Tariff man strikes again and the dollar is sitting higher today. It’s another reminder that with Trump, you never know what you’re gonna get right before the end of the day in the US. He is up threatening with tariffs again and you can check out the headlines here. This is now seeing the dollar bounce back today with USD/JPY more or less erasing yesterday’s drop.

The rebound also comes amid a bounce off the support from the 50.0 Fib retracement level at 153.75. But as buyers push price action back above 155.00, sellers are facing a setback in trying to steer the ship downwards again.

Elsewhere, EUR/USD is down 0.5% to 1.0433 and GBP/USD down 0.4% to 1.2441 currently. Meanwhile, the antipodeans are shoved lower with AUD/USD down 0.6% to 0.6250 and falling back below both its key hourly moving averages. A shift in the tides, essentially.

For now, there’s no major point of action yet as tariffs continue to be used as a threat and/or blackmail tool. Market players did feel last week that Trump’s bark might be worse than his bite. But if the headlines today are any lesson, it is that market players still do have a small pocket of fear that it could escalate.

We’re still in that part of the story when the boy cries wolf, the people will still come running.

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

DXY (US Dollar Index):

Potential Direction: Bearish
Overall momentum of the chart: Bullish

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

Pivot: 108.50

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

1st support: 106.73
Supporting reasons: Identified as an overlap support that aligns with the 78.6% Fibonacci projection, indicating a potential level where price could find support once more.

1st resistance: 109.38
Supporting reasons: Identified as an overlap resistance that aligns with the 78.6% Fibonacci retracement, indicating a potential area that could halt any further upward movement.

EUR/USD:

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: 1.0345

Supporting reasons: Identified as an overlap support  that aligns close to the 50 Fibonacci retracement, indicating a potential area where buying pressures could intensify

1st support: 1.0251

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

1st resistance: 1.0535
Supporting reasons:  Identified as an overlap resistance, indicating a potential area that could halt any further upward movement.

EUR/JPY:

Potential Direction: Bearish
Overall momentum of the chart: Bullish

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

Pivot: 162.34

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

1st support: 159.78

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

1st resistance: 164.77
Supporting reasons: Identified as a multi-swing high resistance, indicating a potential area that could halt any further upward movement.

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: 0.8372

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

1st support: 0.8326

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

1st resistance: 0.8432
Supporting reasons: Identified as a pullback 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 continuation toward the 1st support.

Pivot: 1.2403

Supporting reasons: Identified as an overlap resistance  that aligns with the 100% Fibonacci projection, indicating a potential area where selling pressures could intensify

1st support: 1.2367

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

1st resistance: 1.2609
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: Bearish

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

Pivot: 191.87

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

1st support:  190.18
Supporting reasons: Identified as a pullback support that aligns close to the 78.6% Fibonacci retracement, indicating a potential level where price could find support.

1st resistance: 194.54
Supporting reasons: Identified as an overlap 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 fall towards the 1st support.

Pivot: 0.9092

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

1st support: 0.8973
Supporting reasons: Identified as an overlap support that aligns with the 50% Fibonacci retracement, indicating a potential level where price could find support once again.

1st resistance: 0.9194
Supporting reasons: Identified as a multi-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 fall towards the 1st support.

Pivot: 156.61

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

1st support: 153.40
Supporting reasons: Identified as an overlap support that aligns close to the 50% Fibonacci retracement, indicating a potential level where price could find support once more.

1st resistance: 158.54
Supporting reasons: Identified as a swing high resistance, indicating a potential area that could halt any further upward movement.

USD/CAD:

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: 1.4415
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: 1.4300
Supporting reasons: Identified as multi-swing-low support that aligns close to a 38.2% Fibonacci retracement, indicating a key level where the price could stabilize once more.

1st resistance: 1.4516
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 has made a bearish reversal off the pivot and could potentially fall towards the 1st support.

Pivot: 0.6324

Supporting reasons: Identified as an overlap resistance that aligns with a 23.6% Fibonacci retracement, indicating a potential area where selling pressures could intensify.

