The post Ex-Dividend 23/12/2024 first appeared on IC Markets | Official Blog.

Global Markets:

•  Asian Stock Markets : Nikkei down 0.09%, Shanghai Composite up 0.31%, Hang Seng up 0.18% ASX down 1.24%
• Commodities : Gold at $2612.35 (-0.14%), Silver at $29.04 (-0.38%), Brent Oil at $72.39 (-0.56%), WTI Oil at $69.04 (-0.39%)
• Rates : US 10-year yield at 4.560, UK 10-year yield at 4.5785, Germany 10-year yield at 2.304

News & Data:

• (USD) Final GDP q/q  3.1% vs 2.8% expected
• (USD) Unemployment Claims 220K vs 229K expected

Markets Update:

Asia-Pacific markets mostly declined on Friday as investors weighed inflation data from Japan and China’s interest rate decision. The People’s Bank of China maintained its loan prime rates, keeping the one-year rate at 3.1% and the five-year rate at 3.6%. The one-year LPR impacts corporate and household loans, while the five-year LPR influences mortgage rates.

Following the announcement, Hong Kong’s Hang Seng index edged up 0.11%, and mainland China’s CSI 300 rose 0.27%, reversing earlier losses. These were the only major Asian indexes in positive territory.

Japan released November inflation data, with core inflation (excluding fresh food prices) at 2.7%, slightly above the 2.6% forecast, and headline inflation reaching 2.9%, up from 2.3% in October. Despite this, Japan’s Nikkei 225 dipped slightly, and the Topix fell 0.11%.

South Korea’s Kospi dropped 1.87%, and the Kosdaq fell 2.33%, leading regional losses. Australia’s S&P/ASX 200 declined 1.36%, hitting its lowest intraday level since September at 8,051 before recovering slightly.

In the U.S., the Dow Jones Industrial Average narrowly broke its longest losing streak since 1974, gaining 0.04% on Thursday. However, the S&P 500 fell 0.09%, and the Nasdaq Composite dropped 0.10%. Meanwhile, the 10-year Treasury yield climbed for a second consecutive day, exceeding 4.5% and pressuring stocks, following a 13-point surge in the prior session.

Upcoming Events: 

• 01:30 PM GMT – CAD Core Retail Sales m/m
• 01:30 PM GMT – CAD Retail Sales m/m

The post Friday 20th December 2024: Asia-Pacific Markets Slip Amid Inflation Data and China’s Rate Decision first appeared on IC Markets | Official Blog.

IC Markets Asia Fundamental Forecast | 20 December 2024

What happened in the Asia session?

After moderating lower from 2.8% in August to 2.3% in October, core CPI in Japan unexpectedly accelerated to 2.7% YoY in November as it beat the estimate of 2.6%. Japan’s core inflation has consistently remained at or above the Bank of Japan’s 2% target for over two and a half years, which has contributed to their more hawkish stance this year but that was not enough as the central bank paused for the third successive meeting. The yen remained under pressure providing lift for USD/JPY which climbed above 157 on Thursday, a level last seen in July.

What does it mean for the Europe & US sessions?

After Thursday’s pause by the Bank of England (BoE), focus will now shift to consumer spending in the U.K. which registered its first monthly decline in four months as sales fell 0.7% MoM in October. However, sales now expected to rebound 0.5% in November and higher figures could provide the pound with a much-needed lift for Cable.

Retail sales in Canada have grown steadily since July with October’s estimate of 0.7% pointing to a fourth consecutive month of higher consumer spending. This would also mark the second highest sales growth of this year. The Loonie has depreciated significantly in 2024 causing USD/CAD to soar more than 9% as it hit a high of 1.4466 on Thursday. Stronger-than-expected sales could provide a near-term boost for the Loonie and potentially rein in the astronomical rise for USD/CAD.

The Dollar Index (DXY)

Key news events today

PCE Price Index (1:30 pm GMT)

What can we expect from DXY today?

Inflation in the U.S. accelerated in November as evident in the most-recent CPI and PPI data that were released last week. The PCE Price Index – which is the Federal Reserve’s preferred gauge of inflation – also accelerated for the first time this year with headline and core PCE increasing at an annual rate of 2.3% and 2.8% respectively for the month of October. Should the PCE Price Index rise higher for the second month in a row, demand for the dollar will likely surge once more. The DXY looks all set to notch its third week of gains as it already jumped more than 1% this week alone.

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

Strong Bullish

Gold (XAU)

Key news events today

PCE Price Index (1:30 pm GMT)

What can we expect from Gold today?

Inflation in the U.S. accelerated in November as evident in the most-recent CPI and PPI data that were released last week. The PCE Price Index – which is the Federal Reserve’s preferred gauge of inflation – also accelerated for the first time this year with headline and core PCE increasing at an annual rate of 2.3% and 2.8% respectively for the month of October. Should the PCE Price Index rise higher for the second month in a row, demand for the dollar will likely surge once more and potentially weigh heavily on gold prices.

Next 24 Hours Bias

Medium Bearish

The Australian Dollar (AUD)

Key news events today

No major news events.

What can we expect from AUD today?

Robust demand for the greenback drove the Aussie briefly under 0.6200 on Thursday. This currency pair was hovering around 0.6230 as Asian markets came online on Friday but overhead pressures remain intact – these are the support and resistance levels for today.

Support: 0.6170

Resistance: 0.6290

Central Bank Notes:

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

Next 24 Hours Bias

Strong Bearish

The Kiwi Dollar (NZD)

Key news events today

No major news events.

What can we expect from NZD today?

After plunging as low as 0.5607 on Thursday, the Kiwi retraced higher to climb above 0.5650 overnight but intense headwinds remain firm. This currency pair was sliding towards 0.5600 at the beginning of the Asia session – these are the support and resistance levels for today.

Support: 0.5557

Resistance: 0.5770

Central Bank Notes:

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

Next 24 Hours Bias

Strong Bearish

The Japanese Yen (JPY)

Key news events today

National Core CPI (11:30 pm GMT 19th December)

What can we expect from JPY today?

After moderating lower from 2.8% in August to 2.3% in October, core CPI in Japan unexpectedly accelerated to 2.7% YoY in November as it beat the estimate of 2.6%. Japan’s core inflation has consistently remained at or above the Bank of Japan’s 2% target for over two and a half years, which has contributed to their more hawkish stance this year but that was not enough as the central bank paused for the third successive meeting. The yen remained under pressure providing lift for USD/JPY which climbed above 157 on Thursday, a level last seen in July.

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

Strong Bullish

The Euro (EUR)

Key news events today

No major news events.

What can we expect from EUR today?

After tumbling as low as 1.0343 on Thursday, the Euro retraced higher towards 1.0430 before running out of steam overnight. This currency pair promptly fell under the 1.0400-level once more as Asian markets came online – these are the support and resistance levels for today.

Support: 1.0240

Resistance: 1.0460

Central Bank Notes:

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

Next 24 Hours Bias

Medium Bearish

The Swiss Franc (CHF)

Key news events today

No major news events.

