IC Markets Europe Fundamental Forecast | 4 February 2025

What happened in the Asia session?

With no major data releases or news headlines, it was a relatively quiet session as the dollar index (DXY) hovered around 108.70 while spot prices for gold remained above $2,810/oz. Meanwhile, overhead pressures remained firmly in place for crude oil as WTI oil drifted towards $72 per barrel.

What does it mean for the Europe & US sessions?

Looking at U.S. inventories, the API stockpiles have increased over the last couple of weeks which is usually a sign of weaker demand for crude oil. Should inventory levels continue to build further, it could weigh on oil prices later today – WTI oil was hovering above $72 per barrel by midday Asia.

The Dollar Index (DXY)

Key news events today

JOLTS Job Openings (3:00 pm GMT)

What can we expect from DXY today?

Job vacancies have dwindled lower since its peak in March 2022, hitting a low of 7.37M openings in September 2024. However, this data point rebounded over the next couple of months as 8.1M jobs were listed in November with increased job openings in the professional and business services; finance and insurance; and private educational services sectors. December’s forecast of 7.88M shows vacancies edging lower following two months of higher figures. Should the result miss the market consensus, the greenback could face near-term headwinds.

Central Bank Notes:

• The Board of Governors of the Federal Reserve System voted unanimously to maintain the Federal Funds Rate in a target range of 4.25 to 4.50% on 29 January.
• 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 the unemployment rate has stabilized at a low level in recent months, and labour market conditions remain solid. However, inflation remains somewhat elevated.
• December’s Summary of Economic Projections (SEP) now indicates just two rate cuts in 2025 totalling 50 bps, compared to the full percentage point of reductions projected in the previous quarter.
• GDP growth forecasts were revised upward for 2024 (2.5% vs. 2% in the September projection) and 2025 (2.1% vs. 2%), while remaining steady at 2% for 2026. Similarly, PCE inflation projections have been adjusted higher for 2024 (2.4% vs. 2.3%), 2025 (2.5% vs. 2.1%), and 2026 (2.1% vs. 2%).
• In 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.
• The Committee will roll over at auction the amount of principal payments from the Federal Reserve’s holdings of Treasury securities maturing in each calendar month that exceeds a cap of $25 billion per month and redeem Treasury coupon securities up to this monthly cap and Treasury bills to the extent that coupon principal payments are less than the monthly cap.
• In addition, the Committee will reinvest the amount of principal payments from the Federal Reserve’s holdings of agency debt and agency mortgage-backed securities (MBS) received in each calendar month that exceeds a cap of $35 billion per month into Treasury securities to roughly match the maturity composition of Treasury securities outstanding.
• The next meeting runs from 18 to 19 March 2025.

Next 24 Hours Bias

Weak Bullish

Gold (XAU)

Key news events today

JOLTS Job Openings (3:00 pm GMT)

What can we expect from Gold today?

Job vacancies have dwindled lower since its peak in March 2022, hitting a low of 7.37M openings in September 2024. However, this data point rebounded over the next couple of months as 8.1M jobs were listed in November with increased job openings in sectors such as professional and business services; finance and insurance; and private educational services. December’s forecast of 7.88M shows vacancies edging lower following two months of higher figures. Should the result miss the market consensus, the greenback could face near-term headwinds which would potentially provide support for this precious metal.

Next 24 Hours Bias

Weak Bearish

The Australian Dollar (AUD)

Key news events today

No major news events.

What can we expect from AUD today?

The Aussie faces significant downward pressure as Asian markets opened on Tuesday, influenced by multiple bearish factors such as Monday’s stronger-than-anticipated ISM Manufacturing PMI report in the U.S. and sluggish retail sales in Australia. Consumer spending in the land down under fell 0.1% MoM to register its first decline in nine months – this currency pair was trading around 0.6200 as Asian markets came online.

Central Bank Notes:

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

Next 24 Hours Bias

Weak Bearish

The Kiwi Dollar (NZD)

Key news events today

No major news events.

What can we expect from NZD today?

