The polar vortex is pushing south and east in what could be a record-breaking cold snap in parts of the United States.

Several models are converging around cold weather in the eastern half of the US in the second week of January. The peak of the cold looks to be around January 12 but some of the modelling has an extended period of cold. If it unfolds, there will surely be record US natural gas demand and that could also be combined with well shut-ins due to freeze offs in Texas and the Marcellus.

Needless to say, there could be macro impacts as well. Higher natural gas prices feed into headline inflation while I would also expect the cold to dampen US consumer spending.

Henry hub natural gas prices on the February contract were last up 59-cents to $3.98.

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

Barring a miracle turnaround in the final two trading days of the month, gold will finish lower in December. That’s unusual because there has been a strong seasonal tailwind for gold in December forever and it’s risen in the month in every year since 2016.

Now, it’s not hard to understand why gold is lower this month. The Fed took a hawkish turn, the US dollar has strengthened and bonds sold off. Gold priced in yen, for instance, is up 3.4% in the month.

There is also plenty of good news for gold bulls on the year, as it’s gained 26.5% — that’s the best year since 2010.

Perhaps another good sign is that the prior two times where it declined in December — 2015 and 2016 — it rallied strongly in January, by 6.6% and 5.4%, respectively.

Technically, there is some consolidation ongoing after a big run-up since March.

Fundamentally, I think the most-important driver right now is that China’s central bank has resumed buying gold. We should get an update on December purchases around the 7th of January and it will be an important signal if they continue to buy.

I will also be watching Russia in January and for signs that Trump could end the Ukraine war (so far, it’s not looking likely).

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

Happy Monday in a stunted week that will be the final one of 2024 and the first one of 2025.

It’s the final full trading day of the year and it’s been quiet so far in FX. That’s not the case in equities where S&P 500 futures are down nearly 1%.

It’s all about positioning and re-positioning today so I wouldn’t read too much into the moves, though I strongly suspect we will see profit-taking in high-flying names early in the year, if only due to tax considerations.

Today’s economic calendar will be a non-factor as we get the Chicago PMI (9:45 am ET), pending home sales (10 am ET) and the Dallas Fed (10:30 am ET). For more, see the economic calendar.

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

The new week is underway and it will be dissected on Wednesday by New Years Day holiday on January 1. The US stock market will have a full day on New Years Eve (closing at 4 PM ET), but the US bond market will close early at 2 PM ET to start the festivities. Some important international markets will be shut, or close early, on New Year’s Eve. Exchanges in London and Hong Kong, for instance, will close early, while there will be no trading in Japan. With a limited economic schedule on the 31st (S&P/CS home price data will be the only economic release scheduled), barring any geopolitical event, the markets will be influenced by year-end flows.

Overnight:

• Japan’s factory activity contracted with the au Jibun Bank PMI rising to 49.6 from 49.0 in November. The estimate was slighltly lower at 49.5
• The index remained below the 50.0 growth threshold for the sixth month.

In trading today, US pending home sales will be released at 10 AM ET with the estimate at 0.9% vs last month up 2.0%

Looking at the markets US stocks are continuing the flows seen at the end of last week with the Nasdaq falling sharply in pre-market trading. On Friday the Nasdaq tumbled -298.33 points or -1.49%. The Dow fell -333.59 points or 0.77% and the S&P fell -66.75 points or -.1.11%.

In early trading today, the major indice futures are heading lower with the last hour stepping up the declines in volatile trading. A snapshot of the futures are now implying:

• Dow -292 points
• S&P -49 potins
• Nasdaq -178 points.

Looking at the European equity markets a snapshot shows mixed results:

• German DAX, -0.42%
• France’s CAC, -0.1%
• UK FTSE 100, -0.26%
• Spain’s Ibex, +0.22%
• Italy’s FTSE MIB, +0.18%

In the US debt market, the 10 year yield at the end of last week moved up 100 basis points from the time the Fed started to cut rate with the yield running from 3.62% to 4.62% (the high yield reached 4.639%). In trading today, the 10 year is down -4.6 bps to 4.583%. A snapshot of the yield curve shows:

• 2-year 4.289%, -4.1 basis points
• 5-year 4.410%, -5.5 basis points
• 10 year yield 4.583%, -4.6 basis points
• 30 year yield 4.788%, -3.3 basis points

Looking at the forex market, the USD is mostly lower vs the major currencies with only a small gains vs the CHF. The greenback is lower vs the other currencies with declines of -0.43% vs the NZD and -0.32% vs the AUD leading the way.

