According to Punchbowl News:

• Republican leadership has proposed a plan addressing the debt limit.
• The proposal includes raising the debt limit by $1.5 trillion in the first reconciliation package.
• It also promises to cut $2.5 trillion in net mandatory spending through the reconciliation process.

Statements from Key Figures:

• House Majority Leader Steve Scalise: if not today, they will act tomorrow

• House Speaker Mike Johnson:Johnson has reportedly discussed a new funding plan with the President electronically, though details remain unclear.

The White House’s Response:

• The White House has urged Republicans to adhere to the existing bipartisan deal to keep the government open.
• Officials stress that there is still time to avoid a government shutdown.

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

The changes on the day are light and it reflects the lack of appetite or incentive among traders to chase anything on the week. It’s one of those times in markets where there isn’t much of a point in trying to make sense of any moves as trading conditions are exacerbated by thin liquidity.

I mean it is the holiday period after all. For EUR/USD, there are large option expiries around €1.8 billion at 1.0425. So, that might offer some pull factor on the day. But the rest of the week promises to be much quieter.

As a whole, the dollar looks to be ending the year in a prominent spot as it has capitalised on a more hawkish Fed last week. The technicals are certainly siding with the greenback as we enter the festive season at least. And barring any major headline shifts, trading sentiment should pick up from where we are leaving off at the start of next year.

That means one can ignore the movements we’re seeing in markets during this week as they will be largely influenced by thinner liquidity conditions.

It’s the best time to take a step back, review everything, and look to start the new year fresh. To those already enjoying the break, I wish you happy holidays. And to those who aren’t, well try and take it easy.

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

• Domestic sight deposits CHF 448.0 bn vs CHF 448.2 bn prior

Swiss sight deposits are little changed in the past week, holding at levels seen in the past few months still. That doesn’t suggest any major signs of intervention on the part of the SNB at least. Here’s the trend:

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

• Prior +0.8%
• GDP +3.3% vs +3.4% y/y prelim
• Prior +3.2%

No change to the quarterly estimate as the Spanish economy remains one of the few bright spots in Europe, especially with the two biggest economies – Germany and France – collapsing.

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

• Prior +0.5%; revised to +0.4%
• GDP +0.9% vs +1.0% y/y prelim
• Prior +0.7%

The negative revision means that the UK economy stagnated in Q3, with economic conditions stuttering in the second half of the year. The pressure is starting to build for the BOE, even as price pressures haven’t quite come down as quickly as they are hoping for.

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

Global Markets:

•  Asian Stock Markets : Nikkei up 1.33%, Shanghai Composite up 0.1%, Hang Seng up 0.78% ASX up 1.67%
• Commodities : Gold at $2643.35 (-0.04%), Silver at $30.04 (0.8%), Brent Oil at $72.89 (0.56%), WTI Oil at $69.84 (0.55%)
• Rates : US 10-year yield at 4.530, UK 10-year yield at 4.508, Germany 10-year yield at 2.2865

News & Data:

• (CAD) Core Retail Sales m/m  0.1% vs 0.2% expected
• (CAD) Retail Sales m/m 0.6% vs 0.7% expected

Markets Update:

Asia-Pacific markets began the holiday-shortened Christmas week positively as investors awaited the official announcement of a merger between Japanese automakers Honda and Nissan. The companies aim to finalize their agreement by June 2025 and plan to establish a holding company by summer 2026, led by a Honda executive, according to NHK.

Reports from Kyodo News stated that the presidents of Honda, Nissan, and Mitsubishi informed Japan’s industry ministry of their merger talks. A press conference is anticipated later today, with both Honda and Nissan holding board meetings to discuss formal integration and sign a memorandum of understanding, as per NHK.

On the stock market front, Honda shares gained 2.11%, while Nissan shares dipped 0.74%. Last Wednesday, Nissan shares saw a record surge following speculation about the merger. Broader market optimism was fueled by cooler-than-expected U.S. inflation data released on Friday.

