, indicating a potential level where price could find support.

1st resistance: 158.28
Supporting reasons: Identified as an overlap resistance, indicating a potential area that could halt any further upward movement.

USD/CAD:

Potential Direction: Bullish

Overall momentum of the chart: Bullish

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

Pivot: 1.4324

Supporting reasons: Identified as a pullback support, indicating a potential level where buying interests could pick up to resume the uptrend.

1st support: 1.4152
Supporting reasons: Identified as an overlap support, indicating a key level where price could find support once again.

1st resistance: 1.4517
Supporting reasons: Identified as a swing-high resistance, indicating a potential area that could halt any further upward movement.

AUD/USD:

Potential Direction: Bearish
Overall momentum of the chart: Bearish

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

Pivot: 0.6301

Supporting reasons: Identified as a pullback resistance, indicating a potential area where selling pressures could intensify. 

1st support: 0.6201
Supporting reasons: Identified as a multi-swing-low support, suggesting a potential area where price could find support once more.

1st resistance: 0.6349
Supporting reasons: Identified as a pullback resistance that aligns close to a 23.6% Fibonacci retracement, indicating a potential area that could halt any further upward movement.

NZD/USD

Potential Direction: Bearish
Overall momentum of the chart: Bearish

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

Pivot: 0.5684

Supporting reasons: Identified as an overlap resistance, indicating a potential area where selling pressures could intensify.

1st support: 0.5553
Supporting reasons: Identified as a multi-swing-low support, suggesting a key support area where price could find support once again.

1st resistance: 0.5758
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: Bearish

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

Pivot: 42,323.88

Supporting reasons: Identified as a swing-low support that aligns with a 127.2% Fibonacci extension, indicating a potential area where buying interests could pick up.

1st support: 41,604.84

Supporting reasons: Identified as an overlap support that aligns with a 161.8% Fibonacci extension, indicating a potential level where price could find support once again.

1st resistance: 43,330.76

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

DE40 (DAX):

Potential Direction: Bullish
Overall momentum of the chart: Bearish

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

Pivot: 19,664.76
Supporting reasons:  Identified as an overlap support that aligns with a 50% Fibonacci retracement, indicating a potential area where buying interests could pick up.

1st support: 19,237.70

Supporting reasons: Identified as an overlap support that aligns close to a 78.6% Fibonacci retracement, indicating a key level where price could find support once more.

1st resistance: 20,194.70
Supporting reasons: Identified as a pullback resistance that aligns with a 61.8% Fibonacci retracement, indicating a potential area that could halt any further upward movement.

US500 (S&P 500): 

Potential Direction: Bullish
Overall momentum of the chart: Neutral

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

Pivot: 5,867.40

Supporting reasons: Identified as an overlap support that aligns with a confluence of Fibonacci levels i.e. the 23.6% and 61.8% retracements, indicating a potential area where buying interests could pick up.

1st support: 5,694.10

Supporting reasons: Identified as a multi-swing-low support that aligns with a confluence of Fibonacci levels i.e. the 38.2% and 61.8% retracements, indicating a potential level where price could find support once again.

1st resistance: 6,041.80
Supporting reasons: Identified as an overlap resistance that aligns with a 78.6% Fibonacci retracement, indicating a potential area that could halt any further upward movement.

BTC/USD (Bitcoin):

Potential Direction: Bullish
Overall momentum of the chart: Bearish

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

Pivot: 91,855.25

Supporting reasons: Identified as an overlap support that aligns close to a 38.2% Fibonacci retracement, indicating a potential area where buying interests could pick up.

1st support: 87,835.36
Supporting reasons: Identified as a pullback support that aligns with a 50% Fibonacci retracement, indicating a potential level where price could find support once again.

1st resistance: 99,881.07
Supporting reasons: Identified as an overlap resistance that aligns with a 50% Fibonacci retracement, indicating a potential area that could halt any further upward movement.

ETH/USD (Ethereum):

Potential Direction: Bullish
Overall momentum of the chart: Bearish

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

Pivot: 3,250.78

Supporting reasons: Identified as a swing-low support that aligns close to a 50% Fibonacci retracement, indicating a potential area where buying interests could pick up.

1st support: 3,027.15
Supporting reasons: Identified as a swing-low support that aligns with a 61.8% Fibonacci retracement, indicating a potential level where price could find support once more.

