S&P 500 futures are down 0.4% with Nasdaq futures down 0.5% and Dow futures down 0.4% as well. Trading conditions are mired by thin liquidity as we are still in the holiday period for markets. Europe is out for the day and so will Canada, leaving only US markets to open later. But during a period like this, don’t expect market players to do much in any case. Not until the new year at least.

Coming up though, we do have the weekly initial jobless claims. So, that will add to some intrigue on Christmas week. The S&P 500 itself has largely erased its post-Fed drop and that’s vindicating dip buyers going into the turn of the year. Here’s a look at the chart:

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

• September was +0.1%
• Canada GDP for October 0.3% m/m vs 0.1% estimate
• November est is -0.1%. Decreases in mining, quarrying, and oil and gas extraction, transportation and warehousing, and finance and insurance were partially offset by increases in accommodation and food services and real estate and rental and leasing.

Details:

• Goods-producing industries: Up 0.9%, led by mining, quarrying, and oil and gas extraction.
• Services-producing industries: Up 0.1%, driven by real estate and rental and leasing activity (fifth consecutive month of growth).
• Sector performance: 12 of 20 sectors expanded in October.

The Mining sector led the growth for the month.

• Mining, quarrying, and oil and gas extraction expanded 2.4% in October after three months of contraction.
• Oil and gas extraction:
  • Grew 3.1%, driven by oil sands extraction (+5.2%), the largest increase since December 2020.
  • Oil sands activity resumed after maintenance, with some facilities reaching record production.
  • Natural gas extraction increased, offsetting a decline in crude petroleum.

Manufacturing up helped by non-durable goods manufacturing:

• Manufacturing rose 0.3% in October driven by an increase in non-durable goods manufacturing (+1.2%) following four consecutive monthly declines. Durable goods manufacturing tempered the increase in the overall sector, contracting 0.4% in October.

• Mining and quarrying (except oil and gas):
  • Grew 0.8%, led by metal ore mining (+1.4%).
  • Copper, nickel, lead, and zinc ore mining rose 2.3%.
  • Iron ore mining increased 1.3%, recovering from equipment failures in September.
  • Coal mining surged 4.1%, driven by thermal coal production in Alberta.
• Support activities for mining and oil and gas extraction:
  • Rebounded 1.3%, boosted by higher drilling and rigging activity

In other sectors:

• Real estate and rental and leasing up for the 6th consecutive month by 0.5%
• Constuction up for the 3rd month by 0.4%
• Wholesale trade up 0.5% for the 2nd increase in a row.
• Transportation and warehousing up by 0.2% for the 3rd increase in a row despite strike activity

Despite the gain, the USDCAD is still higher (lower CAD today). US yields are higher. The S&P and the Dow are now lower, while the Nasdaq is now only up about 11 points in pre-market trading.

Technically, the USDCAD based near the 100 hour MA today and used that level as a base to push back higher after the decline on Friday.

.

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

This according to the NPC Standing Committee, as announced yesterday. For now, the agenda is said to encompass “reviewing the government work report, and examining the report on the implementation of the annual plan on national economic and social development for 2024 and the draft plan on national economic and social development for 2025”.

Adding to that, there will be the usual budget deliberations for both the central government and local councils.

This is typically China’s biggest political event as it will not only set out their goals and targets for the year, but also outline their resolve in achieving them. This will see all lawmakers and politicians gather in Beijing to sort out these economic and social issues.

The political event tends to last for about two weeks. However, do expect plenty of commentary to follow when we get things started in early March next year.

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

IC Markets Asia Fundamental Forecast | 26 December 2024

What happened in the Asia session?

With many financial markets in Asia Pacific closed for Boxing Day on Thursday, it was a pretty quiet session as the dollar index (DXY) floated around 108.15 while spot gold stalled its upward ascent around $2,6030/oz.

What does it mean for the Europe & US sessions?