1st support: 0.6172

Supporting reasons: Identified as a multi-swing-low support that aligns with a 78.6% Fibonacci retracement, suggesting a potential area where the price could stabilize once again.

1st resistance: 0.6448
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.

NZD/USD

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: 0.5724

Supporting reasons: Identified as an overlap resistance that aligns close to a 23.6% Fibonacci retracement, indicating a potential level where selling pressures could intensify.

1st support: 0.5542

Supporting reasons: Identified as a swing-low support, suggesting a potential area where the price could stabilize once more.

1st resistance: 0.5885

Supporting reasons: Identified as a pullback resistance that aligns close to the 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: 44,525.60

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

1st support: 43,933.88

Supporting reasons: Identified as a swing-low support that aligns close to a 23.6% Fibonacci retracement, indicating a potential level where the price could stabilize once again.

1st resistance: 45,103.25

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.

DE40 (DAX):

Potential Direction: Bullish
Overall momentum of the chart: Bullish

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

Pivot: 21,114.40
Supporting reasons: Identified as a swing-low support that aligns close to a 23.6% Fibonacci retracement, indicating a potential area where buying interests could pick up to resume the uptrend.

1st support: 20,918.30

Supporting reasons: Identified as an overlap support that aligns close to a 38.2% Fibonacci retracement, indicating a key level where the price could stabilize once more.

1st resistance: 21,528.30
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: Bearish
Overall momentum of the chart: Neutral

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

Pivot: 6,041.80

Supporting reasons: Identified as an overlap resistance that aligns close to a 61.8% Fibonacci retracement, indicating a potential area where selling pressures could intensify.

1st support: 5,930.40

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

1st resistance: 6,123.30

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

Pivot: 104,368.99

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: 98,987.55
Supporting reasons: Identified as an overlap support, indicating a potential level where the price could stabilize once more.

1st resistance: 108,006.97
Supporting reasons: Identified as a multi-swing high 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 rising towards the pivot and could potentially make a bearish reversal off this level to fall towards the 1st support.

Pivot: 3,287.13

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

1st support: 3,028.93
Supporting reasons: Identified as a multi-swing-low support that aligns with a 78.6% Fibonacci retracement, indicating a potential level where the price could stabilize once again.

1st resistance: 3,473.97
Supporting reasons: Identified as a multi-swing-high resistance, indicating a potential area that could halt any further upward movement.

WTI/USD (Oil):

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: 75.11
Supporting reasons: Identified as an overlap resistance that aligns close to a 23.6% Fibonacci retracement, indicating a potential area where selling pressures could intensify.

1st support: 72.96
Supporting reasons: Identified as an overlap support that aligns close to a 61.8% Fibonacci retracement, indicating a key level where the price could stabilize once more.

1st resistance: 76.54
Supporting reasons: Identified as an overlap resistance that aligns with a 38.2% Fibonacci retracement, indicating a potential area that could halt any further upward movement.

XAU/USD (GOLD):

Potential Direction: Bearish

Overall momentum of the chart: Bullish

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

Pivot: 2754.59

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

1st support: 2,717.61

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 again.

1st resistance: 2776.50

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

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The post Tuesday 28th January 2025: Technical Outlook and Review first appeared on IC Markets | Official Blog.

IC Markets Asia Fundamental Forecast | 28 January 2025

What happened in the U.S. session?

New home sales rose 3.6% MoM in January as 698K homes were purchased, firmly above market expectations of 670K. The latest figures also marked the highest since September and signalled a welcomed rebound in sales activity for this segment. After hitting a low of 106.96 on Monday, the dollar index (DXY) retraced higher towards 107.50 while spot prices for gold remained under pressure as it hovered around $2,740/oz.

What does it mean for the Asia Session?