What can we expect from CHF today?

After hitting a high of 0.9021 on Thursday, USD/CHF pulled back towards 0.8960 but remained elevated. This currency pair resumed the uptrend as it raced towards the threshold of 0.9000 once again and it should climb above this level on the final trading day of the week – these are the support and resistance levels for today.

Support: 0.8920

Resistance: 0.9040

Central Bank Notes:

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

Next 24 Hours Bias

Medium Bullish

The Pound (GBP)

Key news events today

Retail Sales (1:30 pm GMT)

What can we expect from GBP today?

After Thursday’s pause by the Bank of England (BoE), focus will now shift to consumer spending in the U.K. which registered its first monthly decline in four months as sales fell 0.7% MoM in October. However, sales now expected to rebound 0.5% in November and higher figures could provide the pound with a much-needed lift for Cable.

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

Strong Bearish

The Canadian Dollar (CAD)

Key news events today

Retail Sales (1:30 pm GMT)

What can we expect from CAD today?

Retail sales in Canada have grown steadily since July with October’s estimate of 0.7% pointing to a fourth consecutive month of higher consumer spending. This would also mark the second highest sales growth of this year. The Loonie has depreciated significantly in 2024 causing USD/CAD to soar more than 9% as it hit a high of 1.4466 on Thursday. Stronger-than-expected sales could provide a near-term boost for the Loonie and potentially rein in the astronomical rise for USD/CAD.

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

Medium Bullish

Oil

Key news events today

No major news events.

What can we expect from Oil today?

Prices for crude oil remain under pressure as WTI oil tumbled 1.7% on Thursday as dour economic outlook adds to oversupply concerns – softening economic activity could deepen a slowdown in oil demand growth in 2025. WTI oil looks set to fall under the $69-mark and looks to be on course for a 3.5% weekly decline.

Next 24 Hours Bias

Medium Bearish

The post IC Markets Europe Fundamental Forecast | 20 December 2024 first appeared on IC Markets | Official Blog.

DXY (US Dollar Index):

Potential Direction: Bullish
Overall momentum of the chart: Bullish

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

Pivot: 107.56
Supporting reasons: Identified as a pullback support, indicating a potential area where buying pressures could intensify.

1st support: 106.78
Supporting reasons: Identified as an overlap support, indicating a potential level where price could find support once more.

1st resistance: 108.78
Supporting reasons: Identified as a resistance that aligns with the 127.2% Fibonacci extension, indicating a potential area that could halt any further upward movement.

EUR/USD:

Potential Direction: Bearish

Overall momentum of the chart: Bearish

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

Pivot: 1.0450
Supporting reasons: Identified as a pullback resistance, 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: 1.0606
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: Bearish

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

Pivot: 163.43.
Supporting reasons: Identified as an overlap resistance that aligns with the 127.2% Fibonacci retracement, indicating a potential area where selling pressures could intensify

1st support: 160.53

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

1st resistance: 164.94
Supporting reasons: Identified as an overlap resistance, indicating a potential area that could halt any further upward movement.

EUR/GBP:

Potential Direction: Bullish

Overall momentum of the chart: Bearish

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

Pivot: 0.8270
Supporting reasons: Identified as a pullback support, indicating a potential area where buying pressures could intensify

1st support: 0.8224

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

1st resistance: 0.8325
Supporting reasons: Identified as a swing high resistance, 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: 1.2616
Supporting reasons: Identified as a pullback resistance, indicating a potential area where selling pressures could intensify

1st support: 1.2488

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

1st resistance: 1.2719
Supporting reasons: Identified as an overlap resistance, indicating a potential area that could halt any further upward movement.

GBP/JPY:

Potential Direction: Bullish

Overall momentum of the chart: Bullish

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

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

1st support: 193.17
Supporting reasons: Identified as an overlap support, indicating a key level where price could find support once more.

1st resistance: 199.55
Supporting reasons: Identified as a swing high resistance close to the 78.6% Fibonacci projection, indicating a potential area that could halt any further upward movement.

USD/CHF:

Potential Direction: Bullish

Overall momentum of the chart: Bullish

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

Pivot: 0.8974
Supporting reasons: Identified as an overlap support, indicating a potential area where buying pressures could intensify.

1st support: 0.8909

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

1st resistance: 0.9074
Supporting reasons: Identified a resistance that aligns with the 61.8% Fibonacci projection, indicating a potential area that could halt any further upward movement.

USD/JPY:

Potential Direction: Bullish

Overall momentum of the chart: Bullish

Price could potentially make a bullish continuation toward the 1st resistance

Pivot: 156.57
Supporting reasons: Identified as a pullback support, indicating a potential area where buying pressures could intensify.

1st support: 154.90
Supporting reasons: Identified as a pullback support, indicating a potential level where price could find support once again.

1st resistance: 159.04
Supporting reasons: Identified as a resistance that aligns with the 100% Fibonacci projection, indicating a potential area that could halt any further upward movement.

USD/CAD:

Potential Direction: Bearish

Overall momentum of the chart: Bullish

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

Pivot: 1.4517

Supporting reasons: Identified as a multi-swing-high resistance, indicating a potential level where selling pressures could intensify.

1st support: 1.4336
Supporting reasons: Identified as a pullback support that aligns close to a 23.6% Fibonacci retracement, indicating a key level where price could find support.

1st resistance: 1.4602
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: 0.6251

Supporting reasons: Identified as a pullback resistance, suggesting a key area where selling pressures have intensified. The presence of a red Ichimoku Cloud adds further significance to the strength of this resistance zone.

1st support: 0.6193
Supporting reasons: Identified as a multi-swing-low support, suggesting a potential area where price could find support once more.

1st resistance: 0.6285
Supporting reasons: Identified as a pullback resistance that aligns close to 23.6% Fibonacci retracement, indicating a potential area that could halt any further upward movement.

NZD/USD

Potential Direction: Bearish
Overall momentum of the chart: Bearish

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

Pivot: 0.5684

Supporting reasons: Identified as an overlap resistance, indicating a potential area where selling pressures could intensify. The presence of a red Ichimoku Cloud adds further significance to the strength of this resistance zone.

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

1st resistance: 0.5798
Supporting reasons: Identified as an overlap resistance that aligns close to a 23.6% Fibonacci retracement, indicating a potential area that could halt any further upward movement.

US30 (DJIA):

Potential Direction: Bearish
Overall momentum of the chart: Bearish

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

Pivot: 42,654.55

Supporting reasons: Identified as an overlap resistance, indicating a potential area where selling pressures could intensify. The presence of a red Ichimoku Cloud adds further significance to the strength of this resistance zone.

1st support: 41,762.06

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

1st resistance: 43,045.19

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

DE40 (DAX):

Potential Direction: Bearish
Overall momentum of the chart: Bearish

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

Pivot: 19,902.14
Supporting reasons: Identified as a potential breakout level where the strong bearish momentum could drive price lower.