In a similar fashion to its Pacific neighbour, the Kiwi faces significant downward pressure influenced by several key factors such as the anticipated weak employment data due for release on Wednesday along with risk-off sentiment and expectations of a 50-basis point reduction in the official cash rate by the RBNZ at its board meeting on 19th February. This currency pair was sliding towards 0.5600 at the beginning of the Asia session.

Central Bank Notes:

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

Next 24 Hours Bias

Weak Bearish

The Japanese Yen (JPY)

Key news events today

No major news events.

What can we expect from JPY today?

Continued demand for the greenback lifted USD/JPY above 155 to hit an overnight high of 155.40, fueled by a better-than-expected ISM Manufacturing PMI report and the newly imposed trade tariffs on Canada, Mexico and China. This currency pair was pulling back towards 155 as Asian markets came online but it should remain elevated as the day progresses.

Central Bank Notes:

• The Policy Board of the Bank of Japan decided on 24 January, by an 8-1 majority vote, to set the following guidelines for money market operations for the inter-meeting period:
  1. The Bank will encourage the uncollateralized overnight call rate to remain at around 0.5%.
  2. The Bank will embark on a plan to reduce the amount of its monthly outright purchases of JGBs so that it will be about 3 trillion yen in January-March 2026; the amount will be cut down by about 400 billion yen each calendar quarter in principle.
• Japan’s economy has recovered moderately, although some weakness has been seen in part. Exports and industrial production have been more or less flat while corporate profits have been on an improving trend and business sentiment has stayed at a favourable level.
• The employment and income situation has improved moderately while private consumption has been on a moderately increasing trend despite the impact of price rises and other factors.
• On the price front, the year-on-year rate of increase in the consumer price index (CPI, all items less fresh food) has been at around 3% recently, as services prices have continued to rise moderately, reflecting factors such as wage increases, although the effects of a pass-through to consumer prices of cost increases led by the past rise in import prices have waned.
• Inflation expectations have risen moderately while underlying CPI inflation has been increasing gradually toward the price stability target of 2%. With wages continuing to rise, there has been an increase in moves to reflect higher costs, such as increased personnel expenses and distribution costs, in selling prices.
• Japan’s economy is likely to keep growing at a pace above its potential growth rate, with overseas economies continuing to grow moderately and as a virtuous cycle from income to spending gradually intensifies against the background of factors such as accommodative financial conditions.
• The next meeting is on 19 March 2025.

Next 24 Hours Bias

Medium Bullish

The Euro (EUR)

Key news events today

No major news events.

What can we expect from EUR today?

The combination of Monday’s better-than-expected US manufacturing data and the implementation of trade tariffs by the U.S. created overhead pressures for the Euro on Monday. This currency pair should fall under 1.0300 once again on Tuesday as it resumes its downward trend.

Central Bank Notes:

• The Governing Council reduced the three key ECB interest rates by 25 basis points on 30 January to mark the fourth 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 2.90%, 3.15% and 2.75% respectively.
• The disinflation process is well on track and inflation is set to return to the Governing Council’s 2% medium-term target in the course of this year. Most measures of underlying inflation suggest that inflation will settle at around the 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 asset purchase programme (APP) and pandemic emergency purchase programme (PEPP) portfolios are declining at a measured and predictable pace, as the Eurosystem no longer reinvests the principal payments from maturing securities.
• 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 6 March 2025.

Next 24 Hours Bias

Weak Bearish

The Swiss Franc (CHF)

Key news events today

No major news events.

What can we expect from CHF today?

Continued demand for the greenback caused USD/CHF to rally strongly as it approached the threshold of 0.9200, fueled by a better-than-expected ISM Manufacturing PMI report and the newly imposed trade tariffs on Canada, Mexico and China. This currency pair pulled back overnight as it briefly dipped under 0.9100 as Asian markets came online before reversing sharply to surge higher.

Central Bank Notes:

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

Next 24 Hours Bias

Medium Bullish

The Pound (GBP)

Key news events today

No major news events.

What can we expect from GBP today?

Stronger-than-anticipated U.S. PMI data overnight along with the implementation of trade tariffs by the U.S. put the Cable under intense selling pressure as markets re-opened on Monday. This currency pair retraced strongly to climb above 1.2400 but the downward momentum is likely to pick up once more on Tuesday.