After moderating significantly lower for most of last year, core inflation as reported by the Bank of Japan (BoJ) accelerated from 1.5% to 1.7% YoY in November as it exceeded the forecast of 1.5%. December’s estimate of 1.7% points to an unchanged reading but another surprise to the upside could pressure the BoJ into a further hawkish stance and potentially strengthen the yen in the near term. USD/JPY was floating around 154.50 in early trading on Tuesday.

The Dollar Index (DXY)

Key news events today

Durable Goods Orders (1:30 pm GMT)

Consumer Confidence (3:00 pm GMT)

What can we expect from DXY today?

New orders for durable goods have been weak from August through November but the forecast for December suggests an uptick in manufactured goods. Meanwhile, the Conference Board Consumer Confidence survey pulled back in December as concerns about the future outlook returned, particularly for future business conditions and incomes. However, January’s estimate of 105.7 points to a slight improvement in consumer sentiment and if combined with higher-than-anticipated orders, demand for the dollar could rekindle later today.

Central Bank Notes:

• The Board of Governors of the Federal Reserve System voted by a majority to lower the Federal Funds Rate target range by 25 basis points to 4.25 to 4.50% on 18 December. Voting against the action was Beth M. Hammack, who preferred to maintain the target range at 4.5 to 4.75%.
• The Committee seeks to achieve maximum employment and inflation at the rate of 2% over the longer run and judges that the risks to achieving its employment and inflation goals are roughly in balance.
• The economic outlook is uncertain, and the Committee is attentive to the risks to both sides of its dual mandate.
• Recent indicators suggest that economic activity has continued to expand at a solid pace while labour market conditions have generally eased, and the unemployment rate has moved up but remains low.
• Inflation has made further progress toward the Committee’s 2% objective but remains somewhat elevated.
• The Summary of Economic Projections (SEP) now indicates just two rate cuts in 2025 totalling 50 bps, compared to the full percentage point of reductions projected in the previous quarter.
• GDP growth forecasts were revised upward for 2024 (2.5% vs. 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

Durable Goods Orders (1:30 pm GMT)

Consumer Confidence (3:00 pm GMT)

What can we expect from Gold today?

New orders for durable goods have been weak from August through November but the forecast for December suggests an uptick in manufactured goods. Meanwhile, the Conference Board Consumer Confidence survey pulled back in December as concerns about the future outlook returned, particularly for future business conditions and incomes. However, January’s estimate of 105.7 points to a slight improvement in consumer sentiment and if combined with higher-than-anticipated orders, demand for the dollar could rekindle later today – a result that could weigh on 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?

With demand for the greenback picking up in early Tuesday trading, the Aussie fell under 0.6300. This currency pair tumbled towards 0.6450 as Asian markets came online and should overhead pressures increase further, the downfall could extend on Tuesday.

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 wage 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?

Like its Pacific neighbour, the Kiwi reversed off Monday’s high at 0.5723 to fall under 0.5700. With demand for the greenback rekindling on Tuesday, this currency pair slid lower towards 0.5650 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 service 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 ease monetary policy restraint further.
• The next meeting is on 19 February 2025.

Next 24 Hours Bias

Weak Bullish

The Japanese Yen (JPY)

Key news events today

BoJ Core CPI (5:00 am GMT)

What can we expect from JPY today?

After moderating significantly lower for most of last year, core inflation as reported by the Bank of Japan (BoJ) accelerated from 1.5% to 1.7% YoY in November as it exceeded the forecast of 1.5%. December’s estimate of 1.7% points to an unchanged reading but another surprise to the upside could pressure the BoJ into a further hawkish stance and potentially strengthen the yen in the near term.

Central Bank Notes:

• The Policy Board of the Bank of Japan decided on 24 January, by an 8-1 majority vote, to set the following guidelines for money market operations for the inter-meeting period:
  1. The Bank will encourage the uncollateralized overnight call rate to remain at around 0.5%.
  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 moderately 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 at around 3% recently, as services prices have continued to rise moderately, reflecting factors such as wage increases, although the effects of a pass-through to consumer prices of cost increases led by the past rise in import prices have waned.
• Inflation expectations have risen moderately while underlying CPI inflation has been increasing gradually toward the price stability target of 2%. With wages continuing to rise, there has been an increase in moves to reflect higher costs, such as increased personnel expenses and distribution costs, in selling prices.
• Japan’s economy is likely to keep growing at a pace above its potential growth rate, with overseas economies continuing to grow moderately and as a virtuous cycle from income to spending gradually intensifies against the background of factors such as accommodative financial conditions.
• The next meeting is on 19 March 2025.