1st support: 19,664.76

Supporting reasons: Identified as a pullback support that aligns close to a 50% Fibonacci retracement, indicating a key level where price could find support.

1st resistance: 20,202.28
Supporting reasons: Identified as a pullback resistance, indicating a potential area that could halt any further upward movement.

US500 (S&P 500): 

Potential Direction: Bearish
Overall momentum of the chart: Bearish

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

Pivot: 5,853.30

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

1st support: 5,761.80

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

1st resistance: 5,930.30
Supporting reasons: Identified as an overlap resistance, indicating a potential area that could halt any further upward movement.

BTC/USD (Bitcoin):

Potential Direction: Bearish
Overall momentum of the chart: Bearish

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

Pivot: 99,518.87

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

1st support: 92,791.73
Supporting reasons: Identified as an overlap support that aligns with a 38.2% Fibonacci retracement, indicating a potential level where price could find support once again.

1st resistance:  103,493.90
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: Bearish

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

Pivot: 3,501.55

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

1st support: 3,283.12
Supporting reasons: Identified as an overlap support that aligns with a confluence of Fibonacci levels i.e. a 78.6% retracement and a 127.2% extension, indicating a potential level where price could find support once more.

1st resistance: 3,688.94
Supporting reasons:  Identified as an overlap resistance, indicating a potential area that could halt any further upward movement.

WTI/USD (Oil):

Potential Direction: Bullish
Overall momentum of the chart: Neutral

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

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

1st support: 67.92
Supporting reasons: Identified as a pullback support that aligns close to a 78.6% Fibonacci retracement, indicating a key level where price could find support once again.

1st resistance: 70.61
Supporting reasons: Identified as an overlap resistance that aligns with a 61.8% Fibonacci retracement, 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: 262619.67
Supporting reasons: Identified as an overlap resistance, indicating a potential area where selling pressures could intensify.

1st support: 2585.41

Supporting reasons: Identified as an overlap support that aligns with the 127.2% Fibonacci extension, indicating a potential level where price could find support.

1st resistance: 2665.06

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

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The post Friday 20th December 2024: Technical Outlook and Review first appeared on IC Markets | Official Blog.

IC Markets Asia Fundamental Forecast | 20 December 2024

What happened in the U.S. session?

As widely expected, the Bank of England (BoE) maintained its Official Bank Rate (OBR) at 4.75% to mark the second pause over the past four meetings. The Monetary Policy Committee (MPC) voted by a majority of 6 to 3 to keep rates on hold, with three members preferring a reduction of 25 basis points which would have brought the OBR to 4.5%. With CPI inflation, wage growth and some indicators of inflation expectations rising in recent months, adding to the risk of inflation persistence, the central bank reinforced that a gradual approach to removing monetary policy restraint remains appropriate. Despite the relatively ‘hawkish’ statement, the pound sold off sharply as Cable plunged over 1% following the announcement, losing more than 130 pips in the process as it tumbled under 1.2500.

Moving over to stateside, the final GDP reading for the third quarter of this year showed the American economy growing stronger than its second estimate of 2.8% and above the second quarter’s reading. GDP expanded at an annual rate of 3.1% to mark the biggest growth rate so far this year as personal spending increased at the fastest pace since the first quarter of 2023 while fixed investment and investment in equipment also soared. Along with unemployment claims which moderated lower to 220K – a sign of labour market resilience – these macroeconomic data provided another strong tailwind for the greenback as the dollar index (DXY) surged past 108 to hit an overnight high of 108.48.

What does it mean for the Asia Session?

After moderating lower from 2.8% in August to 2.3% in October, core CPI in Japan unexpectedly accelerated to 2.7% YoY in November as it beat the estimate of 2.6%. Japan’s core inflation has consistently remained at or above the Bank of Japan’s 2% target for over two and a half years, which has contributed to their more hawkish stance this year but that was not enough as the central bank paused for the third successive meeting. The yen remained under pressure providing lift for USD/JPY which climbed above 157 on Thursday, a level last seen in July.

The Dollar Index (DXY)

Key news events today

PCE Price Index (1:30 pm GMT)

What can we expect from DXY today?

Inflation in the U.S. accelerated in November as evident in the most-recent CPI and PPI data that were released last week. The PCE Price Index – which is the Federal Reserve’s preferred gauge of inflation – also accelerated for the first time this year with headline and core PCE increasing at an annual rate of 2.3% and 2.8% respectively for the month of October. Should the PCE Price Index rise higher for the second month in a row, demand for the dollar will likely surge once more. The DXY looks all set to notch its third week of gains as it already jumped more than 1% this week alone.

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

Strong Bullish

Gold (XAU)

Key news events today

PCE Price Index (1:30 pm GMT)

What can we expect from Gold today?

Inflation in the U.S. accelerated in November as evident in the most-recent CPI and PPI data that were released last week. The PCE Price Index – which is the Federal Reserve’s preferred gauge of inflation – also accelerated for the first time this year with headline and core PCE increasing at an annual rate of 2.3% and 2.8% respectively for the month of October. Should the PCE Price Index rise higher for the second month in a row, demand for the dollar will likely surge once more and potentially weigh heavily on gold prices.

Next 24 Hours Bias

Medium Bearish

The Australian Dollar (AUD)

Key news events today

No major news events.

What can we expect from AUD today?

Robust demand for the greenback drove the Aussie briefly under 0.6200 on Thursday. This currency pair was hovering around 0.6230 as Asian markets came online on Friday but overhead pressures remain intact – these are the support and resistance levels for today.

Support: 0.6170

Resistance: 0.6290

Central Bank Notes:

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

Next 24 Hours Bias

Strong Bearish

The Kiwi Dollar (NZD)

Key news events today

No major news events.

What can we expect from NZD today?

After plunging as low as 0.5607 on Thursday, the Kiwi retraced higher to climb above 0.5650 overnight but intense headwinds remain firm. This currency pair was sliding towards 0.5600 at the beginning of the Asia session – these are the support and resistance levels for today.

Support: 0.5557

Resistance: 0.5770

Central Bank Notes:

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

Next 24 Hours Bias

Strong Bearish

The Japanese Yen (JPY)

Key news events today

National Core CPI (11:30 pm GMT 19th December)

What can we expect from JPY today?

After moderating lower from 2.8% in August to 2.3% in October, core CPI in Japan unexpectedly accelerated to 2.7% YoY in November as it beat the estimate of 2.6%. Japan’s core inflation has consistently remained at or above the Bank of Japan’s 2% target for over two and a half years, which has contributed to their more hawkish stance this year but that was not enough as the central bank paused for the third successive meeting. The yen remained under pressure providing lift for USD/JPY which climbed above 157 on Thursday, a level last seen in July.

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

Strong Bullish

The Euro (EUR)

Key news events today

No major news events.

What can we expect from EUR today?

After tumbling as low as 1.0343 on Thursday, the Euro retraced higher towards 1.0430 before running out of steam overnight. This currency pair promptly fell under the 1.0400-level once more as Asian markets came online – these are the support and resistance levels for today.