After stabilizing around $69 on Monday, crude oil prices rebounded on Tuesday with WTI oil climbing nearly 1.3% on Tuesday. This benchmark hit a high of $70.43 before closing at $70.10 per barrel for Christmas. Moving over to U.S. inventories, the API stockpiles bucked two weeks of higher inventory builds by registering a drawdown of 4.7M barrels of crude last week. Should inventory levels once again experience a higher-than-anticipated draw, it could provide further tailwinds for this commodity later today.

The Dollar Index (DXY)

Key news events today

Unemployment Claims (1:30 pm GMT)

What can we expect from DXY today?

After surging in early December with a reading of 242K, claims moderated lower last week as figures fell to 220K – higher claims are typically a sign of labour market weakness. This week’s forecast of 223K points to a somewhat unchanged reading and a lower result could add further fuel to this rally in the dollar.

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

Unemployment Claims (1:30 pm GMT)

What can we expect from Gold today?

After surging in early December with a reading of 242K, claims moderated lower last week as figures fell to 220K – higher claims are typically a sign of labour market weakness. This week’s forecast of 223K points to a somewhat unchanged reading and a lower result could add further fuel to this rally in the dollar – a move that would potentially weigh on gold prices.

Next 24 Hours Bias

Weak Bullish

The Australian Dollar (AUD)

Key news events today

Boxing Day Holiday (All Day)

What can we expect from AUD today?

Australian banks will be closed from 24th to 26th December in observance of the Christmas holidays with trading activity likely to be significantly muted this week.

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

Boxing Day Holiday (All Day)

What can we expect from NZD today?

New Zealand banks will be closed from 24th to 26th December in observance of the Christmas holidays with trading activity likely to be significantly muted this week.

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?

The yen continues to remain under pressure keeping USD/JPY elevated. This currency pair was trading around 157.30 as Asian markets came online.

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

Boxing Day Holiday (All Day)

What can we expect from EUR today?

European banks will be closed from 24th to 26th December in observance of the Christmas holidays with trading activity likely to be significantly muted this week.

Central Bank Notes:

• The Governing Council reduced the three key ECB interest rates by 25 basis points on 12 December to mark the third successive rate cut.
• Accordingly, the interest rate on the main refinancing operations and the interest rates on the marginal lending facility and the deposit facility will be decreased to 3.15%, 3.40% and 3.00% respectively.
• The disinflation process is well on track and most measures of underlying inflation suggest that inflation will settle at around the Governing Council’s 2% medium-term target on a sustained basis.
• Staff see headline inflation averaging 2.4% in 2024, 2.1% in 2025, 1.9% in 2026 and 2.1% in 2027 when the expanded EU Emissions Trading System becomes operational. For inflation excluding energy and food, staff project an average of 2.9% in 2024, 2.3% in 2025 and 1.9% in both 2026 and 2027.
• Staff now expect a slower economic recovery than in the September projections. Although growth picked up in the third quarter of this year, survey indicators suggest it has slowed in the current quarter – the economy is expected to grow by 0.7% in 2024, 1.1% in 2025, 1.4% in 2026 and 1.3% in 2027
• The Eurosystem no longer reinvests all of the principal payments from maturing securities purchased under the pandemic emergency purchase programme (PEPP), reducing the PEPP portfolio by €7.5 billion per month on average and the Governing Council intends to discontinue reinvestments under the PEPP at the end of 2024.
• The Governing Council stands ready to adjust all of its instruments within its mandate to ensure that inflation stabilises sustainably at its 2% target over the medium term and to preserve the smooth functioning of monetary policy transmission.
• The next meeting is on 30 January 2025.

Next 24 Hours Bias

Weak Bearish

The Swiss Franc (CHF)

Key news events today

Boxing Day Holiday (All Day)

What can we expect from CHF today?

Swiss banks will be closed from 24th to 26th December in observance of the Christmas holidays with trading activity likely to be significantly muted this week.

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

Boxing Day Holiday (All Day)

What can we expect from GBP today?

British banks will be closed from 24th to 26th December in observance of the Christmas holidays with trading activity likely to be significantly muted this week.