1st resistance: 3,540.71
Supporting reasons: Identified as an overlap resistance that aligns close to a 38.2% Fibonacci retracement, indicating a potential area that could halt any further upward movement.

WTI/USD (Oil):

Potential Direction: Bearish
Overall momentum of the chart: Neutral

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

Pivot: 72.73
Supporting reasons: Identified as an overlap resistance that aligns with a 50% Fibonacci retracement, indicating a potential area where selling pressures could intensify. 

1st support: 69.62
Supporting reasons: Identified as a swing low support, indicating a key level where price could find support once again.

1st resistance:
Supporting reasons: Identified as a swing-high resistance that aligns close to a 78.6% Fibonacci retracement, indicating a potential area that could halt any further upward movement.

XAU/USD (GOLD):

Potential Direction: Bearish

Overall momentum of the chart: Neutral

Price could potentially make a bearish reversal off the pivot to drop towards the 1st support.

Pivot: 2,658.94
Supporting reasons: Identified as an overlap resistance that aligns with a 50% Fibonacci retracement, indicating a potential area where selling pressures could intensify

1st support: 2,561.78

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

1st resistance: 2,721.38

Supporting reasons: Identified as a multi-swing-high resistance that aligns close to the 78.6% Fibonacci retracement, indicating a potential area that could halt any further upward movement.

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The post Tuesday 31st December 2024: Technical Outlook and Review first appeared on IC Markets | Official Blog.

IC Markets Asia Fundamental Forecast | 31 December 2024

What happened in the U.S. session?

The Chicago PMI fell for the third consecutive month as it missed the market estimate of 42.7 with a reading of 36.9 in December. Economic activity contracted for the 13th successive month as new orders – a sign of future demand – fell 13.5 points to mark the second lowest reading since May 2020. The latest PMI data also registered the second lowest print of 2024. The dollar index (DXY) hit an overnight high of 108.37 before sliding towards 108 by the end of this session.

What does it mean for the Asia Session?

With many major financial markets either closing early on Tuesday or are completely closed in lieu of New Year’s Day, trading activity is likely to be extremely quiet on the final day of 2024.

The Dollar Index (DXY)

Key news events today

No major news events.

What can we expect from DXY today?

The DXY has risen 6.7% in 2024 to mark the second highest annual gain in four years as intense demand for the greenback pushed this index to levels last seen in over two decades.

Central Bank Notes:

• The Board of Governors of the Federal Reserve System voted by a majority to lower the Federal Funds Rate target range by 25 basis points to 4.25 to 4.50% on 18 December. Voting against the action was Beth M. Hammack, who preferred to maintain the target range at 4.5 to 4.75%.
• 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.
• The Summary of Economic Projections (SEP) now indicates just two rate cuts in 2025 totalling 50 bps, compared to the full percentage point of reductions projected in the previous quarter.
• GDP growth forecasts were revised upward for 2024 (2.5% vs to 2% in the September projection) and 2025 (2.1% vs 2%), while remaining steady at 2% for 2026. Similarly, PCE inflation projections have been adjusted higher for 2024 (2.4% vs 2.3%), 2025 (2.5% vs 2.1%), and 2026 (2.1% vs 2%).
• 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.
• The next meeting runs from 28 to 29 January 2025.

Next 24 Hours Bias

Weak Bullish

Gold (XAU)

Key news events today

No major news events.

What can we expect from Gold today?

Spot prices for gold have surged more than 26% this year to mark the highest annual gain in over a decade, driven by a combination of intense central bank buying and global geopolitical concerns.

Next 24 Hours Bias

Weak Bearish

The Australian Dollar (AUD)

Key news events today

New Year’s Day (Early close at 2:10 pm GMT)

What can we expect from AUD today?

The Aussie has tumbled 8.7% this year to register a fourth consecutive year of decline as robust demand for the greenback picked up over this period.