Central Bank Notes:

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

Next 24 Hours Bias

Weak Bearish

The Canadian Dollar (CAD)

Key news events today

No major news events.

What can we expect from CAD today?

Following the announcement of tariffs on Canadian imports into the U.S. by the White House on Saturday, demand for the dollar surged causing USD/CAD to rally past 1.4700 to hit a high of 1.4793 on Monday. However, this currency pair pulled sharply overnight as it fell under 1.4500 but stabilized around 1.4420 at the beginning of the Asia session.

Central Bank Notes:

• The Bank of Canada reduced its target for the overnight rate by 25 basis points bringing it down to 3% on 29 January; this marked the sixth consecutive meeting where rates were reduced.
• The bank announced its plan to complete the normalization of its balance sheet, ending quantitative tightening, and will restart asset purchases in early March, beginning gradually so that its balance sheet stabilizes and then grows modestly, in line with growth in the economy.
• Past cuts to interest rates have started to boost the economy and the recent strengthening in both consumption and housing activity is expected to continue. However, business investment remains weak while the outlook for exports is being supported by new export capacity for oil and gas.
• The Bank forecasts GDP growth will strengthen in 2025 and now projects GDP will grow by 1.8% in both 2025 and 2026, somewhat higher than potential growth.
• The labour market remains soft, with the unemployment rate at 6.7% in December. Job growth has strengthened in recent months, after lagging growth in the labour force for more than a year. Wage pressures, which have proven sticky, are showing some signs of easing.
• CPI inflation remains close to 2%, with some volatility due to the temporary suspension of the GST/HST on some consumer products. Shelter price inflation is still elevated but it is easing gradually, as expected
• A broad range of indicators, including surveys of inflation expectations and the distribution of price changes among components of the CPI, suggests that underlying inflation is close to 2% with forecasts that CPI inflation will be around the 2% target over the next two years.
• 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 a further 25 basis points to support growth and keep inflation close to the middle of the 1-3% target range.
• The cumulative reduction in the policy rate since last June is substantial as lower interest rates are boosting household spending and the economy is expected to strengthen gradually and inflation to stay close to target. However, if broad-based and significant tariffs were imposed, the resilience of Canada’s economy would be tested.
• The Bank is committed to maintaining price stability for Canadians by keeping inflation close to the 2% target.
• The next meeting is on 12 March 2025.

Next 24 Hours Bias

Weak Bullish

Oil

Key news events today

API Crude Oil Stock (9:30 pm GMT)

What can we expect from Oil today?

Following Monday’s ‘soft’ Caixin Manufacturing PMI report and the decision by OPEC+ to stick to its policy of gradually raising oil output from April on Monday while removing the U.S. government’s Energy Information Administration (EIA) from the sources used to monitor its production and adherence to supply pacts caused crude oil prices remained under pressure overnight. Moving over to U.S. inventories, the API stockpiles have increased over the last couple of weeks which is usually a sign of weaker demand for crude oil. Should inventory levels continue to build further, it could weigh on oil prices later today – WTI oil was hovering above the $72 per barrel mark at the beginning of Tuesday’s Asia session.

Next 24 Hours Bias

Medium Bearish

The post IC Markets Europe Fundamental Forecast | 4 February 2025 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: 108.13

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

1st support: 107.14
Supporting reasons: Identified as an overlap support, indicating a potential level where price could find support once more.

1st resistance: 109.66
Supporting reasons: Identified as a multi-swing high resistance, indicating a potential area that could halt any further upward movement.

EUR/USD:

Potential Direction: Bearish

Overall momentum of the chart: Bearish

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

Pivot: 1.0345

Supporting reasons: Identified as an overlap resistance that aligns with the 38.6% Fibonacci retracement, indicating a potential area where selling pressures could intensify.

1st support: 1.0195

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

1st resistance: 1.0461
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 reversal off the pivot and drop toward the 1st support

Pivot: 161.22

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

1st support: 158.36 

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

1st resistance: 163.78
Supporting reasons: Identified as a swing high resistance, indicating a potential area that could halt any further upward movement.

EUR/GBP:

Potential Direction: Bullish

Overall momentum of the chart: Bullish

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

Pivot: 0.8272

Supporting reasons: Identified as an overlap support that aligns with the 78.6% Fibonacci retracement, indicating a potential area where buying interests could pick up to stage a rebound.