Support: 1.0240

Resistance: 1.0460

Central Bank Notes:

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

Next 24 Hours Bias

Medium Bearish

The Swiss Franc (CHF)

Key news events today

No major news events.

What can we expect from CHF today?

After hitting a high of 0.9021 on Thursday, USD/CHF pulled back towards 0.8960 but remained elevated. This currency pair resumed the uptrend as it raced towards the threshold of 0.9000 once again and it should climb above this level on the final trading day of the week – these are the support and resistance levels for today.

Support: 0.8920

Resistance: 0.9040

Central Bank Notes:

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

Next 24 Hours Bias

Medium Bullish

The Pound (GBP)

Key news events today

Retail Sales (1:30 pm GMT)

What can we expect from GBP today?

After Thursday’s pause by the Bank of England (BoE), focus will now shift to consumer spending in the U.K. which registered its first monthly decline in four months as sales fell 0.7% MoM in October. However, sales now expected to rebound 0.5% in November and higher figures could provide the pound with a much-needed lift for Cable.

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

Strong Bearish

The Canadian Dollar (CAD)

Key news events today

Retail Sales (1:30 pm GMT)

What can we expect from CAD today?

Retail sales in Canada have grown steadily since July with October’s estimate of 0.7% pointing to a fourth consecutive month of higher consumer spending. This would also mark the second highest sales growth of this year. The Loonie has depreciated significantly in 2024 causing USD/CAD to soar more than 9% as it hit a high of 1.4466 on Thursday. Stronger-than-expected sales could provide a near-term boost for the Loonie and potentially rein in the astronomical rise for USD/CAD.

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

Medium Bullish

Oil

Key news events today

No major news events.

What can we expect from Oil today?

Prices for crude oil remain under pressure as WTI oil tumbled 1.7% on Thursday as dour economic outlook adds to oversupply concerns – softening economic activity could deepen a slowdown in oil demand growth in 2025. WTI oil looks set to fall under the $69-mark and looks to be on course for a 3.5% weekly decline.

Next 24 Hours Bias

Medium Bearish

The post IC Markets Asia Fundamental Forecast | 20 December 2024 first appeared on IC Markets | Official Blog.

Markets Calm After Fed Storm – Nasdaq off 0.1%

US stock markets had a bit of a breather yesterday after Wednesday’s volatile post-Fed moves. All three major indices closed close to flat: the Dow added 0.04%, the S&P lost 0.09%, and the Nasdaq fell 0.1%. The US Treasury yield curve steepened, with the 2-year yield losing 3.8 basis points to move back to 4.317%, while the 10-year benchmark moved 4.8 basis points higher to 4.562%. The dollar continued to push higher, although much slower than its post-Fed surge, with the DXY gaining 0.27% to close at 108.40. Oil prices fell again as future demand concerns continued to weigh, with Brent down 0.95% to $72.69 and WTI down 0.91% to $69.38. Gold had a lively day as well, ultimately recovering a small amount of the previous day’s loss, closing up 0.24% at $2,593.05.

Cable to Weaken After Dovish Bank of England

It has been a near-perfect storm for Cable bears over the last few trading sessions as both associated central banks have pushed the major currency pair lower. Cable was on the back foot into yesterday’s Bank of England rate call after the Fed produced a hawkish cut the previous day. When the MPC held rates as expected, but the rate vote showed that 3 members (not the expected 2) had pushed for a cut, we saw a further extension of the move south. The market is now pricing in 55 basis points worth of cuts next year, compared to 45 basis points before the decision, and traders will be looking for levels to sell in the coming days. Cable has found some support near the November low, but a break lower now opens the way for a move to challenge the annual low at 1.2296 before the end of the year.

Another Busy Calendar Day to See Out the Week

It’s another full calendar day today to close out the week, with macroeconomic events scheduled across all three trading sessions. Chinese markets are in focus in the Asian session, with the key Loan Prime Rates updates scheduled for midway through the day, with investors again hoping for some stimulus for the world’s second-largest economy. Another day and another data release from the UK once Europe comes into play, with Retail Sales numbers due out early in the session. The expectation is for a 0.5% increase in the month-on-month data, and a miss here could see Cable drop hard. The US day kicks off with focus north of the border on Canadian Retail Sales, but US Core PCE data is set to dominate overall market sentiment as we move into the final trading session of a volatile week.

The post General Market Analysis – 20/12/24 first appeared on IC Markets | Official Blog.

The post Ex-Dividend 20/12/2024 first appeared on IC Markets | Official Blog.

Global Markets:

•  Asian Stock Markets : Nikkei down 0.7%, Shanghai Composite down 0.31%, Hang Seng down 0.74% ASX down 1.78%
• Commodities : Gold at $2621.35 (-1.24%), Silver at $29.84 (-2.38%), Brent Oil at $72.9 (-0.56%), WTI Oil at $69.4 (-1.39%)
• Rates : US 10-year yield at 4.526, UK 10-year yield at 4.5575, Germany 10-year yield at 2.2410

News & Data:

• (USD) Federal Funds Rate  4.5% vs 4.5% expected
• (USD) Building Permits 1.51M vs 1.43M expected

Markets Update:

Asia-Pacific stocks and currencies declined Thursday amid a global market sell-off following the U.S. Federal Reserve’s third consecutive rate cut and its indication of fewer cuts ahead. The Bank of Japan maintained its policy rate at 0.25% for the third consecutive meeting, leading to a weakened yen, which dropped to 155.40 against the dollar from 154.60 pre-announcement. The Nikkei 225 narrowed its losses to 0.63% from 0.96%, while the Topix fell 0.49%.

In South Korea, the Kospi and Kosdaq indices both declined by 1.65%, with the won trading near its weakest level since March 2009 at 1,450.46 per dollar. Australia’s S&P/ASX 200 dropped 1.96%, while Hong Kong’s Hang Seng index fell 0.88%, and China’s CSI 300 slid 0.62%. Hong Kong’s Monetary Authority reduced interest rates by 25 basis points, mirroring the Fed’s move, as its currency is tightly pegged to the U.S. dollar.

Meanwhile, New Zealand officially entered a recession, with GDP falling 1% in the September quarter, marking two consecutive quarters of decline.

Overnight in the U.S., the Dow Jones dropped 1,123.03 points, or 2.58%, to 42,326.87, marking its first 10-day losing streak since 1974. The S&P 500 fell 2.95% to 5,872.16, and the Nasdaq Composite declined 3.56% to 19,392.69. The sell-off followed the Fed’s anticipated 25-basis-point rate cut to a target range of 4.25%-4.5%, with a forecast of only two rate cuts in 2025, fewer than the four previously projected.

Upcoming Events: 

• 01:30 PM GMT – USD Final GDP q/q
• 01:30 PM GMT – USD Unemployment Claims

The post Thursday 19th December 2024: Global Markets Slide Amid Fed Rate Cuts and Economic Uncertainty first appeared on IC Markets | Official Blog.