Japan’s Nikkei 225 rose 1.06%, and the Topix gained 0.79%. South Korea’s Kospi advanced 1.25%, with the Kosdaq up 1.51%. Australia’s S&P/ASX 200 climbed 1.03%, while Hong Kong’s Hang Seng added 0.72%. Mainland China’s CSI 300 remained flat.

In the U.S., markets closed higher Friday. The Dow Jones Industrial Average gained 1.18%, the S&P 500 rose 1.09%, and the Nasdaq Composite advanced 1.03%. The personal consumption expenditures price index, a key inflation gauge, increased to 2.4% in November, slightly below the 2.5% estimate. Core PCE, excluding food and energy, rose 2.8% year-over-year, under the 2.9% forecast.

Upcoming Events: 

• 01:30 PM GMT – CAD GDP m/m

The post Monday 23rd December 2024: Asia-Pacific Markets Rise Amid Honda-Nissan Merger Talks  first appeared on IC Markets | Official Blog.

IC Markets Asia Fundamental Forecast | 23 December 2024

What happened in the Asia session?

The dollar index (DXY) slid under 107.80 while spot prices for gold hovered around $2,625/oz in what was an extremely quiet morning. WTI oil rose as high as $70.26 per barrel before easing slightly. Trading activity could pick in the latter part of Monday.

What does it mean for the Europe & US sessions?

Most indicators of U.K. near-term activity have declined with Bank of England (BoE) staff expecting GDP growth to be weaker at the end of the year than originally projected in the November Monetary Policy Report. Staff now expect 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 pound could face headwinds on the back of weaker GDP data before the start of the European trading hours.

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 projections. The Loonie has faced intense headwinds since the end of September and could come under pressure once more, keeping USD/CAD elevated.

The Dollar Index (DXY)

Key news events today

CB Consumer Confidence (3:00 pm GMT)

What can we expect from DXY today?

The Conference Board (CB) Consumer Confidence survey improved for the second successive month as labour market optimism drove up confidence in November. With stock markets close to all-time highs and the holiday season in full-swing, December’s estimate points to a third consecutive month of higher optimism among Americans, potentially fuelling further demand for the greenback later today.

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 Bearish

Gold (XAU)

Key news events today

CB Consumer Confidence (3:00 pm GMT)

What can we expect from Gold today?

The Conference Board (CB) Consumer Confidence survey improved for the second successive month as labour market optimism drove up confidence in November. With stock markets close to all-time highs and the holiday season in full-swing, December’s estimate points to a third consecutive month of higher optimism among Americans, potentially fuelling further demand for the greenback and creating headwinds for gold later today.

Next 24 Hours Bias

Weak Bullish

The Australian Dollar (AUD)

Key news events today

No major news events.

What can we expect from AUD today?

After tumbling as much as 2.7% last week, the Aussie found its footing around 0.6200 on Thursday before retracing higher to close at 0.6250 on Friday. This currency pair rose above 0.6250 as Asian markets came online – these are the support and resistance levels for today.

Support: 0.6200

Resistance: 0.6290

Central Bank Notes:

• The RBA kept the cash rate target unchanged at 4.35% on 10th 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 Bullish

The Kiwi Dollar (NZD)

Key news events today

No major news events.

What can we expect from NZD today?

The Kiwi dived over 3% as it hit a low of 0.5607 on Wednesday before stabilizing around this level to retrace higher before closing at 0.5653 on Friday. This currency pair hovered around 0.5650 at the beginning of the Asia session – these are the support and resistance levels for today.

Support: 0.5555

Resistance: 0.5770

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 Bullish

The Japanese Yen (JPY)

Key news events today

No major news events.

What can we expect from JPY today?