1st support: 0.8222

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

1st resistance: 0.8356
Supporting reasons: Identified as an overlap resistance that aligns close to the 38.2 Fibonacci retracement, indicating a potential area that could halt any further upward movement.

GBP/USD:

Potential Direction: Bearish

Overall momentum of the chart: Bearish

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

Pivot: 1.2474

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

1st support: 1.2245

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

1st resistance: 1.2609
Supporting reasons: Identified as an overlap resistance, indicating a potential area that could halt any further upward movement.

GBP/JPY:

Potential Direction: Bearish
Overall momentum of the chart: Bearish

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

Pivot: 193.18

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

1st support: 190.56
Supporting reasons: Identified as an overlap support, indicating a potential level where price could find support once again.

1st resistance: 194.60
Supporting reasons: Identified as an overlap resistance that aligns close to the 61.8% Fibonacci retracement, 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 off the pivot and rise toward the 1st resistance.

Pivot: 0.9067

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

1st support: 0.8974
Supporting reasons: Identified as an overlap support, indicating a potential level where price could find support once again.

1st resistance: 0.9182
Supporting reasons: Identified as a swing high resistance, indicating a potential area that could halt any further upward movement.

USD/JPY:

Potential Direction: Bearish

Overall momentum of the chart: Bearish

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

Pivot: 156.58

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

1st support: 154.21
Supporting reasons: Identified as an overlap support, indicating a potential level where price could find support once more.

1st resistance: 158.60
Supporting reasons: Identified as a swing-high resistance, indicating a potential area that could halt any further upward movement.

USD/CAD:

Potential Direction: Bullish

Overall momentum of the chart: Neutral

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

Pivot: 1.4404
Supporting reasons: Identified as an overlap support, indicating a potential area where buying interests could pick up to stage a rebound.

1st support: 1.4299
Supporting reasons: Identified as a multi-swing-low support, indicating a key level where the price could stabilize once more.

1st resistance: 1.4537
Supporting reasons: Identified as a pullback resistance that aligns with a 38.2% Fibonacci retracement, indicating a potential area that could halt any further upward movement.

AUD/USD:

Potential Direction: Bearish
Overall momentum of the chart: Bearish

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

Pivot: 0.6255

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

1st support: 0.6177

Supporting reasons: Identified as a pullback support, suggesting a potential area where the price could stabilize.

1st resistance: 0.6323
Supporting reasons: Identified as a swing-high resistance, indicating a potential area that could halt any further upward movement.

NZD/USD

Potential Direction: Bearish
Overall momentum of the chart: Bearish

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

Pivot: 0.5679

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

1st support: 0.5580

Supporting reasons: Identified as a pullback support, suggesting a potential area where the price could stabilize.

1st resistance: 0.5716

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

US30 (DJIA):

Potential Direction: Bullish
Overall momentum of the chart: Neutral

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

Pivot: 43,819.77

Supporting reasons: Identified as a multi-swing-low support that aligns close to a 38.2% Fibonacci retracement, indicating a potential level where buying interests could pick up to stage a rebound.

1st support: 43,241.57

Supporting reasons: Identified as an overlap support that aligns close to a 50% Fibonacci retracement, indicating a potential level where the price could stabilize once again.

1st resistance: 45,060.27

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

DE40 (DAX):

Potential Direction: Bearish
Overall momentum of the chart: Neutral

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

Pivot: 21,525.30

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

1st support: 21,114.40

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

1st resistance: 21,774.50
Supporting reasons: Identified as a swing-high resistance that aligns close to the all-time high, indicating a potential area that could halt any further upward movement.

US500 (S&P 500): 

Potential Direction: Bearish
Overall momentum of the chart: Neutral

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

Pivot: 6,039.40

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

1st support: 5,923.40

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

1st resistance: 6,123.30

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

BTC/USD (Bitcoin):

Potential Direction: Bearish
Overall momentum of the chart: Neutral

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

Pivot: 103,087.61

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

1st support: 98,903.64
Supporting reasons: Identified as an overlap support, indicating a potential level where the price could stabilize once more.