IC Markets Asia Fundamental Forecast | 19 December 2024

What happened in the Asia session?

New Zealand’s economy contracted for the second consecutive quarter as GDP output fell 1.5% in the third quarter of this year, significantly lower than the estimate of a 0.4%-decline. This marked the fourth period of contraction over the past five quarters as goods-producing and service industries led the downturn. The Kiwi tumbled hard towards 0.5600 before stabilizing around 0.5630 by midday Asia. However, overhead pressures remain for this currency pair.

Meanwhile, the Bank of Japan (BoJ) maintained its key policy rate at 0.25%, in line with market consensus, during its final meeting of the year keeping it at the highest level since 2008. However, the vote was split 8 to 1 with board member Naoki Tamura advocating for a 25-basis point (bps) hike. The central bank needed more time to assess certain risks, particularly U.S. economic policies under incoming President Donald Trump and next year’s wage outlook while adhering to its assessment that Japan’s economy is on track for a moderate recovery, despite some areas of weakness. The press conference by Governor Kazuo Ueda will be equally if not more pivotal than the statement – his remarks will no doubt have a significant impact on the direction of the yen.

What does it mean for the Europe & US sessions?

The Bank of England (BoE) is expected to keep its official bank rate on hold at 4.75% as both headline and core CPI have picked up in recent months and are moving away from the target of 2%. This would mark the second pause since their rate cutting cycle began in August. The Pound has strengthened meaningfully since the end of November and could appreciate even further should the BoE maintain rates at current levels while the statement points to a hawkish outlook on future monetary policy action.

The Dollar Index (DXY)

Key news events today

GDP (1:30 pm GMT)

Unemployment Claims (1:30 pm GMT)

What can we expect from DXY today?

The final GDP reading for the third quarter of this year is expected to show the American economy growing at an annual rate of 2.8%, highlighting a strong economy. Meanwhile, unemployment claims have risen notably higher over the last couple of weeks which is typically a sign of potential labour market weakness. For the latest result, claims are forecasted to moderate marginally lower from 242K to 229K. Demand for the dollar could surge once more should markets receive a strong GDP result while unemployment claims fall more than anticipated.

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

Strong Bullish

Gold (XAU)

Key news events today

GDP (1:30 pm GMT)

Unemployment Claims (1:30 pm GMT)

What can we expect from Gold today?

The final GDP reading for the third quarter of this year is expected to show the American economy growing at an annual rate of 2.8%, highlighting a strong economy. Meanwhile, unemployment claims have risen notably higher over the last couple of weeks which is typically a sign of potential labour market weakness. For the latest result, claims are forecasted to moderate marginally lower from 242K to 229K. Demand for the dollar could surge once more should markets receive a strong GDP result while unemployment claims fall more than anticipated, potentially creating intense headwinds for gold prices.

Next 24 Hours Bias

Strong Bearish

The Australian Dollar (AUD)

Key news events today

No major news events.

What can we expect from AUD today?

The Aussie plunged more than 2% on Wednesday following a hawkish outlook by the Federal Reserve. Intense headwinds have built up for this currency pair and it could fall further as the day progresses – these are the support and resistance levels for today.

Support: 0.6170

Resistance: 0.6290

Central Bank Notes:

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

Next 24 Hours Bias

Strong Bearish

The Kiwi Dollar (NZD)

Key news events today

GDP (9:45 pm GMT 18th December)

What can we expect from NZD today?

New Zealand’s economy contracted for the second consecutive quarter as GDP output fell 1.5% in the third quarter of this year, significantly lower than the estimate of a 0.4%-decline. This marked the fourth period of contraction over the past five quarters as goods-producing and service industries led the downturn. The Kiwi tumbled hard towards 0.5600 before stabilizing around 0.5630 by midday Asia. However, overhead pressures remain for this currency pair.

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

Strong Bearish

The Japanese Yen (JPY)

Key news events today

BoJ Monetary Policy Statement (2:52 am GMT)

BoJ Press Conference (Tentative)

What can we expect from JPY today?

The Bank of Japan (BoJ) maintained its key policy rate at 0.25%, in line with market consensus, during its final meeting of the year keeping it at the highest level since 2008. However, the vote was split 8 to 1 with board member Naoki Tamura advocating for a 25-basis point (bps) hike. The central bank needed more time to assess certain risks, particularly U.S. economic policies under incoming President Donald Trump and next year’s wage outlook while adhering to its assessment that Japan’s economy is on track for a moderate recovery, despite some areas of weakness. The press conference by Governor Kazuo Ueda will be equally if not more pivotal than the statement – his remarks will no doubt have a significant impact on the direction of the yen.

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

Strong Bullish

The Euro (EUR)

Key news events today

No major news events.

What can we expect from EUR today?

Following the outcome of the FOMC meeting, the Euro plunged almost 1.4% on Wednesday as it dived under 1.0400. This currency pair stabilized around 1.0350 at the beginning of the Asia session but overhead pressures remain firmly in place – these are the support and resistance levels for today.

Support: 1.0315

Resistance: 1.0460

Central Bank Notes:

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

Next 24 Hours Bias

Strong Bearish

The Swiss Franc (CHF)

Key news events today

No major news events.

What can we expect from CHF today?

As demand for the dollar surged overnight, USD/CHF soared past 0.9000 with ease. This currency pair is likely to remain elevated and was trading around 0.9010 at the beginning of the Asia session but it should remain elevated as the day progresses – these are the support and resistance levels for today.

Support: 0.8920

Resistance: 0.9050

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

Strong Bullish

The Pound (GBP)

Key news events today

BoE Monetary Policy Statement (12:00 pm GMT)

What can we expect from GBP today?

The Bank of England (BoE) is expected to keep its official bank rate on hold at 4.75% as both headline and core CPI have picked up in recent months and are moving away from the target of 2%. This would mark the second pause since their rate cutting cycle began in August. The Pound has strengthened meaningfully since the end of November and could appreciate even further should the BoE maintain rates at current levels while the statement points to a hawkish outlook on future monetary policy action.

Central Bank Notes:

• The Bank of England’s Monetary Policy Committee (MPC) voted by a majority of 8 to 1 to reduce the Bank Rate by 25 basis points, to 4.75% on 7 November 2024 – one member preferred to maintain the Bank rate at 5.0%.
• 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.
• Twelve-month CPI inflation fell to 1.7% in September but is expected to increase to around 2.5% by the end of the year as weakness in energy prices falls out of the annual comparison; services consumer price inflation has declined to 4.9%.
• CPI inflation is expected to increase to around 2.75% by the second half of 2025 as weakness in energy prices falls out of the annual comparison, revealing more clearly the continuing persistence of domestic inflationary pressures.
• The MPC’s latest projections for activity and inflation are also set out in the accompanying November Report; this forecast is based on the second case where CPI inflation is projected to fall back to around the 2% target in the medium term as a margin of slack emerges later in the forecast period that acts against second-round effects in domestic prices and wages.
• GDP had grown by 0.5% in 2024 Q2, 0.2% weaker than had been expected in the August Report, and 0.1% weaker than the earlier outturn had indicated at the time of the MPC’s previous meeting. Through the second half of 2024, GDP was projected to grow at a somewhat slower rate than in Q2 – headline GDP growth is expected to fall back to its recent underlying pace of around 0.25% per quarter over the second half of this year.
• The combined effects of the measures announced in Autumn Budget 2024 are provisionally expected to boost the level of GDP by around 0.75% at their peak in a year’s time, relative to the August projections, while the Budget is provisionally expected to boost CPI inflation by just under 0.5% at the peak.
• Annual private sector regular average weekly earnings growth has continued to fall but remained elevated at 4.8% in the three months to August; the MPC judges that the labour market continues to loosen, although it appears relatively tight by historical standards.
• Based on the evolving evidence, a gradual approach to removing policy restraint remains appropriate but 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.
• The Committee continues to monitor closely the risks of inflation persistence and will decide the appropriate degree of monetary policy restrictiveness at each meeting.
• The next meeting is on 19 December 2024.