Central Bank Notes:

• The RBA kept the cash rate target unchanged at 4.35% on 10 December, marking the ninth 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. However, measures of underlying inflation are around 3.5%, which is still some way from the 2.5% midpoint of the inflation target.
• The most recent forecasts published in the November Statement on Monetary Policy (SMP) do not see inflation returning sustainably to the midpoint of the target until 2026 but the Board is gaining some confidence that inflationary pressures are declining in line with these recent forecasts with risks remaining in place.
• Growth in output has been weak as the economy grew by only 0.8% in the September quarter over the past year. Outside of the COVID-19 pandemic, this was the slowest pace of growth since the early 1990s.
• A range of indicators suggest that labour market conditions remain tight; while those conditions have been easing gradually, some indicators have recently stabilised. The unemployment rate was 4.1 per cent in October, up from 3.5 per cent in late 2022.
• Wage pressures have eased more than expected in the November SMP. The rate of wages growth as measured by the Wage Price Index was 3.5% over the year to the September quarter, a step down from the previous quarter, but labour productivity growth remains weak.
• Sustainably returning inflation to target within a reasonable timeframe remains the Board’s highest priority. This is consistent with the RBA’s mandate for price stability and full employment. To date, longer term inflation expectations have been consistent with the inflation target and it is important that this remains the case.
• The Board will continue to rely upon the data and the evolving assessment of risks to guide its decisions, paying close attention to developments in the global economy and financial markets, trends in domestic demand, and the outlook for inflation and the labour market.
• The next meeting is on 18 February 2025.

Next 24 Hours Bias

Weak Bearish

The Kiwi Dollar (NZD)

Key news events today

New Year’s Day (Early close at 12:45 pm GMT)

What can we expect from NZD today?

Intense demand for the greenback has caused the Kiwi to dive nearly 11% in 2024 to mark a fourth successive year of decline.

Central Bank Notes:

• The Monetary Policy Committee (MPC) agreed to reduce the Official Cash Rate (OCR) by 50 basis points bringing it down to 4.25% on 27 November, marking the third consecutive rate cut.
• The Committee assessed that annual consumer price inflation has declined and is now close to the midpoint of the MPC’s 1 to 3% target band; inflation expectations are also close to target and core inflation is converging to the midpoint.
• Economic activity remains subdued and output continues to be below its potential. With excess productive capacity in the economy, inflation pressures have eased. If economic conditions continue to evolve as projected, the Committee expects to be able to lower the OCR further early next year.
• Domestic economic activity remains below trend, as a result of weakness in demand for durable goods consumption and investment. This has been reflected in falling activity in interest rate sensitive sectors such as construction, manufacturing, and retail trade. In contrast, some services sectors have continued to grow.
• Consistent with feedback from business visits, high frequency indicators suggest that the economy has stabilised in recent months. Economic growth is expected to recover from the December quarter, in part due to lower interest rates, but there is uncertainty around the exact timing and speed of the recovery.
• Wage growth is slowing, consistent with inflation returning to the target midpoint while employment levels and job vacancies have declined, reflecting subdued economic activity; unemployment is expected to continue rising in the near term.
• Expectations of future inflation, the pricing intentions of firms, and spare productive capacity are consistent with the inflation target being sustainably achieved, providing the context and the confidence for the Committee to further ease monetary policy restraint.
• The next meeting is on 19 February 2025.

Next 24 Hours Bias

Weak Bearish

The Japanese Yen (JPY)

Key news events today

Market Holiday (All Day)

What can we expect from JPY today?

The yen has depreciated more than 11% this year causing USD/JPY to mark a fourth consecutive year of higher gains with monetary policy divergence between the Federal Reserve and the Bank of Japan acting as the primary catalyst.

Central Bank Notes:

• The Policy Board of the Bank of Japan decided on 19 December, by a 8-1 majority 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.
• Japan’s economy has recovered moderately, although some weakness has been seen in part. Exports and industrial production have been more or less flat while corporate profits have been on an improving trend and business sentiment has stayed at a favourable level.
• The employment and income situation has improved moderately while private consumption has been on a moderate increasing trend despite the impact of price rises and other factors.
• On the price front, the year-on-year rate of increase in the consumer price index (CPI, all items less fresh food) has been in the range of 2.0-2.5% 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; inflation expectations have risen moderately.
• With regard to the CPI (all items less fresh food), while the effects of the 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.
• 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.
• The next meeting is on 24 January 2025.

Next 24 Hours Bias

Weak Bullish

The Euro (EUR)

Key news events today

New Year’s Day (All Day)

What can we expect from EUR today?

The Euro has shed almost 5.8% in 2024 as a struggling eurozone economy is overshadowed by robust economic growth in the United States.