1st resistance: 106,815.65
Supporting reasons: Identified as a multi-swing-high resistance, indicating a potential area that could halt any further upward movement.

ETH/USD (Ethereum):

Potential Direction: Bearish
Overall momentum of the chart: Bearish

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

Pivot: 2,901.68

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

1st support: 2,472.17
Supporting reasons: Identified as a swing-low support, indicating a potential level where the price could stabilize once again.

1st resistance: 3,431.60
Supporting reasons: Identified as a multi-swing-high resistance, indicating a potential area that could halt any further upward movement.

WTI/USD (Oil):

Potential Direction: 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: 71.58
Supporting reasons: Identified as a pullback support that aligns close to a 61.8% Fibonacci retracement, indicating a potential area where buying interests could pick up to stage a rebound.

1st support: 69.17
Supporting reasons: Identified as an overlap support, indicating a key level where the price could stabilize once more.

1st resistance: 75.96
Supporting reasons: Identified as a pullback resistance, indicating a potential area that could halt any further upward movement.

XAU/USD (GOLD):

Potential Direction: Bullish

Overall momentum of the chart: Bullish

Price could  make a bullish continuation toward the 1st resistance 

Pivot: 2813.38

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

1st support: 2777.29

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

1st resistance: 2845.06

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

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The post Tuesday 4th February 2025: Technical Outlook and Review first appeared on IC Markets | Official Blog.

IC Markets Asia Fundamental Forecast | 4 February 2025

What happened in the U.S. session?

Manufacturing activity in the U.S. has contracted over the past nine months as reported by the Institute for Supply Management (ISM) with a reading of 49.3 in December. However, this sector recorded its first expansion in January with a reading of 50.9 as sub-indices such as new orders, production and employment all showed strong growth. Despite the better-than-expected PMI report, the dollar index (DXY) continued to slide lower overnight after making a high of 109.88 on Monday – this index eventually dipped under 108.50 by the end of this session.

What does it mean for the Asia Session?

The combination of strong U.S. manufacturing data and safe-haven flows triggered by newly imposed trade tariffs on Canada, Mexico and China provide the foundation for continued dollar strength and elevated gold prices. Meanwhile, crude oil prices remained under pressure as OPEC+ agreed to stick to its policy of gradually raising oil output from April on Monday and removed the U.S. government’s Energy Information Administration (EIA) from the sources used to monitor its production and adherence to supply pacts as the first OPEC-JMMC meeting of 2025 concluded in Vienna on Monday.

The Dollar Index (DXY)

Key news events today

JOLTS Job Openings (3:00 pm GMT)

What can we expect from DXY today?

Job vacancies have dwindled lower since its peak in March 2022, hitting a low of 7.37M openings in September 2024. However, this data point rebounded over the next couple of months as 8.1M jobs were listed in November with increased job openings in the professional and business services; finance and insurance; and private educational services sectors. December’s forecast of 7.88M shows vacancies edging lower following two months of higher figures. Should the result miss the market consensus, the greenback could face near-term headwinds.

Central Bank Notes:

• The Board of Governors of the Federal Reserve System voted unanimously to maintain the Federal Funds Rate in a target range of 4.25 to 4.50% on 29 January.
• 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 the unemployment rate has stabilized at a low level in recent months, and labour market conditions remain solid. However, inflation remains somewhat elevated.
• December’s Summary of Economic Projections (SEP) now indicates just two rate cuts in 2025 totalling 50 bps, compared to the full percentage point of reductions projected in the previous quarter.
• GDP growth forecasts were revised upward for 2024 (2.5% vs. 2% in the September projection) and 2025 (2.1% vs. 2%), while remaining steady at 2% for 2026. Similarly, PCE inflation projections have been adjusted higher for 2024 (2.4% vs. 2.3%), 2025 (2.5% vs. 2.1%), and 2026 (2.1% vs. 2%).
• In 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.
• The Committee will roll over at auction the amount of principal payments from the Federal Reserve’s holdings of Treasury securities maturing in each calendar month that exceeds a cap of $25 billion per month and redeem Treasury coupon securities up to this monthly cap and Treasury bills to the extent that coupon principal payments are less than the monthly cap.
• In addition, the Committee will reinvest the amount of principal payments from the Federal Reserve’s holdings of agency debt and agency mortgage-backed securities (MBS) received in each calendar month that exceeds a cap of $35 billion per month into Treasury securities to roughly match the maturity composition of Treasury securities outstanding.
• The next meeting runs from 18 to 19 March 2025.