Central Bank Notes:

• The Bank of England’s Monetary Policy Committee (MPC) voted by a majority of 6 to 3 to maintain the Bank Rate at 4.75% on 19 December 2024 – three members preferred to reduce the Bank rate by 25 basis points, bringing it down to 4.50%.
• The MPC also voted unanimously to reduce the stock of UK government bond purchases held for monetary policy purposes, and financed by the issuance of central bank reserves, by £100B over the next 12 months to a total of £558B, starting in October 2024. On 18 December 2024, the stock of UK government bonds held for monetary policy purposes was £655B.
• Twelve-month CPI inflation had increased to 2.6% in November from 1.7% in September, slightly higher than previous expectations while services consumer price inflation had remained elevated, at 5.0%, while core goods price inflation had risen to 1.1%.
• Headline CPI inflation was slightly higher than previous expectations, owing in large part to stronger inflation in core goods and food, and is expected to continue to rise slightly in the near term.
• Most indicators of UK near-term activity have declined with Bank staff expecting GDP growth to be weaker at the end of the year than originally projected in the November Monetary Policy Report.
• Bank staff now expected zero GDP growth in 2024 Q4, weaker than the 0.3% that had been incorporated in the November Report, broadly consistent with the latest combined steer from business surveys and the available official data.
• The Committee now judges that the labour market is broadly in balance as annual private sector regular average weekly earnings growth picked up quite sharply in the three months to October but there remains significant uncertainty around developments in the labour market.
• Monetary policy has been guided by the need to squeeze remaining inflationary pressures out of the economy to achieve the 2% target both in a timely manner and on a lasting basis. Over recent quarters there has been progress in disinflation, particularly as previous external shocks have abated, although remaining domestic inflationary pressures are resolving more slowly.
• The Committee continues to monitor closely the risks of inflation persistence and will assess the extent to which the evolving evidence is consistent with more constrained supply, which could sustain inflationary pressures, or with weaker demand, which could lead to the emergence of spare capacity in the economy and push down inflation; a gradual approach to removing monetary policy restraint remains appropriate.
• Monetary policy will need to continue to remain restrictive for sufficiently long until the risks to inflation returning sustainably to the 2% target in the medium term have dissipated further and the Committee will decide the appropriate degree of monetary policy restrictiveness at each meeting.
• The next meeting is on 6 February 2025.

Next 24 Hours Bias

Weak Bearish

The Canadian Dollar (CAD)

Key news events today

Boxing Day Holiday (All Day)

What can we expect from CAD today?

Canadian banks will be closed from 24th to 26th December in observance of the Christmas holidays with trading activity likely to be significantly muted this week.

Central Bank Notes:

• The Bank of Canada reduced its target for the overnight rate by 50 basis points bringing it down to 3.25% while continuing its policy of balance sheet normalization on 11 December; this marked the fifth consecutive meeting where rates were reduced.
• Canada’s economy grew by 1% in the third quarter, somewhat below the Bank’s October projection, and the fourth quarter also looks weaker than projected. Third-quarter GDP growth was pulled down by business investment, inventories and exports.
• The unemployment rate rose to 6.8% in November as employment continued to grow more slowly than the labour force while wage growth showed some signs of easing, but remains elevated relative to productivity.
• Headline CPI has declined significantly from 2.7% in June to 1.6% in September while shelter costs inflation remains elevated but has begun to ease; the preferred measures of core inflation are now below 2.5%.
• CPI inflation has been about 2% since the summer, and is expected to average close to the 2% target over the next couple of years. Since October, the upward pressure on inflation from shelter and the downward pressure from goods prices have both moderated as expected.
• Looking ahead, the GST holiday will temporarily lower inflation but that will be unwound once the GST break ends. In addition, the possibility the incoming US administration will impose new tariffs on Canadian exports to the United States has increased uncertainty and clouded the economic outlook
• With inflation around 2%, the economy in excess supply, and recent indicators tilted towards softer growth than projected, the Governing Council decided to reduce the policy rate by a further 50 basis points to support growth and keep inflation close to the middle of the 1-3% target range.
• The Governing Council has reduced the policy rate substantially since June and going forward, they will be evaluating the need for further reductions in the policy rate one decision at a time.
• The Bank is committed to maintaining price stability for Canadians by keeping inflation close to the 2% target.
• The next meeting is on 29 January 2025.