Central Bank Notes:

• The Governing Council reduced the three key ECB interest rates by 25 basis points on 12 December to mark the third 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 3.15%, 3.40% and 3.00% respectively.
• The disinflation process is well on track and most measures of underlying inflation suggest that inflation will settle at around the Governing Council’s 2% medium-term target on a sustained basis.
• Staff see headline inflation averaging 2.4% in 2024, 2.1% in 2025, 1.9% in 2026 and 2.1% in 2027 when the expanded EU Emissions Trading System becomes operational. For inflation excluding energy and food, staff project an average of 2.9% in 2024, 2.3% in 2025 and 1.9% in both 2026 and 2027.
• Staff now expect a slower economic recovery than in the September projections. Although growth picked up in the third quarter of this year, survey indicators suggest it has slowed in the current quarter – the economy is expected to grow by 0.7% in 2024, 1.1% in 2025, 1.4% in 2026 and 1.3% in 2027
• 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 Governing Council stands ready to adjust all of its instruments within its mandate to ensure that inflation stabilises sustainably at its 2% target over the medium term and to preserve the smooth functioning of monetary policy transmission.
• The next meeting is on 30 January 2025.

Next 24 Hours Bias

Weak Bearish

The Swiss Franc (CHF)

Key news events today

New Year’s Day (All Day)

What can we expect from CHF today?

Aggressive monetary policy easing by the Swiss National Bank has weakened the franc significantly to provide a strong lift for USD/CHF – this currency pair has rallied over 7.3% this year.

Central Bank Notes:

• The SNB eased monetary policy by lowering its key policy rate by 50 basis points, going from 1.00% to 0.50% on 12 December, marking for the fourth consecutive reduction.
• Underlying inflationary pressure has decreased again this quarter.
• Inflation in the period since the last monetary policy assessment has again been lower than expected as it decreased from 1.1% in August to 0.7% in November; both goods and services contributed to this decline.
• In the shorter term, the new conditional inflation forecast is below that of September: 1.1% for 2024, 0.3% for 2025 and 0.8% for 2026, based on the assumption that the SNB policy rate is 0.5% over the entire forecast horizon.
• GDP growth in Switzerland was only modest in the third quarter of 2024 with growth in the services sector was again somewhat stronger, while value added in manufacturing declined.
• There was a further slight increase in unemployment, and employment growth was subdued while the utilisation of overall production capacity was
• normal.
• The SNB anticipates GDP growth of around 1% this year while currently expecting growth of between 1.0% and 1.5% for 2025.
• The SNB will continue to monitor the situation closely, and will adjust its monetary policy if necessary to ensure inflation remains within the range consistent with price stability over the medium term.
• The next meeting is on 20 March 2025.

Next 24 Hours Bias

Weak Bullish

The Pound (GBP)

Key news events today

New Year’s Day (Early close at 12:30 pm GMT)

What can we expect from GBP today?

Despite robust demand for the dollar in 2024, the Pound has shown strong resilience as Cable depreciated just 1.5%. In an environment where every other major currency has depreciated significantly, the Pound stood out among its peers.

Central Bank Notes:

• The Bank of England’s Monetary Policy Committee (MPC) voted by a majority of 6 to 3 to maintain the Bank Rate at 4.75% on 19 December 2024 – three members preferred to reduce the Bank rate by 25 basis points, bringing it down to 4.50%.
• 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. On 18 December 2024, the stock of UK government bonds held for monetary policy purposes was £655B.
• Twelve-month CPI inflation had increased to 2.6% in November from 1.7% in September, slightly higher than previous expectations while services consumer price inflation had remained elevated, at 5.0%, while core goods price inflation had risen to 1.1%.
• Headline CPI inflation was slightly higher than previous expectations, owing in large part to stronger inflation in core goods and food, and is expected to continue to rise slightly in the near term.
• Most indicators of UK near-term activity have declined with Bank staff expecting GDP growth to be weaker at the end of the year than originally projected in the November Monetary Policy Report.
• Bank staff now expected zero GDP growth in 2024 Q4, weaker than the 0.3% that had been incorporated in the November Report, broadly consistent with the latest combined steer from business surveys and the available official data.
• The Committee now judges that the labour market is broadly in balance as annual private sector regular average weekly earnings growth picked up quite sharply in the three months to October but there remains significant uncertainty around developments in the labour market.
• Monetary policy has been guided by the need to squeeze remaining inflationary pressures out of the economy to achieve the 2% target both in a timely manner and on a lasting basis. Over recent quarters there has been progress in disinflation, particularly as previous external shocks have abated, although remaining domestic inflationary pressures are resolving more slowly.
• The Committee continues to monitor closely the risks of inflation persistence and will assess the extent to which the evolving evidence is consistent with more constrained supply, which could sustain inflationary pressures, or with weaker demand, which could lead to the emergence of spare capacity in the economy and push down inflation; a gradual approach to removing monetary policy restraint remains appropriate.
• 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 and the Committee will decide the appropriate degree of monetary policy restrictiveness at each meeting.
• The next meeting is on 6 February 2025.