Next 24 Hours Bias

Weak Bullish

The Euro (EUR)

Key news events today

No major news events.

What can we expect from EUR today?

The Euro reached a high of 1.0533 on Monday before fizzling out around this level. This currency pair was sliding lower towards 1.0450 as Asian markets came online as demand for the greenback picked up on early Tuesday.

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?

Waning demand for the greenback drove USD/CHF to an overnight low of 0.8965 on Monday. However, this currency pair found its footing around 0.8989 at the beginning of the Asia session to climb above the threshold of 0.9000. Should demand rekindle for the dollar, USD/CHF could edge higher on Tuesday.

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 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 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

No major news events.

What can we expect from GBP today?

Cable hit a high of 1.2523 before retreating away from this level on Monday. This currency pair was pulling back towards 1.2450 at the beginning of the Asia session but it should remain elevated on Tuesday.

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?

Weakness in the Loonie has kept USD/CAD above 1.4300 since the beginning of the year. This currency pair was floating around 1.4380 as Asian markets came online and could grind higher 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

API Crude Oil Stock (9:30 pm GMT)

What can we expect from Oil today?

Crude oil prices fell on Monday as news of surging interest in Chinese start-up DeepSeek’s low-cost artificial intelligence (AI) model raised concerns over this sector’s perceived lower energy consumption by power data centres. WTI oil fell over 1.5%, tumbling as low as $72.38 before stabilizing around $73 per barrel. Moving over to U.S. inventories, the API stockpiles bucked a five-week streak of falling inventories as 1M barrels of crude were added to storage last week. Should inventories continue to build for the second consecutive week, it could add further woes to oil prices late Tuesday.

Next 24 Hours Bias

Medium Bearish

The post IC Markets Asia Fundamental Forecast | 28 January 2025 first appeared on IC Markets | Official Blog.

• Deutsche Bank on 4 factors that could prompt further losses for US equities
• China and India are working towards warmer relations between the two states
• BoJ Rate Hike May Move Closer: Analysis & Outlook
• More on White House ordering a halt to federal loans, grants
• Report that White House budget office is ordering a pause to all federal grants and loans
• Trump says he wants tariffs “much bigger” than 2.5%
• Trump is speaking with media
• RBNZ Chief Economist Paul Conway is speaking on Wednesday – on growth and interest rates
• Critical Australian inflation data due tomorrow – likely to tick the RBA rate cut box?
• Singapore and Hong Kong Lunar New Year market closures – the dates to watch
• There is no PBoC USD/CNY reference rate setting today – China is on holiday
• Australian December 2024 business confidence: -2 (prior -3)
• More on Japan’s service-sector inflation data – will keep the BoJ on rate-hike simmer
• UK shop prices fell in January, not as fast as they fell in December
• Trump says DeepSeek is a positive – a ‘wake up’ call. Meanwhile USD strong still.
• Japan data – Services PPI (December) 2.9% y/y (prior 3%)
• USD surging again – Trump tariff threats, Bessent want tariffs too
• More from Trump – will place tariffs on computer chips, pharmaceuticals
• Bessent is pushing a starting 2.5% universal US tariff plan, which would rise each month
• Trump speaking – Will have many bids for TikTok, Don’t want China involved in TikTok
• Deutsche Bank European Central Bank preview – cut this week and plenty more after that
• ICYMI – Morgan Stanley slashes UK 2025 GDP growth forecast to 0.9% (from 1.3% previously)
• SNB Chair Schlegel says doesn’t want negative interest rates, but “can’t rule them out”
• Rabo stay bearish EUR/USD, expect parity in Q2 2025
• US equity close: Big bifurcation as chipmakers and power generation crushed
• Trade ideas thread – Tuesday, 28 January, insightful charts, technical analysis, ideas
• Forexlive Americas FX news wrap: Nvidia’s market cap loss is the worst in history

It
was another day of tariff talk from Trump, and also from his
Treasury Secretary Scott Bessant.