Next 24 Hours Bias

Strong Bearish

The Canadian Dollar (CAD)

Key news events today

No major news events.

What can we expect from CAD today?

A hawkish outlook for 2025 by the Federal Reserve triggered a surge in demand for the greenback propelling USD/CAD beyond 1.4450. This currency pair will likely remain elevated as the day progresses – these are the support and resistance levels for today.

Support: 1.4350

Resistance: 1.4560

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

Strong Bullish

Oil

Key news events today

No major news events.

What can we expect from Oil today?

Oil prices tumbled for the third consecutive day this week as the EIA crude oil inventories fell less than originally anticipated and a hawkish outlook from the Federal Reserve for 2025 created headwinds for this commodity. The EIA inventories declined by just 0.9M barrels of crude, lower than the estimate of a 1.6M-drawdown. WTI oil fell under the $70-mark once again and was drifting lower towards $69 per barrel as Asian markets came online on Thursday – this benchmark has shed almost 2.6% so far.

Next 24 Hours Bias

Medium Bearish

The post IC Markets Europe Fundamental Forecast | 19 December 2024 first appeared on IC Markets | Official Blog.

DXY (US Dollar Index):

Potential Direction: Bullish
Overall momentum of the chart: Bullish

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

Pivot: 107.56
Supporting reasons: Identified as a pullback support, indicating a potential area where buying pressures could intensify.

1st support: 106.78
Supporting reasons: Identified as an overlap support, indicating a potential level where price could find support once more.

1st resistance: 108.78
Supporting reasons: Identified as a resistance that aligns with the 127.2% Fibonacci extension, indicating a potential area that could halt any further upward movement.

EUR/USD:

Potential Direction: Bearish

Overall momentum of the chart: Bearish

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

Pivot: 1.0450
Supporting reasons: Identified as a pullback resistance, 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: 1.0606
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: Bullish

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

Pivot: 159.25
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: 157.65

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

1st resistance: 160.93
Supporting reasons: Identified as a pullback resistance, indicating a potential area that could halt any further upward movement.

EUR/GBP:

Potential Direction: Bearish

Overall momentum of the chart: Bearish

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

Pivot: 0.8270
Supporting reasons: Identified as an overlap resistance, indicating a potential area where selling pressures could intensify

1st support: 0.8224

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

1st resistance: 0.8310
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 reaction off the pivot and drop toward the 1st support 

Pivot: 1.2616
Supporting reasons: Identified as a pullback resistance, indicating a potential area where selling pressures could intensify

1st support: 1.2488

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

1st resistance: 1.2719
Supporting reasons: Identified as an overlap resistance, indicating a potential area that could halt any further upward movement.

GBP/JPY:

Potential Direction: Bearish

Overall momentum of the chart: Bullish

Price could potentially make a bearish continuation toward the 1st support 

Pivot: 195.84
Supporting reasons: Identified as a pullback resistance close to the 61.8% Fibonacci retracement, indicating a potential area where selling pressures could intensify.

1st support: 192.44
Supporting reasons: Identified as an overlap support, indicating a key level where price could find support once more.

1st resistance: 198.21
Supporting reasons: Identified as an overlap resistance, indicating a potential area that could halt any further upward movement.

USD/CHF:

Potential Direction: Bullish

Overall momentum of the chart: Bullish

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

Pivot: 0.8974
Supporting reasons: Identified as a pullback support, indicating a potential area where buying pressures could intensify.

1st support: 0.8909

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

1st resistance: 0.9074
Supporting reasons: Identified a resistance that aligns with the 61.8% Fibonacci projection, indicating a potential area that could halt any further upward movement.

USD/JPY:

Potential Direction: Bullish

Overall momentum of the chart: Bullish

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

Pivot: 157.18
Supporting reasons: Identified as a pullback support, indicating a potential area where buying pressures could intensify.

1st support: 152.68
Supporting reasons: Identified as a pullback support, indicating a potential level where price could find support once again.

1st resistance: 155.38
Supporting reasons: Identified as a resistance that aligns with the 161.8% Fibonacci extension, indicating a potential area that could halt any further upward movement.

USD/CAD:

Potential Direction: Bearish

Overall momentum of the chart: Bullish

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

Pivot: 1.4517

Supporting reasons: Identified as a multi-swing-high resistance, indicating a potential level where selling pressures could intensify.

1st support: 1.4336
Supporting reasons: Identified as a pullback support that aligns close to a 23.6% Fibonacci retracement, indicating a key level where price could find support.

1st resistance: 1.4602
Supporting reasons: Identified as a-swing-high resistance, indicating a potential area that could halt any further upward movement.

AUD/USD:

Potential Direction: Bearish
Overall momentum of the chart: Bearish

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

Pivot: 0.6285

Supporting reasons: Identified as a pullback resistance that aligns with a 23.6% Fibonacci retracement, suggesting a key area where selling pressures could intensify.

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

1st resistance: 0.6349
Supporting reasons: Identified as an overlap resistance, indicating a potential area that could halt any further upward movement.

NZD/USD

Potential Direction: Bearish
Overall momentum of the chart: Bearish

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

Pivot: 0.5684

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

1st support: 0.5554
Supporting reasons: Identified as a swing-low support, suggesting a key support area where price could find support.

1st resistance: 0.5798
Supporting reasons: Identified as an overlap resistance that aligns close to a 23.6% Fibonacci retracement, indicating a potential area that could halt any further upward movement.

US30 (DJIA):

Potential Direction: Bearish
Overall momentum of the chart: Bearish

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

Pivot: 42,654.55

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

1st support: 41,762.06

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

1st resistance: 43,471.10

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

DE40 (DAX):

Potential Direction: Bullish
Overall momentum of the chart: Bearish

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

Pivot: 19,902.14
Supporting reasons: Identified as a pullback support that aligns close to a 38.2% Fibonacci retracement, indicating a potential area where buying interests could pick to stage a minor rebound.

1st support: 19,664.76

Supporting reasons: Identified as a pullback support that aligns close to a 50% Fibonacci retracement, indicating a key level where price could find support.