Next 24 Hours Bias

Weak Bearish

The Canadian Dollar (CAD)

Key news events today

No major news events.

What can we expect from CAD today?

With falling oil prices and a struggling Canadian economy, the Loonie came under intense overhead pressures in 2024 as USD/CAD surged beyond 1.4450 by mid-December.

Central Bank Notes:

• The Bank of Canada reduced its target for the overnight rate by 50 basis points bringing it down to 3.25% while continuing its policy of balance sheet normalization on 11 December; this marked the fifth consecutive meeting where rates were reduced.
• Canada’s economy grew by 1% in the third quarter, somewhat below the Bank’s October projection, and the fourth quarter also looks weaker than projected. Third-quarter GDP growth was pulled down by business investment, inventories and exports.
• The unemployment rate rose to 6.8% in November as employment continued to grow more slowly than the labour force while wage growth showed some signs of easing, but remains elevated relative to productivity.
• 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%.
• CPI inflation has been about 2% since the summer, and is expected to average close to the 2% target over the next couple of years. Since October, the upward pressure on inflation from shelter and the downward pressure from goods prices have both moderated as expected.
• Looking ahead, the GST holiday will temporarily lower inflation but that will be unwound once the GST break ends. In addition, the possibility the incoming US administration will impose new tariffs on Canadian exports to the United States has increased uncertainty and clouded the economic outlook
• With inflation around 2%, the economy in excess supply, and recent indicators tilted towards softer growth than projected, the Governing Council decided to reduce the policy rate by a further 50 basis points to support growth and keep inflation close to the middle of the 1-3% target range.
• The Governing Council has reduced the policy rate substantially since June and going forward, they will be evaluating the need for further reductions in the policy rate one decision at a time.
• The Bank is committed to maintaining price stability for Canadians by keeping inflation close to the 2% target.
• The next meeting is on 29 January 2025.

Next 24 Hours Bias

Weak Bullish

Oil

Key news events today

API Crude Oil Stock (9:30 pm GMT)

What can we expect from Oil today?

Crude prices bounced this week as rising optimism for China’s economic growth in 2025 could potentially boost demand from the top crude oil importing nation. Recovery in the world’s second largest economy has struggled this year but the authorities have agreed to issue a record 3 trillion yuan ($411B) in special treasury bonds in 2025, as reported by Reuters last week. Moving over to U.S. inventories, the API stockpiles recorded large drawdown of 4.7M barrels of crude last week and should inventory levels register a second successive week of higher draws, oil prices could receive further tailwinds to end December on a strong note – WTI oil has gained over 5.2% so far this month.

Next 24 Hours Bias

Medium Bullish

The post IC Markets Asia Fundamental Forecast | 31 December 2024 first appeared on IC Markets | Official Blog.

• China’s Xi and Russia’s Putin spoke – Xi says two will move forward hand in hand
• Is Tesla Stock a Buy or Sell?
• China official National Bureau of Statistics (NBS) December 2024 PMIs – why the long face?
• USD/JPY under 156.50
• China official December Manufacturing PMI 50.1 (expected 50.3) Services 52.2 (exp 50.2)
• PBOC sets USD/ CNY reference rate for today at 7.1884 (vs. estimate at 7.2832)
• Hackers connected to China’s government successfully breached US Treasury
• South Korean December headline inflation comes in hotter than expected
• Why does China have two sets of PMIs and why are both valuable?
• Trade ideas thread – Tuesday, 31 December, insightful charts, technical analysis, ideas

USD/JPY
was a notable mover on the session, continuing its decline during the
US session to fall to lows under 156.40. There was no fresh news or
data from Japan. Trade and interest was thin due to the New Year
holiday approaching.