Next 24 Hours Bias

Weak Bullish

Oil

Key news events today

API Crude Oil Stock (9:30 pm GMT)

What can we expect from Oil today?

After stabilizing around $69 on Monday, crude oil prices rebounded on Tuesday with WTI oil climbing nearly 1.3% on Tuesday. This benchmark hit a high of $70.43 before closing at $70.10 per barrel for Christmas. Moving over to U.S. inventories, the API stockpiles bucked two weeks of higher inventory builds by registering a drawdown of 4.7M barrels of crude last week. Should inventory levels once again experience a higher-than-anticipated draw, it could provide further tailwinds for this commodity later today.

Next 24 Hours Bias

Weak Bullish

The post IC Markets Europe Fundamental Forecast | 26 December 2024 first appeared on IC Markets | Official Blog.

The post Ex-Dividend 26/12/2024 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: 107.58
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: 106.58
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: 108.50
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 continuation toward the 1st support.

Pivot: 1.0460
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: 1.0333

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

1st resistance: 1.0536
Supporting reasons:  Identified as an overlap resistance, 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: 162.47
Supporting reasons: Identified as an overlap support. indicating a potential area where buying pressures could intensify.

1st support: 160.34

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

1st resistance: 164.92
Supporting reasons: Identified as an overlap resistance close to the 78.6% and 50% Fibonacci projection, indicating a strong level of resistance.

EUR/GBP:

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: 0.8270
Supporting reasons: Identified as an overlap support that aligns with the 50% Fibonacci retracement. indicating a potential area where buying pressures could intensify. 

1st support: 0.8223

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, 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: 1.2486

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

1st resistance: 1.2718
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 continuation toward the 1st resistance

Pivot: 195.84
Supporting reasons: Identified as an overlap support, indicating a potential area where buying pressures could intensify.

1st support: 193.26
Supporting reasons: Identified as an overlap support close to the 50% Fibonacci retracement, indicating a key level where price could find support once more.

1st resistance: 198.62
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 reaction off the pivot and drop toward the 1st support 

Pivot: 0.9011
Supporting reasons: Identified as a swing high resistance, indicating a potential area where selling pressures could intensify

1st support: 0.8905

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

1st resistance: 0.9097
Supporting reasons: Identified as a swing high resistance close to the 161.8% Fibonacci extension, 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 reaction off the pivot and drop toward the 1st support 

Pivot: 157.71
Supporting reasons: Identified as a swing high resistance, indicating a potential area where selling pressures could intensify

1st support: 155.73
Supporting reasons: Identified as a pullback support, indicating a potential level where price could find support once again.

1st resistance: 159.33
Supporting reasons: Identified as an overlap resistance close to the 161.8% Fibonacci extension, indicating a potential area that could halt any further upward movement.

USD/CAD:

Potential Direction: Bullish

Overall momentum of the chart: Bullish

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

Pivot: 1.4350

Supporting reasons: Identified as a multi-swing-low support that aligns close to a 23.6% Fibonacci retracement, indicating a potential level where buying interests could pick up to resume the uptrend.

1st support: 1.4194
Supporting reasons: Identified as a pullback support that aligns with a 50% Fibonacci retracement, indicating a key level where price could find support.

1st resistance: 1.4447
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 is rising towards the pivot and could potentially make a bearish reversal off this level to fall towards the 1st support.

Pivot: 0.6265

Supporting reasons: Identified as a multi-swing high resistance that aligns close to a 23.6% Fibonacci retracement, 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: 0.6201
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 is rising towards the pivot and could potentially make a bearish reversal off this level to fall towards the 1st support.