Bessant
kicked it off with a ‘moderate’ proposal to set a universal tariff at
2.5% with a gradual rise of 2.5% each month. Bessent said the
universal tariff could rise as high as 20%. Bessant’s comments were
from an unnamed source cited by the Financial Times.

The
USD began to rise, and soon after Trump weighed in, promising tariffs
on computer chips in the near future, on producers of
pharmaceuticals, will look at steel and other industries for tariffs,
and also tariffs on aluminum and copper.

The
USD gained further. Major FX lost ground broadly: EUR, AUD, GBP,
NZD, CAD.

There
was some stabilisation and a small bounce for non-USD FX before Trump
spoke again saying he wanted tariffs much higher than 2.5%, opposing
Bessent.

The
USD found renewed strength.

USD/JPY
has been a bit of an exception, while many of the major non-USD
currencies stabilised the yen lost further ground pretty much for the
entire session. Lows were around 154.50 and as I update its pressing
towards 155.70.

On
the data agenda today we had services PPI from Japan (for December
2024) coming in slightly lower than November but still at a solid
2.9% y/y rise.

From
Australia, we had a marginal improvement for business confidence but
a better improvement for business conditions (December 2024 data
also).

Australia
will be a focus tomorrow with the official Q4 CPI result (preview in
the points above).

China
began its Lunar New Year holidays today (January 28 – February 4).
Singapore and Hong Kong will be out Wednesday and Thursday and
Wednesday, Thursday and Friday respectively.

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

Deutsche Bank make note of the shunt lower for US stocks on Monday, saying markets remain sensitive to ‘downside news’.

• add that selloffs from time to time are normal
• mention that recently bearish factors are beginning to look more positive

DB point to 4 factors that could hit stocks ahead though:

1. The delayed impact of previous interest rate hikes hit the economy and financial markets.
2. Rising inflation and elevated long-term borrowing costs finally weigh on risk assets.
3. The Trump administration enforces stricter tariffs, leading to higher inflation and slower economic growth.
4. Economic indicators start to show weaker-than-expected results.

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

Chinese Foreign Ministry reported by the Global Times:

China and India have agreed to

• resume direct flights between the Chinese mainland and India,
• support coordination between competent departments of the two countries to advance this goal,
• and take measures to facilitate personnel exchanges and mutual postings of journalists

Tensions between the two are particularly high in border regions.

From a few years ago:

• flare-up on the India – China border resulting in at least 20 deaths

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

The initial news on the the White House ordering a broad pause on federal financial assistance programs pending a review by the Trump administration is here:

• Report that White House budget office is ordering a pause to all federal grants and loans

Wall Street Journal (also gated) now:

• The White House ordered executive departments and agencies to broadly pause federal financial assistance programs pending a review by the Trump administration, according to a memo reviewed by The Wall Street Journal.
• The memo, sent around 5 p.m. on Monday by the Office of Management and Budget, caused confusion with some employees in federal agencies who sought to understand which programs were affected and how they should respond, said a person familiar with the matter.

• It wasn’t immediately clear whether the memo only paused financial assistance related to the executive orders that President Trump signed during his first week in office, or all current federal financial assistance programs.

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

Washington Post is gated, but here is, in brief, what they are reporting:

White House pauses all federal grants, sparking confusion

• Trillions of dollars
  could be on hold, according to an Office of Management and Budget
  memo.

• The White House budget office is ordering a pause to all grants and
  loans disbursed by the federal government, according to an internal
  memo sent to agencies Monday, creating significant confusion across
  Washington.