Weakness in the yen persists as USD/JPY rose as much as 2.8% last week before retreating from a high of 157.92 to close at 156.36 on Friday. This currency pair remained elevated and was edging higher towards 156.80 as Asian markets came online – these are the support and resistance levels for today.

Support: 156.00

Resistance: 158.40

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

No major news events.

What can we expect from EUR today?

The Euro has been one of the weakest currencies in the fourth quarter as it fell 2.7% in the last couple of weeks alone. However, this currency pair found its footing on Thursday at around 1.0330 before rebounding sharply on Friday to close at 1.0426. The Euro edged towards 1.0450 as Asian markets came online – these are the support and resistance levels for today.

Support: 1.0330

Resistance: 1.0460

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 Bullish

The Swiss Franc (CHF)

Key news events today

No major news events.

What can we expect from CHF today?

After hitting a high of 0.9021 last Thursday, demand for the dollar waned causing USD/CHF to fall under 0.8950 before closing at 0.8930 on Friday. This currency pair gapped lower to open at 0.8914 but rose as high as 0.8936 to quickly fill this gap – these are the support and resistance levels for today.

Support: 0.8920

Resistance: 0.9040

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

GDP (7:00 am GMT)

What can we expect from GBP today?

Most indicators of U.K. near-term activity have declined with Bank of England (BoE) staff expecting GDP growth to be weaker at the end of the year than originally projected in the November Monetary Policy Report. Staff now expect 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 pound could face headwinds on the back of weaker GDP data before the start of the European trading hours.

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 Bullish

The Canadian Dollar (CAD)

Key news events today

GDP (1:30 pm GMT)

What can we expect from CAD today?

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 projections. The Loonie has faced intense headwinds since the end of September and could come under pressure once more, keeping USD/CAD elevated.

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 Bearish

Oil

Key news events today

No major news events.

What can we expect from Oil today?

After rebounding strongly in the second week of December with a gain of nearly 6.4%, WTI reversed sharply last week as it dived more than 4% at its lowest point. This benchmark closed at $69.46 per barrel and has ranged approximately between $66.70 on the lower bound and $72.50 on the upper bound since mid-October. Price fluctuations have been driven by global demand concerns, geopolitical tensions and OPEC+ production output levels – this commodity could continue to face higher bouts of volatility as the year comes to a close.

Next 24 Hours Bias

Medium Bullish

The post IC Markets Europe Fundamental Forecast | 23 December 2024 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 toward the 1st resistance, Additionally, when the price remains above the Ichimoku cloud, it’s typically seen as a strong bullish signal, indicating upward momentum.

Pivot: 107.49
Supporting reasons: Identified as a pullback support close to the 38.2% Fibonacci retracement. indicating a potential area where buying pressures could intensify. 

1st support: 106.47
Supporting reasons: Identified as a pullback support close to 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 reaction off the pivot and drop toward the 1st support. Additionally, when the price remains below the Ichimoku cloud, it’s typically seen as a strong bearish signal, indicating downward momentum.

Pivot: 1.0460
Supporting reasons: Identified as a pullback resistance 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 an overlap resistance close to the 50% Fibonacci retracement, indicating a potential area that could halt any further upward movement.

EUR/JPY:

Potential Direction: Bullish
Overall momentum of the chart: Bearish

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

Pivot: 161.82
Supporting reasons: Identified as a pullback support. indicating a potential area where buying pressures could intensify.

1st support: 158.81

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

1st resistance: 164.71
Supporting reasons: Identified as an overlap resistance close to the 78.6% and 50% Fibonacci retracement, indicating a strong level of resistance.

EUR/GBP:

Potential Direction: Bearish

Overall momentum of the chart: Bearish

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

Pivot: 0.8318
Supporting reasons: Identified as an overlap resistance close to the 38.2% Fibonacci retracement, indicating a potential area where selling pressures could intensify.