1st resistance: 20,202.28
Supporting reasons: Identified as a pullback resistance, indicating a potential area that could halt any further upward movement.

US500 (S&P 500): 

Potential Direction: Bullish
Overall momentum of the chart: Bearish

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

Pivot: 5,853.30

Supporting reasons: Identified as an overlap support that aligns with a 61.8% Fibonacci retracement, indicating a potential area where buying interests could pick to stage a minor rebound.

1st support: 5,761.80

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

1st resistance: 5,930.30
Supporting reasons: Identified as an overlap resistance, indicating a potential area that could halt any further upward movement.

BTC/USD (Bitcoin):

Potential Direction: Bearish
Overall momentum of the chart: Bearish

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

Pivot: 99,518.87

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

1st support: 92,791.73
Supporting reasons: Identified as an overlap support, indicating a potential level where price could find support once again.

1st resistance:  107,849.06
Supporting reasons: Identified as a swing-high resistance that aligns close to the all-time high, indicating a potential area that could halt any further upward movement.

ETH/USD (Ethereum):

Potential Direction: Bullish
Overall momentum of the chart: Bearish

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

Pivot: 3,501.55

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

1st support: 3,283.12
Supporting reasons: Identified as an overlap support that aligns with a confluence of Fibonacci levels i.e. a 78.6% retracement and a 127.2% extension, indicating a potential level where price could find support once more.

1st resistance: 3,760.69
Supporting reasons:  Identified as an overlap resistance, indicating a potential area that could halt any further upward movement.

WTI/USD (Oil):

Potential Direction: Bullish
Overall momentum of the chart: Neutral

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

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

1st support: 67.92
Supporting reasons: Identified as a pullback support that aligns close to a 78.6% Fibonacci retracement, indicating a key level where price could find support once again.

1st resistance: 70.61
Supporting reasons: Identified as an overlap resistance that aligns with a 61.8% Fibonacci retracement, 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: 2624.59
Supporting reasons: Identified as a pullback resistance, indicating a potential area where selling pressures could intensify.

1st support: 2585.41

Supporting reasons: Identified as an overlap support that aligns with the 127.2% Fibonacci extension, indicating a potential level where price could find support.

1st resistance: 2665.06

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

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The post Thursday 19th December 2024: Technical Outlook and Review first appeared on IC Markets | Official Blog.

IC Markets Asia Fundamental Forecast | 19 December 2024

What happened in the U.S. session?

The final FOMC meeting of this year concluded with what many analysts had forecasted as a ‘hawkish cut’ as the Federal Reserve moved ahead with its third successive rate cut by reducing the Fed Funds Rate by 25 basis points (bps). This latest policy action brings rates down to 4.25 to 4.50%, marking a total of 100-bps reduction in 2024.  The dot plot indicates that policymakers now anticipate just two rate cuts in 2025, totalling 50 bps, compared to the full percentage point of reductions that were originally projected in the previous quarter. The Fed also revised its GDP growth forecasts upward for 2024 and 2025 while PCE inflation projections have also been adjusted higher from 2024 to 2026.

During his press conference, Fed Chairman Jerome Powell stated that economic activity continues to grow at a strong pace despite ongoing weakness in the housing sector while the labour market remains robust, it has softened slightly when compared to 2023. With regards to inflation, Powell remarked that the good progress had been made so far but it still remains above the 2% target. He also signalled flexibility in future policy meetings, leaving the door open on the possibility of accelerating or slowing the pace of adjustments if inflation fails to progress toward the target or if signs of significant economic weakness emerge. The dollar index (DXY) was hovering around 107 prior to the release of the statement but it surged past 108 within a few hours, hitting an overnight high of 108.26. This index jumped nearly 1.2% as it rose 125 pips in the process while spot prices for gold plunged over 2%, diving under $2,600/oz – this precious metal was floating around $2,580/oz as Asian markets came online.

What does it mean for the Asia Session?

New Zealand’s economy remains subdued and output continues to be below its potential with GDP output contracting for the third time over the past four quarters. The economy contracted 0.5% YoY in the second quarter of this year with decreased output observed in primary and goods-producing industries. Should the economy contract even further, the Kiwi is all but certain to face intense overhead pressures.

The Bank of Japan (BoJ) could keep its key policy rate on hold at 0.25% for the third consecutive meeting. At the previous meeting, the central bank highlighted concerns about the increasingly uncertain global economic outlook, stating that there is time to analyse risk factors after implementing rate hikes in March and July. The press conference by Governor Kazuo Ueda will be equally if not more pivotal than the statement – his remarks will no doubt have a significant impact on the direction of the yen.

The Dollar Index (DXY)

Key news events today

GDP (1:30 pm GMT)

Unemployment Claims (1:30 pm GMT)

What can we expect from DXY today?

The final GDP reading for the third quarter of this year is expected to show the American economy growing at an annual rate of 2.8%, highlighting a strong economy. Meanwhile, unemployment claims have risen notably higher over the last couple of weeks which is typically a sign of potential labour market weakness. For the latest result, claims are forecasted to moderate marginally lower from 242K to 229K. Demand for the dollar could surge once more should markets receive a strong GDP result while unemployment claims fall more than anticipated.

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

Strong Bullish

Gold (XAU)

Key news events today

GDP (1:30 pm GMT)

Unemployment Claims (1:30 pm GMT)

What can we expect from Gold today?

The final GDP reading for the third quarter of this year is expected to show the American economy growing at an annual rate of 2.8%, highlighting a strong economy. Meanwhile, unemployment claims have risen notably higher over the last couple of weeks which is typically a sign of potential labour market weakness. For the latest result, claims are forecasted to moderate marginally lower from 242K to 229K. Demand for the dollar could surge once more should markets receive a strong GDP result while unemployment claims fall more than anticipated, potentially creating intense headwinds for gold prices.

Next 24 Hours Bias

Strong Bearish

The Australian Dollar (AUD)

Key news events today

No major news events.

What can we expect from AUD today?

The Aussie plunged more than 2% on Wednesday following a hawkish outlook by the Federal Reserve. Intense headwinds have built up for this currency pair and it could fall further as the day progresses – these are the support and resistance levels for today.

Support: 0.6170

Resistance: 0.6290

Central Bank Notes:

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

Next 24 Hours Bias

Strong Bearish

The Kiwi Dollar (NZD)

Key news events today

GDP (9:45 pm GMT 18th December)

What can we expect from NZD today?

New Zealand’s economy remains subdued and output continues to be below its potential with GDP output contracting for the third time over the past four quarters. The economy contracted 0.5% YoY in the second quarter of this year with decreased output observed in primary and goods-producing industries. Should the economy contract even further, the Kiwi is all but certain to face intense overhead pressures.

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

Strong Bearish

The Japanese Yen (JPY)

Key news events today

BoJ Monetary Policy Statement (Tentative)

BoJ Press Conference (Tentative)

What can we expect from JPY today?