• EUR -0.20%
• JPY -0.18%
• GBP-0.11%
• CHF +0.16%
• CAD -0.14%
• AUD -0.32%
• NZD -0.43%

Looking at other markets:

• Crude oil up $0.20 at $70.81
• Gold is near unchanged at $2621.30
• Silver is up $0.09 at $29.43
• Bitcoin is trading at $93612 after closing at $94168 on Friday.

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

The post Ex-Dividend 31/12/2024 first appeared on IC Markets | Official Blog.

Well, you definitely won’t hear central bankers admitting or acknowledging it. However, you’ll most certainly hear plenty of whispers or even loud conversations in the background on this.

The UK looks to be leading the stagflation charge but there are other major economies also staring down the same path. Germany and Australia are among the ones that stand out but if Trump’s policies do reignite price pressures in the US, there’s going to be plenty of the same scrutiny there as well.

It’ll be interesting to see how central banks sidestep this particular word and how they try to pivot the conversation to something else. But considering how the economic outlook is progressing globally, this is one word that we might come to hear a lot more in 2025.

What is the buzz word that you think we’ll be hearing a whole lot more in the year ahead?

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

• Domestic sight deposits CHF 436.4 bn vs CHF 448.0 bn prior

It’s an interesting drop in sight deposits, with the headline number being the lowest since 2015. The swing could also be impacted by thinner liquidity conditions but also perhaps after the tiered remuneration changes by the SNB this month. After the 50 bps rate cut here, lenders who now park more cash at the SNB than what the threshold allows for will see that exceeding amount earn 0% interest. So, there’s that. But the sight deposit levels are also a form of gauge of forex intervention by the SNB but the drop here sort of runs against the argument that they are viewing the franc as being too strong again. For some context, a material trending rise in sight deposits can often be interpreted as the SNB intervening to weaken the franc. And that is not what we’re seeing here.

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

• Prior +2.4%
• HICP +2.8% vs +2.6% y/y expected
• Prior +2.4%

The concern for the ECB is that core annual inflation here is seen ticking higher to 2.6%, up from 2.4% in November. Here’s a look at the inflation trend in Spain:

The disinflation path looks to have stalled as we close out the 2024 year. The ECB has said that things will be more bumpy in the latter stages of the year, so this validates that sentiment. It’s now a question of how long this supposed “bumpy” path will persist in 2025.

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

Let’s get straight into it, shall we? Here is a look at the voting committee for the current year that has gone by:

• Jerome Powell (Fed chair)
• John Williams (Fed vice chair, New York Fed)
• Michael Barr (Board of Governors)
• Michelle Bowman (Board of Governors)
• Lisa Cook (Board of Governors)
• Philip Jefferson (Board of Governors)
• Adriana Kugler (Board of Governors)
• Christopher Waller (Board of Governors)
• Raphael Bostic (Atlanta Fed)
• Beth Hammack (Cleveland Fed)
• Thomas Barkin (Richmond Fed)
• Mary Daly (San Francisco Fed)

In 2025, it will shape up to be:

• Jerome Powell (Fed chair)
• John Williams (Fed vice chair, New York Fed)
• Michael Barr (Board of Governors)
• Michelle Bowman (Board of Governors)
• Lisa Cook (Board of Governors)
• Philip Jefferson (Board of Governors)
• Adriana Kugler (Board of Governors)
• Christopher Waller (Board of Governors)
• Susan Collins (Boston Fed)
• Austan Goolsbee (Chicago Fed)
• Jeffrey Schmid (Kansas City Fed)
• Alberto Musalem (St Louis Fed)

The changes are highlighted in Italic as it pertains to the usual voting committee rotation. The others are always untouched no matter how things play out.

Among those voting next year, it will be the first time for Schmid and Musalem. As for Collins, she was last a voting member back in 2022. And Goolsbee was last a voting member back in 2023.

But the more important question is what is the balance of views among them and those rotating out?

The current outlook is that the Fed is likely to hold a more hawkish tone going into next year. That especially as reflected by the latest dot plots and the fact that they will look to pause in January to start with.

Of those rotating out, the standout is arguably Hammack as she was the only one who voted against the latest Fed rate cut in December. She argued that policy needed to stay “moderately restrictive” until there is further evidence of inflation converging towards the 2% target.

Meanwhile, Bostic, Barkin, and Daly may be regarded as more centrists but with a slight skew towards siding with what the main stance is for the Fed. And in this case, it is leaning more towards where Powell is standing I would say.

As for those rotating in, Schmid is definitely the most hawkish among the four but less so as compared to Hammack. Then, you have Goolsbee who is definitely hanging a little closer to the dovish scale. But Musalem and Collins are perhaps a little more hawkish than your average centrists, particularly the former.

There’s talk of the voting committee being increasingly more hawkish next year but amid the changes, it’s hard to see that outright being the base case scenario.