1st support: 0.8224

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

1st resistance: 0.8325
Supporting reasons: Identified as a swing high resistance close to the 78.6% 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 toward the 1st support 

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

1st support: 1.2483

Supporting reasons: Identified as an overlap support, indicating a potential level where price could find support once more.

1st resistance: 1.2730
Supporting reasons: Identified as an overlap resistance, 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 and rise toward the 1st resistance

Pivot: 194,13
Supporting reasons: Identified as a pullback support close to the 38.2% Fibonacci retracement, indicating a potential area where buying pressures could intensify.

1st support: 190.07
Supporting reasons: Identified as a pullback support close to the 78.6% Fibonacci retracement, indicating a key level where price could find support once more.

1st resistance: 199.59
Supporting reasons: Identified as a swing high resistance, indicating a potential area that could halt any further upward movement.

USD/CHF:

Potential Direction: Bullish

Overall momentum of the chart: Bullish

Price could potentially make a bullish bounce the pivot and rise toward the 1st resistance.  Additionally, when the price remains above the Ichimoku cloud, it’s typically seen as a strong bullish signal, indicating upward momentum.

Pivot: 0.8864
Supporting reasons: Identified as a pullback support that aligns with the 50% Fibonacci retracement, indicating a potential area where buying pressures could intensify.

1st support: 0.8764

Supporting reasons: Identified as an overlap support, indicating a potential level where price could find support once more.

1st resistance: 0.9039
Supporting reasons: Identified as a swing high resistance close to the 127.2% Fibonacci extension, 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 the pivot and rise toward the 1st resistance

Pivot: 154.28
Supporting reasons: Identified as a pullback support that aligns with the 38.2% Fibonacci retracement, indicating a potential area where buying pressures could intensify.

1st support: 1541.60
Supporting reasons: Identified as a pullback support close to the 61.8% Fibonacci retracement, indicating a potential level where price could find support once again.

1st resistance: 157.63
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 is falling towards the pivot and could potentially make a bullish bounce off this level to rise towards the 1st resistance.

Pivot: 1.4324

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

AUD/USD:

Potential Direction: Bearish
Overall momentum of the chart: Bearish

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

Pivot: 0.6262

Supporting reasons: Identified as a pullback resistance, suggesting a potential area where selling pressures could intensify. The presence of a red Ichimoku Cloud adds further significance to the strength of the bearish momentum.

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 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: Bearish

Price could rise towards the pivot and 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. The presence of a red Ichimoku Cloud adds further significance to the strength of the bearish momentum.

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: 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: 43,330.76

Supporting reasons: Identified as an overlap resistance that aligns with a confluence of Fibonacci levels i.e. a 38.2% retracement and a 61.8% projection, indicating a potential area where selling pressures could intensify.

1st support: 41,604.84

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 once again.

1st resistance: 44,327.75

Supporting reasons: Identified as an overlap resistance that aligns with a confluence of Fibonacci levels i.e. a 78.6% retracement and a 100% projection, indicating a potential area that could halt any further upward movement.

DE40 (DAX):

Potential Direction: Bullish
Overall momentum of the chart: Bearish

Price could fall towards the pivot and potentially make a bullish bounce off this level to 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 to stage a rebound.

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: 20,302.50
Supporting reasons: Identified as a pullback resistance that aligns with a 78.6% Fibonacci retracement, indicating a potential area that could halt any further upward movement.

US500 (S&P 500): 

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: 6,026.60

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

1st support: 5,851.70

Supporting reasons: Identified as a multi-swing-low support that aligns with a 61.8% Fibonacci retracement, indicating a potential level where price could find support once again.

1st resistance: 6,182.45
Supporting reasons: Identified as a resistance that aligns with a 127.2% Fibonacci extension, 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: 92,791.73

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

1st support: 87,933.89
Supporting reasons: Identified as a pullback support that aligns with a confluence of Fibonacci levels i.e. the 38.2% and 50% retracements, indicating a potential level where price could find support once again.