The Bank of Japan (BoJ) could keep its key policy rate on hold at 0.25% for the third consecutive meeting. At the previous meeting, the central bank highlighted concerns about the increasingly uncertain global economic outlook, stating that there is time to analyse risk factors after implementing rate hikes in March and July. The press conference by Governor Kazuo Ueda will be equally if not more pivotal than the statement – his remarks will no doubt have a significant impact on the direction of the yen.

Central Bank Notes:

• The Policy Board of the Bank of Japan decided on 31st October, by a unanimous 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.
• The year-on-year rate of increase in the consumer price index (CPI, all items less fresh food) is likely to be at around 2.5% for fiscal 2024 and then be at around 2% for fiscal 2025 and 2026.
• While the effects of a 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.
• Comparing the projections with those presented in the previous Outlook for Economic Activity and Prices (Outlook Report), the projected real GDP growth rates are more or less unchanged. The projected year-on-year rate of increase in the CPI (all items less fresh food) for fiscal 2025 is somewhat lower due to factors such as the recent decline in crude oil and other resource 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 December 2024.

Next 24 Hours Bias

Strong Bullish

The Euro (EUR)

Key news events today

No major news events.

What can we expect from EUR today?

Following the outcome of the FOMC meeting, the Euro plunged almost 1.4% on Wednesday as it dived under 1.0400. This currency pair stabilized around 1.0350 at the beginning of the Asia session but overhead pressures remain firmly in place – these are the support and resistance levels for today.

Support: 1.0315

Resistance: 1.0460

Central Bank Notes:

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

Next 24 Hours Bias

Strong Bearish

The Swiss Franc (CHF)

Key news events today

No major news events.

What can we expect from CHF today?

As demand for the dollar surged overnight, USD/CHF soared past 0.9000 with ease. This currency pair is likely to remain elevated and was trading around 0.9010 at the beginning of the Asia session but it should remain elevated as the day progresses – these are the support and resistance levels for today.

Support: 0.8920

Resistance: 0.9050

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

Strong Bullish

The Pound (GBP)

Key news events today

BoE Monetary Policy Statement (12:00 pm GMT)

What can we expect from GBP today?

The Bank of England (BoE) is expected to keep its official bank rate on hold at 4.75% as both headline and core CPI have picked up in recent months and are moving away from the target of 2%. This would mark the second pause since their rate cutting cycle began in August. The Pound has strengthened meaningfully since the end of November and could appreciate even further should the BoE maintain rates at current levels while the statement points to a hawkish outlook on future monetary policy action.

Central Bank Notes:

• The Bank of England’s Monetary Policy Committee (MPC) voted by a majority of 8 to 1 to reduce the Bank Rate by 25 basis points, to 4.75% on 7 November 2024 – one member preferred to maintain the Bank rate at 5.0%.
• 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.
• Twelve-month CPI inflation fell to 1.7% in September but is expected to increase to around 2.5% by the end of the year as weakness in energy prices falls out of the annual comparison; services consumer price inflation has declined to 4.9%.
• CPI inflation is expected to increase to around 2.75% by the second half of 2025 as weakness in energy prices falls out of the annual comparison, revealing more clearly the continuing persistence of domestic inflationary pressures.
• The MPC’s latest projections for activity and inflation are also set out in the accompanying November Report; this forecast is based on the second case where CPI inflation is projected to fall back to around the 2% target in the medium term as a margin of slack emerges later in the forecast period that acts against second-round effects in domestic prices and wages.
• GDP had grown by 0.5% in 2024 Q2, 0.2% weaker than had been expected in the August Report, and 0.1% weaker than the earlier outturn had indicated at the time of the MPC’s previous meeting. Through the second half of 2024, GDP was projected to grow at a somewhat slower rate than in Q2 – headline GDP growth is expected to fall back to its recent underlying pace of around 0.25% per quarter over the second half of this year.
• The combined effects of the measures announced in Autumn Budget 2024 are provisionally expected to boost the level of GDP by around 0.75% at their peak in a year’s time, relative to the August projections, while the Budget is provisionally expected to boost CPI inflation by just under 0.5% at the peak.
• Annual private sector regular average weekly earnings growth has continued to fall but remained elevated at 4.8% in the three months to August; the MPC judges that the labour market continues to loosen, although it appears relatively tight by historical standards.
• Based on the evolving evidence, a gradual approach to removing policy restraint remains appropriate but 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.
• The Committee continues to monitor closely the risks of inflation persistence and will decide the appropriate degree of monetary policy restrictiveness at each meeting.
• The next meeting is on 19 December 2024.

Next 24 Hours Bias

Strong Bearish

The Canadian Dollar (CAD)

Key news events today

No major news events.

What can we expect from CAD today?

A hawkish outlook for 2025 by the Federal Reserve triggered a surge in demand for the greenback propelling USD/CAD beyond 1.4450. This currency pair will likely remain elevated as the day progresses – these are the support and resistance levels for today.

Support: 1.4350

Resistance: 1.4560

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

Strong Bullish

Oil

Key news events today

No major news events.

What can we expect from Oil today?

Oil prices tumbled for the third consecutive day this week as the EIA crude oil inventories fell less than originally anticipated and a hawkish outlook from the Federal Reserve for 2025 created headwinds for this commodity. The EIA inventories declined by just 0.9M barrels of crude, lower than the estimate of a 1.6M-drawdown. WTI oil fell under the $70-mark once again and was drifting lower towards $69 per barrel as Asian markets came online on Thursday – this benchmark has shed almost 2.6% so far.

Next 24 Hours Bias

Medium Bearish

The post IC Markets Asia Fundamental Forecast | 19 December 2024 first appeared on IC Markets | Official Blog.

Sterling FX traders have had a busy time over the past couple of trading sessions, reacting to a more hawkish Federal Reserve. Cable now sits at a crucial technical level ahead of the key Bank of England rate decision later today. The Monetary Policy Committee (MPC) is widely expected to hold rates steady at 4.75% after recent inflation data confirmed that both core prices and wages remain ‘sticky’ in the current environment. The market is now pricing in the next rate cut from the Bank to come in May, whereas March had been anticipated less than a week ago. While there had been some hope for cuts as GDP data confirmed significant growth slowing, most traders expect inflation considerations to dominate today’s decision.

Trading opportunities are likely to arise from the message conveyed in the statement and the MPC’s Official Bank Rate Votes. As seen earlier today, any surprises could trigger sharp market movements. A more dovish tone would likely open the way for a downward move, and given the Fed’s overnight update, this could lead to a break of the long-term trendline support and a test of annual lows. Conversely, a more hawkish stance could prompt a relief rally, although this is expected to be limited due to the prevailing bullish sentiment towards the dollar.

Resistance 2: 1.3348 – Trendline Resistance

Resistance 1: 1.2815 – 200-Day Moving Average

Support 1: 1.2555 – Trendline Support

Support 2: 1.2484 – 2024 Low

The post Trade Cable on the Bank of England Rate Decision first appeared on IC Markets | Official Blog.