I reckon Powell will still have a big say on how things will go down at the end of the day. And the thing with the overall Fed view now is that a lot will hinge on upcoming data still.

We did move away from focusing on inflation to labour market data but expect next year to be a bit of a balance of both. That especially as price pressures look to be stalling or at least taking a bumpier path in approaching 2%. And not to mention the threat of Trump’s tariffs and tax cuts as well.

So, those will be the more important focus points as we look towards next year as opposed to who’s who on the voting board considering the rotation above.

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

Global Markets:

•  Asian Stock Markets : Nikkei down 0.92%, Shanghai Composite up 0.09%, Hang Seng down 0.33% ASX down 0.32%
• Commodities : Gold at $2632.35 (-0.04%), Silver at $29.94 (0.08%), Brent Oil at $73.89 (0.06%), WTI Oil at $70.64 (0.05%)
• Rates : US 10-year yield at 4.617, UK 10-year yield at 4.626, Germany 10-year yield at 2.389

News & Data:

• (USD) Crude Oil Inventories  -4.2M vs -0.7M expected

Markets Update:

Asia-Pacific markets were mixed on Monday, reflecting a range of economic and political factors. In South Korea, the Kospi rose 0.91%, and the Kosdaq gained 1.74%, despite the nation grappling with its deadliest airline crash in decades. On Sunday, a Jeju Air plane crash at Muan International Airport claimed 179 lives. Acting President Choi Sang-mok has ordered an urgent inspection of the nation’s airline systems following recovery efforts. Jeju Air shares hit an all-time low, falling 8.53%, while other airline stocks showed volatility.

South Korea also faces political turmoil, with parliament impeaching acting President Han Duck-soo after his predecessor, Yoon, was impeached for a brief martial law decree. Economic data added to the challenges, with industrial output contracting 0.7% in November, surpassing expectations of a 0.4% decline.

Japan’s Nikkei 225 dropped 0.82%, and the Topix fell 0.30%, as factory activity showed a slower contraction. The au Jibun Bank Japan Manufacturing PMI improved to 49.6 in December, signaling softer declines in production and new orders.

Australia’s S&P/ASX 200 declined 0.32%, while Hong Kong’s Hang Seng Index edged up 0.15%, and mainland China’s CSI 300 rose 0.53%. Traders anticipate China’s manufacturing PMI on Tuesday, ahead of market closures for the New Year holiday.

On Wall Street, major U.S. indexes fell Friday, led by technology stocks. The Dow dropped 0.77%, while the S&P 500 and Nasdaq Composite fell 1.11% and 1.49%, respectively, despite overall weekly gains.

Upcoming Events: 

• 03:00 PM GMT – USD Pending Home Sales m/m

The post Monday 30th December 2024: Asia-Pacific Markets Show Mixed Performance Amid Global Developments first appeared on IC Markets | Official Blog.

IC Markets Asia Fundamental Forecast | 30 December 2024

What happened in the Asia session?

Japan’s manufacturing sector has remained in contraction since July with the final PMI reading of 49.6 for December indicating no change to this trend. This sector saw softer deterioration in manufacturing conditions at the end of 2024 as production and demand fell slower than expected while there was a renewed increase in employment. The yen remains weak keeping USD/JPY elevated – this currency pair was hovering around 157.80 by midday Asia.

What does it mean for the Europe & US sessions?

After sliding lower over the last couple of months, the Chicago PMI is expected to rebound from 40.2 to 42.7 in December. However, this would still mark a 13th consecutive month of contraction in Chicago’s economic activity. Demand for the dollar could wane should we see this index post a weaker-than-anticipated result.

The Dollar Index (DXY)

Key news events today

Chicago PMI (2:45 pm GMT)

What can we expect from DXY today?

After sliding lower over the last couple of months, the Chicago PMI is expected to rebound from 40.2 to 42.7 in December. However, this would still mark a 13th consecutive month of contraction in Chicago’s economic activity. Demand for the dollar could wane should we see this index post a weaker-than-anticipated result.

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

Chicago PMI (2:45 pm GMT)

What can we expect from Gold today?

After sliding lower over the last couple of months, the Chicago PMI is expected to rebound from 40.2 to 42.7 in December. However, this would still mark a 13th consecutive month of contraction in Chicago’s economic activity. Demand for the dollar could wane should we see this index post a weaker-than-anticipated result – a move that would provide lift for gold prices.

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?

The Aussie has fallen for five straight weeks to lose nearly 5% over this period. This currency pair opened at 0.6211 to edge towards 0.6230 as Asian markets came online.

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 Bullish

The Kiwi Dollar (NZD)

Key news events today

No major news events.