Pivot: 0.5661

Supporting reasons: Identified as a multi-swing high 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: 0.5741
Supporting reasons: Identified as an overlap resistance that aligns close to a 38.2% Fibonacci retracement, indicating a potential area that could halt any further upward movement.

US30 (DJIA):

Potential Direction: Bullish
Overall momentum of the chart: Bullish

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

Pivot: 43,059.45

Supporting reasons: Identified as an overlap support, indicating a potential area where buying interests could pick up to stage a rebound.

1st support: 42,084.74

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

1st resistance: 43,828.07

Supporting reasons: Identified as an overlap resistance that aligns close to a 61.8% 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: 19,950.90
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: 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: 20,197.50
Supporting reasons: Identified as a pullback resistance that aligns with a 61.8% Fibonacci retracement, indicating a potential area that could halt any further upward movement.

US500 (S&P 500): 

Potential Direction: Bearish
Overall momentum of the chart: Bullish

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

Pivot: 6,039.40

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

1st support: 5,984.70

Supporting reasons: Identified as an overlap support that aligns with a 23.6% Fibonacci retracement, indicating a potential level where price could find support once again.

1st resistance: 6,099.60
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.

BTC/USD (Bitcoin):

Potential Direction: Bearish
Overall momentum of the chart: Neutral

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

Pivot: 99,512.96

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: 93,338.79
Supporting reasons: Identified as a swing-low support, indicating a potential level where price could find support once again.

1st resistance: 103,693.98
Supporting reasons: Identified as an overlap resistance, indicating a potential area that could halt any further upward movement.

ETH/USD (Ethereum):

Potential Direction: Bearish
Overall momentum of the chart: Neutral

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

Pivot: 3,528.21

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

1st support: 3,251.18
Supporting reasons: Identified as a multi-swing-low support, indicating a potential level where price could find support once more.

1st resistance: 3,762.79
Supporting reasons: Identified as a pullback resistance that aligns close to a 61.8% 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 is rising towards the pivot and could potentially make a bearish reversal off this level to fall towards the 1st support.

Pivot: 71.49
Supporting reasons: Identified as a multi-swing-high resistance that aligns with a confluence of Fibonacci levels i.e. a 78.6% retracement and a 127.2% extension, indicating a potential area where selling pressures could intensify.

1st support: 70.23
Supporting reasons: Identified as a pullback support, indicating a key level where price could find support.

1st resistance: 72.85
Supporting reasons: Identified as a multi-swing-high resistance that aligns with a 161.8% Fibonacci extension, 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: 2633.36
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: 2571.77

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

1st resistance: 2673.59

Supporting reasons: Identified as a pullback resistance close to the 61.8% Fibonacci retracement, indicating a potential area that could halt any further upward movement.

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The post Thursday 26th December 2024: Technical Outlook and Review first appeared on IC Markets | Official Blog.

IC Markets Asia Fundamental Forecast | 26 December 2024

What happened in the U.S. session?

All major financial markets closed early on Tuesday and were also closed for the whole of Wednesday due to the Christmas holidays.

What does it mean for the Asia Session?

Many financial markets in Asia Pacific and Europe are closed for Boxing Day on Thursday, so traders should expect lower-than-usual trading activity for the remainder of this week. The dollar index (DXY) opened at 108.17 while spot prices for gold edged higher towards $2,630/oz at the beginning of this session.

The Dollar Index (DXY)

Key news events today

Unemployment Claims (1:30 pm GMT)

What can we expect from DXY today?

After surging in early December with a reading of 242K, claims moderated lower last week as figures fell to 220K – higher claims are typically a sign of labour market weakness. This week’s forecast of 223K points to a somewhat unchanged reading and a lower result could add further fuel to this rally in the dollar.

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

Unemployment Claims (1:30 pm GMT)

What can we expect from Gold today?