1st resistance:  99,518.87
Supporting reasons: Identified as an overlap resistance that aligns close to a 50% Fibonacci retracement, indicating a potential area that could halt any further upward movement.

ETH/USD (Ethereum):

Potential Direction: Bearish
Overall momentum of the chart: Bearish

Price has made a bearish break below the pivot and could potentially fall towards the 1st support.

Pivot: 3,324.31

Supporting reasons: Identified as a potential breakout level where the strong bearish momentum has driven the price lower.

1st support: 3,037.20
Supporting reasons: Identified as a pullback support that aligns with a 61.8% Fibonacci retracement, indicating a potential level where price could find support once more.

1st resistance: 3,570.81
Supporting reasons: Identified as a pullback resistance that aligns close to a 50% Fibonacci retracement, indicating a potential area that could halt any further upward movement.

WTI/USD (Oil):

Potential Direction: Bullish
Overall momentum of the chart: Neutral

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

Pivot: 69.13
Supporting reasons: Identified as an overlap support that aligns close to a 50% Fibonacci retracement, indicating a potential area where buying interests could pick up to stage a rebound.

1st support: 66.98
Supporting reasons: Identified as a multi0-swing-low support, indicating a key level where price could find support once again.

1st resistance: 71.50
Supporting reasons: Identified as a multi-swing-high resistance, indicating a potential area that could halt any further upward movement.

XAU/USD (GOLD):

Potential Direction: Bearish

Overall momentum of the chart: Bearish

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

Pivot: 2623.98
Supporting reasons: Identified as a pullback resistance close to the 38.2% Fibonacci retracement, indicating a potential area where selling pressures could intensify.

1st support: 2558.38

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

1st resistance: 2714.69

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

The accuracy, completeness and timeliness of the information contained on this site cannot be guaranteed. IC Markets does not warranty, guarantee or make any representations, or assume any liability regarding financial results based on the use of the information in the site.

News, views, opinions, recommendations and other information obtained from sources outside of www.icmarkets.com, used in this site are believed to be reliable, but we cannot guarantee their accuracy or completeness. All such information is subject to change at any time without notice. IC Markets assumes no responsibility for the content of any linked site.

The fact that such links may exist does not indicate approval or endorsement of any material contained on any linked site. IC Markets is not liable for any harm caused by the transmission, through accessing the services or information on this site, of a computer virus, or other computer code or programming device that might be used to access, delete, damage, disable, disrupt or otherwise impede in any manner, the operation of the site or of any user’s software, hardware, data or property. 

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

IC Markets Asia Fundamental Forecast | 23 December 2024

What happened in the U.S. session?

The PCE Price Index – which is the Federal Reserve’s preferred gauge of inflation – showed the headline reading accelerating for the second month in a row as it rose marginally from 2.3% to 2.4% while the core remained unchanged at 2.8% YoY in November. However, both readings printed lower than their respective estimates which appeared to have sapped some demand for the greenback on Friday. The dollar index (DXY) had hit a high of 108.54, a level last seen in November of 2022, before retreating to close at 107.81. This index fell 0.61% but that did not stop it from registering a third consecutive week of higher gains as it rose 1.9% over this period to gain 200 pips.

What does it mean for the Asia Session?

With Christmas falling on Wednesday and most financial markets closing early on Tuesday, it could be a relatively quiet session as the holiday season gets underway. The DXY was hovering around 107.80 while spot prices for gold failed to climb above $2,630/oz as markets re-opened on Monday. After stabilizing last Friday, crude oil was rising at the beginning of this session with WTI oil rising above the $70-mark.

The Dollar Index (DXY)

Key news events today

CB Consumer Confidence (3:00 pm GMT)

What can we expect from DXY today?

The Conference Board (CB) Consumer Confidence survey improved for the second successive month as labour market optimism drove up confidence in November. With stock markets close to all-time highs and the holiday season in full-swing, December’s estimate points to a third consecutive month of higher optimism among Americans, potentially fuelling further demand for the greenback later today.