What can we expect from NZD today?

Just like its Pacific neighbour, the Kiwi has depreciated significantly as it tumbled 4.8% over the past four weeks. This currency pair opened at 0.5626 to drift higher at the beginning of the Asia session.

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

Manufacturing PMI (12:30 am GMT)

What can we expect from JPY today?

Japan’s manufacturing sector has remained in contraction since July with the final PMI reading of 49.6 for December indicating no change to this trend. This sector saw softer deterioration in manufacturing conditions at the end of 2024 as production and demand fell slower than expected while there was a renewed increase in employment. The yen remains weak keeping USD/JPY elevated – this currency pair was hovering around 157.80 by midday Asia.

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 Bearish

The Euro (EUR)

Key news events today

No major news events.

What can we expect from EUR today?

The Euro has tumbled nearly 1.3% over the last three weeks as it looks to re-test its 52-week low at 1.0331. This currency pair opened at 1.0426 and was edging higher towards 1.0440 as Asian markets came online.

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?

The franc has weakened significantly since the end of September with UDS/CHF rallying almost 7.5% over this period. This currency pair opened at 0.9010 before drifting lower at the beginning of the Asia session.

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 Bearish

The Pound (GBP)

Key news events today

No major news events.

What can we expect from GBP today?

Just like many other currencies, the Pound has devalued strongly in the last quarter of this year with Cable breaking under the threshold of 1.2500 on 20th December. This currency pair opened at 1.2572 and was hovering around this level as Asian markets came online.

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

No major news events.

What can we expect from CAD today?

The Loonie has been one of the weakest currencies in 2024 causing USD/CAD to surge beyond 1.4450 in recent weeks. This currency pair opened at 1.4413 and is likely to remain elevated as the day progresses.

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

No major news events.

What can we expect from Oil today?

After Friday’s larger-than-expected drawdown in the EIA inventories, crude oil prices are likely to remain buoyed on Monday. WTI oil was hovering around $70.50 per barrel as markets re-opened and this benchmark could continue its upward ascent towards the $72-mark.

Next 24 Hours Bias

Weak Bullish

The post IC Markets Europe Fundamental Forecast | 30 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 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: 163.92
Supporting reasons: Identified as a pullback support. indicating a potential area where buying interests could pick up to resume the uptrend.

1st support: 162.23

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

1st resistance: 166.59
Supporting reasons: Identified as a swing-high resistance close to the 100% Fibonacci projection, 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: 196.74
Supporting reasons: Identified as an overlap support that aligns close to the 23.6% Fibonacci retracement, indicating a potential area where buying interests could pick up to resume the uptrend.

1st support: 194.29
Supporting reasons: Identified as an overlap support that aligns close to the 50% 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: Bearish

Overall momentum of the chart: Bullish

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

Pivot: 0.9039
Supporting reasons: Identified as a swing-high 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, 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: Bearish

Overall momentum of the chart: Bullish

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

Pivot: 158.28
Supporting reasons: Identified as a pullback resistance, indicating a potential area where selling pressures could intensify.

1st support: 156.24
Supporting reasons: Identified as an overlap support, indicating a potential level where price could find support once again.

1st resistance: 160.78
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: Bearish
Overall momentum of the chart: Bearish

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

Pivot: 43,330.76

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

1st support: 42,323.88

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

1st resistance: 44,374.17

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

DE40 (DAX):

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: 20,194.70
Supporting reasons: Identified as a pullback resistance that aligns with a 61.8% Fibonacci retracement, indicating a potential area where selling pressures could intensify.

1st support: 19,664.76

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

1st resistance: 20,476.10
Supporting reasons: Identified as a swing-high resistance that aligns close to the all-time high, 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: 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: 99,881.07

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

1st support: 91,855.25
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: 106,444.58
Supporting reasons: Identified as a swing-high resistance that aligns close to the all-time high, indicating a potential area that could halt any further upward movement.

ETH/USD (Ethereum):

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: 3,540.71

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

1st support: 3,250.78
Supporting reasons: Identified as a swing-low support that aligns with a 50% Fibonacci retracement, indicating a potential level where price could find support once more.

1st resistance: 3,846.78
Supporting reasons: Identified as a pullback resistance that aligns close to a 78.6% 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: 71.50
Supporting reasons: Identified as a multi-swing-high resistance, indicating a potential area where selling pressures could intensify. 

1st support: 67.20
Supporting reasons: Identified as a multi-swing low support, indicating a key level where price could find support once again.

1st resistance: 72.73
Supporting reasons: Identified as an overlap resistance, 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.

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 30th December 2024: Technical Outlook and Review first appeared on IC Markets | Official Blog.