From
China today we had the official, National Bureau of Statistics (NBS),
PMIs for December. Manufacturing slid a little from November and
disappointed estimates but remained in expansion for the third month
in a row. Non-manufacturing, meanwhile jumped 2.2 points from
November and well ahead of estimates.

Prior
to the PMI data release AUD/USD traded higher (EUR, GBP, NZD all
ticked a little higher) but subsided soon after the data. China 10
year bonds ticked a little higher (yields slipped). Chinese equities
slid.

And that’s it from me for 2024. Have a fun and safe New Year’s Eve everyone!

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

Xinhua with the info (via Reuters headlines):

• China’s President Xi and Russia’s Putin exchange New Year greetings
• Xi, to Putin: China and Russia always move forward hand in hand along the right path of non-alliance, non-confrontation, and not targeting any third party
• Xi, to Putin: China-Russia political mutual trust and strategic coordination are continuously marching to a higher level under the strategic guidance of the two leaders

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

The data from China’s National Bureau of Statistics (NBS) is here:

• China official December Manufacturing PMI 50.1 (expected 50.3) Services 52.2 (exp 50.2)

In brief:

Manufacturing PMI 50.1

• slightly down from 50.3 in November
• third consecutive month of expansion
• fell short of the median forecast of 50.3

Non-Manufacturing PMI jumped to 52.2

• from 50.0 in November
• the non-manufacturing PMI covers the services and construction sectors

Composite PMI combines both manufacturing and non-manufacturing activities came in at 50.3

• slightly down from 50.4 in November

Maybe its just me but the acceleration in services is encouraging. The efforts to stimulate manufacturing are suspected of being a little misplaced, sending goods into domestic markets that are already well supplied and flirting with price deflation. Services and construction rising (an acceleration in expansion for the non-manufacturing sectors, in the PMI at least) would seem to be a more desirable outcome.

My interest was piqued, too, by the rise in AUD ahead of the data release. Leaky? Or just China being China?

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

For the record I’m not buying that reason I cited in the sub heading.

Yes, equities weakened in the US … but AUD and EUR have been stable to up in Asia so far.

Still, there is some demand for JPY. Be cautious of reading too much for too long into moves in these thin holiday markets though.

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

December Manufacturing PMI drops from November and comes in not as strong as expected at 50.1

• expected
  50.3, prior 50.3
• more positively manufacturing now in expansion for three months

Non-Manufacturing PMI more than makes up for it, jumping well over November and the median estimate to 52.2

• expected 50.2, prior 50.0

Composite 52.2

• prior 50.8

***

I posted earlier the background to these December results, over the course of H2 of 2024.

ICYMI:

In H2 of 2024 manufacturing has improved, slowly, while services have held in expansion.

Manufacturing PMI:

• July 2024: 49.4, indicating contraction in manufacturing activity. Production expanded slightly (50.1), but new orders fell (49.3).
• August 2024: Remained at 49.4, continuing contraction as challenges persisted in the sector.
• September 2024: Rose to 49.8, showing a slower pace of contraction. Output grew the most in five months.
• October 2024: Increased to 50.1, crossing into expansion territory for the first time in six months, reflecting initial impacts of fiscal stimulus.
• November 2024: Improved further to 50.3, showing modest expansion with strengthening domestic demand.

Non-Manufacturing (Services) PMI:

• July 2024: 51.5, indicating expansion in services, though at a slower pace.
• August 2024: Declined to 51.0, still expanding but with reduced momentum.
• September 2024: Decreased to 50.0, marking stagnation in the sector.
• October 2024: Edged up slightly to 50.2, suggesting mild recovery.
• November 2024: Held steady at 50.0, showing stable but subdued performance.

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

Axios with the info (may be gated):

Hackers connected to China’s government successfully breached several Treasury Department workstations and accessed unclassified documents, according to a letter to Congress on Monday.

• The hackers, which Treasury has linked to an unspecified Chinese state-sponsored hacking group, gained access to Treasury’s networks via software service provider BeyondTrust
• Chinese hackers stole a key that BeyondTrust uses to “secure a cloud-based service used to remotely provide technical support” for several Treasury Department users.
• The hackers were able to leverage that access to override BeyondTrust’s security controls and access unclassified documents.
• A Treasury spokesperson said in a statement to Axios that the “compromised BeyondTrust service has been taken offline” and there is “no evidence indicating a threat actor has continued access to Treasury systems or information.”

China – US war continues (cold one at this stage, but still).

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