After surging in early December with a reading of 242K, claims moderated lower last week as figures fell to 220K – higher claims are typically a sign of labour market weakness. This week’s forecast of 223K points to a somewhat unchanged reading and a lower result could add further fuel to this rally in the dollar – a move that would potentially weigh on gold prices.

Next 24 Hours Bias

Weak Bullish

The Australian Dollar (AUD)

Key news events today

Boxing Day Holiday (All Day)

What can we expect from AUD today?

Australian banks will be closed from 24th to 26th December in observance of the Christmas holidays with trading activity likely to be significantly muted this week.

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

Boxing Day Holiday (All Day)

What can we expect from NZD today?

New Zealand banks will be closed from 24th to 26th December in observance of the Christmas holidays with trading activity likely to be significantly muted this week.

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?

The yen continues to remain under pressure keeping USD/JPY elevated. This currency pair was trading around 157.30 as Asian markets came online.

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

Boxing Day Holiday (All Day)

What can we expect from EUR today?

European banks will be closed from 24th to 26th December in observance of the Christmas holidays with trading activity likely to be significantly muted this week.

Central Bank Notes:

• The Governing Council reduced the three key ECB interest rates by 25 basis points on 12 December to mark the third successive rate cut.
• Accordingly, the interest rate on the main refinancing operations and the interest rates on the marginal lending facility and the deposit facility will be decreased to 3.15%, 3.40% and 3.00% respectively.
• The disinflation process is well on track and most measures of underlying inflation suggest that inflation will settle at around the Governing Council’s 2% medium-term target on a sustained basis.
• Staff see headline inflation averaging 2.4% in 2024, 2.1% in 2025, 1.9% in 2026 and 2.1% in 2027 when the expanded EU Emissions Trading System becomes operational. For inflation excluding energy and food, staff project an average of 2.9% in 2024, 2.3% in 2025 and 1.9% in both 2026 and 2027.
• Staff now expect a slower economic recovery than in the September projections. Although growth picked up in the third quarter of this year, survey indicators suggest it has slowed in the current quarter – the economy is expected to grow by 0.7% in 2024, 1.1% in 2025, 1.4% in 2026 and 1.3% in 2027
• The Eurosystem no longer reinvests all of the principal payments from maturing securities purchased under the pandemic emergency purchase programme (PEPP), reducing the PEPP portfolio by €7.5 billion per month on average and the Governing Council intends to discontinue reinvestments under the PEPP at the end of 2024.
• The Governing Council stands ready to adjust all of its instruments within its mandate to ensure that inflation stabilises sustainably at its 2% target over the medium term and to preserve the smooth functioning of monetary policy transmission.
• The next meeting is on 30 January 2025.

Next 24 Hours Bias

Weak Bearish

The Swiss Franc (CHF)

Key news events today

Boxing Day Holiday (All Day)

What can we expect from CHF today?

Swiss banks will be closed from 24th to 26th December in observance of the Christmas holidays with trading activity likely to be significantly muted this week.

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

Boxing Day Holiday (All Day)

What can we expect from GBP today?

British banks will be closed from 24th to 26th December in observance of the Christmas holidays with trading activity likely to be significantly muted this week.

Central Bank Notes:

• The Bank of England’s Monetary Policy Committee (MPC) voted by a majority of 6 to 3 to maintain the Bank Rate at 4.75% on 19 December 2024 – three members preferred to reduce the Bank rate by 25 basis points, bringing it down to 4.50%.
• The MPC also voted unanimously to reduce the stock of UK government bond purchases held for monetary policy purposes, and financed by the issuance of central bank reserves, by £100B over the next 12 months to a total of £558B, starting in October 2024. On 18 December 2024, the stock of UK government bonds held for monetary policy purposes was £655B.
• Twelve-month CPI inflation had increased to 2.6% in November from 1.7% in September, slightly higher than previous expectations while services consumer price inflation had remained elevated, at 5.0%, while core goods price inflation had risen to 1.1%.
• Headline CPI inflation was slightly higher than previous expectations, owing in large part to stronger inflation in core goods and food, and is expected to continue to rise slightly in the near term.
• Most indicators of UK near-term activity have declined with Bank staff expecting GDP growth to be weaker at the end of the year than originally projected in the November Monetary Policy Report.
• Bank staff now expected zero GDP growth in 2024 Q4, weaker than the 0.3% that had been incorporated in the November Report, broadly consistent with the latest combined steer from business surveys and the available official data.
• The Committee now judges that the labour market is broadly in balance as annual private sector regular average weekly earnings growth picked up quite sharply in the three months to October but there remains significant uncertainty around developments in the labour market.
• Monetary policy has been guided by the need to squeeze remaining inflationary pressures out of the economy to achieve the 2% target both in a timely manner and on a lasting basis. Over recent quarters there has been progress in disinflation, particularly as previous external shocks have abated, although remaining domestic inflationary pressures are resolving more slowly.
• The Committee continues to monitor closely the risks of inflation persistence and will assess the extent to which the evolving evidence is consistent with more constrained supply, which could sustain inflationary pressures, or with weaker demand, which could lead to the emergence of spare capacity in the economy and push down inflation; a gradual approach to removing monetary policy restraint remains appropriate.
• Monetary policy will need to continue to remain restrictive for sufficiently long until the risks to inflation returning sustainably to the 2% target in the medium term have dissipated further and the Committee will decide the appropriate degree of monetary policy restrictiveness at each meeting.
• The next meeting is on 6 February 2025.

Next 24 Hours Bias

Weak Bearish

The Canadian Dollar (CAD)

Key news events today

Boxing Day Holiday (All Day)

What can we expect from CAD today?

Canadian banks will be closed from 24th to 26th December in observance of the Christmas holidays with trading activity likely to be significantly muted this week.

Central Bank Notes:

• The Bank of Canada reduced its target for the overnight rate by 50 basis points bringing it down to 3.25% while continuing its policy of balance sheet normalization on 11 December; this marked the fifth consecutive meeting where rates were reduced.
• Canada’s economy grew by 1% in the third quarter, somewhat below the Bank’s October projection, and the fourth quarter also looks weaker than projected. Third-quarter GDP growth was pulled down by business investment, inventories and exports.
• The unemployment rate rose to 6.8% in November as employment continued to grow more slowly than the labour force while wage growth showed some signs of easing, but remains elevated relative to productivity.
• Headline CPI has declined significantly from 2.7% in June to 1.6% in September while shelter costs inflation remains elevated but has begun to ease; the preferred measures of core inflation are now below 2.5%.
• CPI inflation has been about 2% since the summer, and is expected to average close to the 2% target over the next couple of years. Since October, the upward pressure on inflation from shelter and the downward pressure from goods prices have both moderated as expected.
• Looking ahead, the GST holiday will temporarily lower inflation but that will be unwound once the GST break ends. In addition, the possibility the incoming US administration will impose new tariffs on Canadian exports to the United States has increased uncertainty and clouded the economic outlook
• With inflation around 2%, the economy in excess supply, and recent indicators tilted towards softer growth than projected, the Governing Council decided to reduce the policy rate by a further 50 basis points to support growth and keep inflation close to the middle of the 1-3% target range.
• The Governing Council has reduced the policy rate substantially since June and going forward, they will be evaluating the need for further reductions in the policy rate one decision at a time.
• The Bank is committed to maintaining price stability for Canadians by keeping inflation close to the 2% target.
• The next meeting is on 29 January 2025.

Next 24 Hours Bias

Weak Bullish

Oil

Key news events today

API Crude Oil Stock (9:30 pm GMT)

What can we expect from Oil today?

After stabilizing around $69 on Monday, crude oil prices rebounded on Tuesday with WTI oil climbing nearly 1.3% on Tuesday. This benchmark hit a high of $70.43 before closing at $70.10 per barrel for Christmas. Moving over to U.S. inventories, the API stockpiles bucked two weeks of higher inventory builds by registering a drawdown of 4.7M barrels of crude last week. Should inventory levels once again experience a higher-than-anticipated draw, it could provide further tailwinds for this commodity later today.