Next 24 Hours Bias

Weak Bullish

Gold (XAU)

Key news events today

JOLTS Job Openings (3:00 pm GMT)

What can we expect from Gold today?

Job vacancies have dwindled lower since its peak in March 2022, hitting a low of 7.37M openings in September 2024. However, this data point rebounded over the next couple of months as 8.1M jobs were listed in November with increased job openings in sectors such as professional and business services; finance and insurance; and private educational services. December’s forecast of 7.88M shows vacancies edging lower following two months of higher figures. Should the result miss the market consensus, the greenback could face near-term headwinds which would potentially provide support for this precious metal.

Next 24 Hours Bias

Weak Bearish

The Australian Dollar (AUD)

Key news events today

No major news events.

What can we expect from AUD today?

The Aussie faces significant downward pressure as Asian markets opened on Tuesday, influenced by multiple bearish factors such as Monday’s stronger-than-anticipated ISM Manufacturing PMI report in the U.S. and sluggish retail sales in Australia. Consumer spending in the land down under fell 0.1% MoM to register its first decline in nine months – this currency pair was trading around 0.6200 as Asian markets came online.

Central Bank Notes:

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

Next 24 Hours Bias

Weak Bearish

The Kiwi Dollar (NZD)

Key news events today

No major news events.

What can we expect from NZD today?

In a similar fashion to its Pacific neighbour, the Kiwi faces significant downward pressure influenced by several key factors such as the anticipated weak employment data due for release on Wednesday along with risk-off sentiment and expectations of a 50-basis point reduction in the official cash rate by the RBNZ at its board meeting on 19th February. This currency pair was sliding towards 0.5600 at the beginning of the Asia session.

Central Bank Notes:

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

Next 24 Hours Bias

Weak Bearish

The Japanese Yen (JPY)

Key news events today

No major news events.

What can we expect from JPY today?

Continued demand for the greenback lifted USD/JPY above 155 to hit an overnight high of 155.40, fueled by a better-than-expected ISM Manufacturing PMI report and the newly imposed trade tariffs on Canada, Mexico and China. This currency pair was pulling back towards 155 as Asian markets came online but it should remain elevated as the day progresses.

Central Bank Notes:

• The Policy Board of the Bank of Japan decided on 24 January, by an 8-1 majority vote, to set the following guidelines for money market operations for the inter-meeting period:
  1. The Bank will encourage the uncollateralized overnight call rate to remain at around 0.5%.
  2. The Bank will embark on a plan to reduce the amount of its monthly outright purchases of JGBs so that it will be about 3 trillion yen in January-March 2026; the amount will be cut down by about 400 billion yen each calendar quarter in principle.
• Japan’s economy has recovered moderately, although some weakness has been seen in part. Exports and industrial production have been more or less flat while corporate profits have been on an improving trend and business sentiment has stayed at a favourable level.
• The employment and income situation has improved moderately while private consumption has been on a moderately increasing trend despite the impact of price rises and other factors.
• On the price front, the year-on-year rate of increase in the consumer price index (CPI, all items less fresh food) has been at around 3% recently, as services prices have continued to rise moderately, reflecting factors such as wage increases, although the effects of a pass-through to consumer prices of cost increases led by the past rise in import prices have waned.
• Inflation expectations have risen moderately while underlying CPI inflation has been increasing gradually toward the price stability target of 2%. With wages continuing to rise, there has been an increase in moves to reflect higher costs, such as increased personnel expenses and distribution costs, in selling prices.
• Japan’s economy is likely to keep growing at a pace above its potential growth rate, with overseas economies continuing to grow moderately and as a virtuous cycle from income to spending gradually intensifies against the background of factors such as accommodative financial conditions.
• The next meeting is on 19 March 2025.

Next 24 Hours Bias

Medium Bullish

The Euro (EUR)

Key news events today

No major news events.

What can we expect from EUR today?