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 Bearish

Gold (XAU)

Key news events today

CB Consumer Confidence (3:00 pm GMT)

What can we expect from Gold today?

The Conference Board (CB) Consumer Confidence survey improved for the second successive month as labour market optimism drove up confidence in November. With stock markets close to all-time highs and the holiday season in full-swing, December’s estimate points to a third consecutive month of higher optimism among Americans, potentially fuelling further demand for the greenback and creating headwinds for gold later today.

Next 24 Hours Bias

Weak Bullish

The Australian Dollar (AUD)

Key news events today

No major news events.

What can we expect from AUD today?

After tumbling as much as 2.7% last week, the Aussie found its footing around 0.6200 on Thursday before retracing higher to close at 0.6250 on Friday. This currency pair rose above 0.6250 as Asian markets came online – these are the support and resistance levels for today.

Support: 0.6200

Resistance: 0.6290

Central Bank Notes:

• The RBA kept the cash rate target unchanged at 4.35% on 10th 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 Bullish

The Kiwi Dollar (NZD)

Key news events today

No major news events.

What can we expect from NZD today?

The Kiwi dived over 3% as it hit a low of 0.5607 on Wednesday before stabilizing around this level to retrace higher before closing at 0.5653 on Friday. This currency pair hovered around 0.5650 at the beginning of the Asia session – these are the support and resistance levels for today.

Support: 0.5555

Resistance: 0.5770

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 Bullish

The Japanese Yen (JPY)

Key news events today

No major news events.

What can we expect from JPY today?

Weakness in the yen persists as USD/JPY rose as much as 2.8% last week before retreating from a high of 157.92 to close at 156.36 on Friday. This currency pair remained elevated and was edging higher towards 156.80 as Asian markets came online – these are the support and resistance levels for today.

Support: 156.00

Resistance: 158.40

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

No major news events.

What can we expect from EUR today?

The Euro has been one of the weakest currencies in the fourth quarter as it fell 2.7% in the last couple of weeks alone. However, this currency pair found its footing on Thursday at around 1.0330 before rebounding sharply on Friday to close at 1.0426. The Euro edged towards 1.0450 as Asian markets came online – these are the support and resistance levels for today.

Support: 1.0330

Resistance: 1.0460

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 Bullish

The Swiss Franc (CHF)

Key news events today

No major news events.

What can we expect from CHF today?

After hitting a high of 0.9021 last Thursday, demand for the dollar waned causing USD/CHF to fall under 0.8950 before closing at 0.8930 on Friday. This currency pair gapped lower to open at 0.8914 but rose as high as 0.8936 to quickly fill this gap – these are the support and resistance levels for today.

Support: 0.8920

Resistance: 0.9040

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

GDP (7:00 am GMT)

What can we expect from GBP today?

Most indicators of U.K. near-term activity have declined with Bank of England (BoE) staff expecting GDP growth to be weaker at the end of the year than originally projected in the November Monetary Policy Report. Staff now expect 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 pound could face headwinds on the back of weaker GDP data before the start of the European trading hours.

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 Bullish

The Canadian Dollar (CAD)

Key news events today

GDP (1:30 pm GMT)

What can we expect from CAD today?

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 projections. The Loonie has faced intense headwinds since the end of September and could come under pressure once more, keeping USD/CAD elevated.

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 Bearish

Oil

Key news events today

No major news events.

What can we expect from Oil today?

After rebounding strongly in the second week of December with a gain of nearly 6.4%, WTI reversed sharply last week as it dived more than 4% at its lowest point. This benchmark closed at $69.46 per barrel and has ranged approximately between $66.70 on the lower bound and $72.50 on the upper bound since mid-October. Price fluctuations have been driven by global demand concerns, geopolitical tensions and OPEC+ production output levels – this commodity could continue to face higher bouts of volatility as the year comes to a close.