• In a two-page
  document, Matthew J. Vaeth, the acting director of the White House
  Office of Management and Budget, instructs federal agencies to
  “temporarily pause all activities related to obligations or
  disbursement of all Federal financial assistance.” The memo, a copy
  of which was obtained by The Washington Post, also calls for each
  agency to perform a “comprehensive analysis” to ensure its grant
  and loan programs are consistent with President Donald Trump’s
  executive orders, which aimed to ban federal diversity, equity and
  inclusion initiatives, and limit clean energy spending, among other
  measures.

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

Trump on tariffs again.

Earlier his Treasury Secretary was reported as saying tariffs could start at 2.5% and then gradually rise:

• Bessent is pushing a starting 2.5% universal US tariff plan, which would rise each month

Trump is not having that!

Says he wants tariffs much larger than 2.5%

• hasn’t decided on the level yet

USD catching bids again on this

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

Trump spoke earlier at a House GOP Conference meeting at Trump National Doral Miami.

• More from Trump – will place tariffs on computer chips, pharmaceuticals
• USD surging again – Trump tariff threats, Bessent want tariffs too

He is on his way back to Washington now, speaking with reporters on Air Force One.:

• confirms Microsoft is part of discussions on TikTok

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

China is out on holidays until the middle of next week:

• There is no PBoC USD/CNY reference rate setting today – China is on holiday

There will also be holidays in Hong Kong and Singapore when markets will close.

Hong Kong is closed on:

• Lunar New Year’s Day – 29 January, Wednesday
• The second day of Lunar New Year – 30 January, Thursday
• The third day of Lunar New Year – 31 January, Friday

Singapore is closed on:

• Lunar New Year’s Day – 29 January, Wednesday
• and also 30 January, Thursday

The absence of these markets will thin out trading on Wednesday – Friday this week.

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

US Tech Smashed on AI Update – Nasdaq Down Over 3%

US tech indices, and more specifically AI-related stocks, took a huge hit in trading yesterday as updates from Chinese AI startup DeepSeek’s much cheaper technology led to a run on the market from concerned investors. There was a clear split in the US major indices, with the Dow gaining 0.65% on the day, whilst the tech-heavy S&P and Nasdaq took big hits, losing 1.46% and 3.07% respectively. US treasury yields pulled back strongly as investors moved funds to safer options, with the 2-year dropping 7.1 basis points to 4.195% and the 10-year falling 8.9 basis points to 4.532%. Oil prices also took a hit as demand concerns weighed, with Brent off 11.97% to $76.95 and WTI down 2.10% to $73.09. Gold retreated from its latest run at a new record level, down 1.03% on the day to close at $2,741.75.

Nvidia and AI Stocks in Focus

2024 market darling Nvidia took a massive hit yesterday as its share price dropped by $589bn in market cap, recording the biggest one-day loss for a single stock in trading history. The share price dropped by over 17%, beating its previous record of 9% back in September. This all came on the back of updates out of China from AI startup DeepSeek – which had been flying very much under the radar – that their AI model can give a comparable performance to other models for a fraction of the price. Traders are now expecting even more volatility in this space in the coming sessions and days, as the market rushes to seek clarity on the overall situation and assess whether recent valuations have been accurate or if there will be even bigger corrections in the market.

Volatility to Remain High in Today’s Trading Sessions

Traders are expecting market volatility to remain high as we progress through the trading day. Sharp moves in equity markets overnight have led to moves across all financial products, and traders are expecting to see plenty more headlines hitting the newswires today. There is very little on the macroeconomic event calendar for the first two sessions of the day today, but event risk does pick up once New York opens. The first major US data releases of the week are due out early in the session, with Durable Goods Orders data set to drop. Market expectations are for the headline number to show a 0.4% increase month-on-month. Later in the day, we also have the CB Consumer Confidence (expected 105.7) data, alongside the Richmond Manufacturing Index numbers (expected -13), with the Consumer Confidence number likely to have the biggest influence on markets.

The post General Market Analysis – 28/01/25 first appeared on IC Markets | Official Blog.