Next 24 Hours Bias

Weak Bullish

The post IC Markets Asia Fundamental Forecast | 26 December 2024 first appeared on IC Markets | Official Blog.

The shortened US equity market session on Christmas Eve is often a formality but Santa Claus delivered this year. The 0.7% rally yesterday in the S&P 500 was followed with 0.8% today and the post-Fed rout has now been largely erased.

• S&P 500 +1.1%
• Nasdaq Comp +1.4% (led by +6% for TSLA)
• Russell 2000 +0.8%
• DJIA +0.9%
• Toronto TSX Comp +0.3%

US and Canadian markets are both completely closed on Christmas. The US market will re-open on Boxing Day while Canadian markets remain closed until December 27.

The ‘Santa Claus rally’ period is traditionally after Christmas and before new years, so we have that to look forward to.

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

The major US stocks are trading higher in early US trading:

• Dow Industrial Average: 42,923.11, up 16.16 points (+0.04%)
• S&P index: 5,987.45, up 13.38 points (+0.22%)
• Nasdaq index: 19,840.36, up 75.47 points (+0.38%)
• Rusell 2000 index: 2,236.7892, down 0.6471 points (-0.03%)

In specific stock news:

• Apple has traded at a new record high at $257.00
• Palantir has traded at a new record high at $83.68

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

• Prior month -5.9
• Philly Fed non-manufacturing index for December -6.

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

The stock market will close at 1pm ET (1800 GMT) while the bond market will close at 2pm ET (1900 GMT) later today. It’s the festive period after all and holiday thin liquidity just means it is tough to make sense of price movements during this time. For those interested, here’s how the S&P 500 has performed on Christmas Eve in the past:

• 2018: -2.71%
• 2019: -0.02%
• 2020: +0.35%
• 2021*: +0.62%
• 2022*: +0.59%
• 2023*: +0.17%

*23 December was the last official trading day before Christmas Day

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

For the longest of time now, the pair has been caught within a 1,000 pips range over the last eight years. And that’s just the extremes in certain years. Most of the time, the pair has nestled within a much tighter range during this period. But with the over 4% decline this year, there is a chance for sellers to finally break the mould.

The pair is once again running into a test of the 0.8300 handle and has been testing waters below that in December trading. The last real attempt to break below that came back in 2022 but that was defended by the 200-month moving average (blue line) at the time. This time around, sellers have already broken below that as well as the 100-month moving average (red line). That suggests a stronger downside bias for the pair on any major technical break now.

The March 2022 low is seen at 0.8202 but a firm monthly close under 0.8300 may yet be enough to set up a platform for sellers to take a run towards the downside and break this eight-year range in the pair.

From a fundamental perspective, the conditions are also lining up accordingly – at least as we look towards the start of next year.

The ECB looks poised to keep cutting rates as the euro area economy is in the dumps. And that is not to mention the prospects of a trade conflict with the US amid Trump’s tariffs. That will keep the pressure on the ECB to stick with their current rate cut path.

As for the BOE, they are still keeping a more gradual approach. And that means some rate cuts with a pause every now and then perhaps. Inflation has come down but not as much as they’d hope and the economy isn’t exactly pushed to the brink just yet. We are seeing things slow down in 2H 2024 but policymakers are not yet thrown into the frying pan for now.

That being said, if the UK economy does face stronger headwinds next year, that might change the picture and weigh further on the pound. After all, traders are only pricing in just a little over two rate cuts by the BOE for next year currently. As such, a step up there could weigh on sterling and provide some support for EUR/GBP.

I reckon that’s the only condition that might play into a positive bounce for EUR/GBP at the moment. Otherwise with EUR/USD slated for parity, it might be tough to fight a weaker euro outlook alongside a technical downside break to start the new year. So, definitely one of the more interesting charts to watch out for in major FX as we look towards 2025.

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