Next 24 Hours Bias

Medium Bullish

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

• Qatar warns it will halt gas supplies to Europe if fined under EU due diligence law
• HSBC still sees Fed rate cuts ahead, another 75bp next year. Higher stocks & USD also.
• China hints at further measures to support the recovery of its property market.
• US PCE data – “core inflation didn’t print low enough to prevent a January Fed pause”
• Honda and Nissan are set to announce launch of integration talks
• PBOC sets USD/ CNY reference rate for today at 7.1870 (vs. estimate at 7.2880)
• Goldman Sachs have revised their US inflation forecast higher, citing Trump tariffs
• Trump complains of Panama Canal fees rip off – may demand it be returned to US, in full
• Canadian PM Trudeau not planning to step down — report
• Slovak PM Fico said Putin confirmed readiness to continue supplying gas to the West
• Trade ideas thread – Monday, 23 December, insightful charts, technical analysis, ideas
• Monday morning open levels – indicative forex prices – 23 December 2024
• ECB’s Vujcic says the Bank’s “direction is clear … further reduction of interest rates”
• Forexlive Americas FX news wrap: PCE inflation unexpectedly cools

It
was a relatively quiet beginning to the holiday-interrupted week. The
economic data agenda was sparse, as was fresh news flow.

Major
FX tracked narrow ranges only and rates are currently little changed
from late Friday New York levels.

Regional
equities in Japan and China (mainland and Hong Kong) are a touch
higher as I post, following the Wall Street lead from Friday.

In
commodity news we had Slovak PM Fico saying Putin confirmed readiness
to continue supplying gas to the West. The two met over the weekend
in Moscow. We also had the Qatari energy minister threatening to
block LNG exports to the EU. More on each of these in the points
above.

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

Politico with the report that Qatar has warned it will stop exporting liquefied natural gas (LNG) to the European Union if penalties are imposed under the EU’s new Corporate Sustainability Due Diligence Directive.

• Qatari Energy Minister Saad Sherida al-Kaabi criticized the directive, which mandates companies address human rights and environmental issues or face fines of up to 5% of their global annual revenue.
• “If I lose 5 percent of my revenue by supplying Europe, I won’t supply Europe” al-Kaabi told the FT in an interview published Sunday.
• “I’m not bluffing”
• “5 per cent of generated revenue of QatarEnergy means 5 per cent of generated revenue of the Qatar state. This is the people’s money, so I cannot lose that kind of money – and nobody would accept losing that kind of money.”

Qatar’s LNG exports have been crucial for Europe amid efforts to reduce reliance on Russian energy. This dispute could have significant implications for Europe’s energy security and climate goals.

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

There isn’t much on the macroeconomic data calendar to move markets this week. However, Canadian dollar traders will be fastening their seatbelts once more early in their trading day today as the latest Canadian GDP data is released. The loonie has taken a battering in recent weeks—and indeed months—against the dollar, and further weak data could push it to notch additional annual lows in the next few trading sessions, especially if the dollar resumes its appreciation in thin holiday markets.

Expectations are for the month-on-month data to show a 0.2% increase in GDP. Traders anticipate that an on-target result or a weaker print could lead to further selling pressure on the CAD. The USDCAD saw some selling on Friday after U.S. inflation data came in weaker than expected. However, it remains within striking distance of the short-term trendline resistance on the hourly chart and the annual high. Any GDP figure softer than 0.1% could bring these resistance levels into play. Meanwhile, support currently sits around the 200-day moving average and the trendline near 1.4250.

Key Levels to Watch:

• Resistance 2: 1.4468 – 2024 High
• Resistance 1: 1.4403 – Trendline Resistance
• Support 1: 1.4279 – 200-Day Moving Average
• Support 2: 1.4245 – Trendline Support

The post Trade the Canadian Dollar on the GDP Data first appeared on IC Markets | Official Blog.