The combination of Monday’s better-than-expected US manufacturing data and the implementation of trade tariffs by the U.S. created overhead pressures for the Euro on Monday. This currency pair should fall under 1.0300 once again on Tuesday as it resumes its downward trend.

Central Bank Notes:

• The Governing Council reduced the three key ECB interest rates by 25 basis points on 30 January to mark the fourth 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 2.90%, 3.15% and 2.75% respectively.
• The disinflation process is well on track and inflation is set to return to the Governing Council’s 2% medium-term target in the course of this year. Most measures of underlying inflation suggest that inflation will settle at around the 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 asset purchase programme (APP) and pandemic emergency purchase programme (PEPP) portfolios are declining at a measured and predictable pace, as the Eurosystem no longer reinvests the principal payments from maturing securities.
• 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 6 March 2025.

Next 24 Hours Bias

Weak Bearish

The Swiss Franc (CHF)

Key news events today

No major news events.

What can we expect from CHF today?

Continued demand for the greenback caused USD/CHF to rally strongly as it approached the threshold of 0.9200, fueled by a better-than-expected ISM Manufacturing PMI report and the newly imposed trade tariffs on Canada, Mexico and China. This currency pair pulled back overnight as it briefly dipped under 0.9100 as Asian markets came online before reversing sharply to surge higher.

Central Bank Notes:

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

Next 24 Hours Bias

Medium Bullish

The Pound (GBP)

Key news events today

No major news events.

What can we expect from GBP today?

Stronger-than-anticipated U.S. PMI data overnight along with the implementation of trade tariffs by the U.S. put the Cable under intense selling pressure as markets re-opened on Monday. This currency pair retraced strongly to climb above 1.2400 but the downward momentum is likely to pick up once more on Tuesday.

Central Bank Notes:

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

Next 24 Hours Bias

Weak Bearish

The Canadian Dollar (CAD)

Key news events today

No major news events.

What can we expect from CAD today?

Following the announcement of tariffs on Canadian imports into the U.S. by the White House on Saturday, demand for the dollar surged causing USD/CAD to rally past 1.4700 to hit a high of 1.4793 on Monday. However, this currency pair pulled sharply overnight as it fell under 1.4500 but stabilized around 1.4420 at the beginning of the Asia session.

Central Bank Notes:

• The Bank of Canada reduced its target for the overnight rate by 25 basis points bringing it down to 3% on 29 January; this marked the sixth consecutive meeting where rates were reduced.
• The bank announced its plan to complete the normalization of its balance sheet, ending quantitative tightening, and will restart asset purchases in early March, beginning gradually so that its balance sheet stabilizes and then grows modestly, in line with growth in the economy.
• Past cuts to interest rates have started to boost the economy and the recent strengthening in both consumption and housing activity is expected to continue. However, business investment remains weak while the outlook for exports is being supported by new export capacity for oil and gas.
• The Bank forecasts GDP growth will strengthen in 2025 and now projects GDP will grow by 1.8% in both 2025 and 2026, somewhat higher than potential growth.
• The labour market remains soft, with the unemployment rate at 6.7% in December. Job growth has strengthened in recent months, after lagging growth in the labour force for more than a year. Wage pressures, which have proven sticky, are showing some signs of easing.
• CPI inflation remains close to 2%, with some volatility due to the temporary suspension of the GST/HST on some consumer products. Shelter price inflation is still elevated but it is easing gradually, as expected
• A broad range of indicators, including surveys of inflation expectations and the distribution of price changes among components of the CPI, suggests that underlying inflation is close to 2% with forecasts that CPI inflation will be around the 2% target over the next two years.
• 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 a further 25 basis points to support growth and keep inflation close to the middle of the 1-3% target range.
• The cumulative reduction in the policy rate since last June is substantial as lower interest rates are boosting household spending and the economy is expected to strengthen gradually and inflation to stay close to target. However, if broad-based and significant tariffs were imposed, the resilience of Canada’s economy would be tested.
• The Bank is committed to maintaining price stability for Canadians by keeping inflation close to the 2% target.
• The next meeting is on 12 March 2025.

Next 24 Hours Bias

Weak Bullish

Oil

Key news events today

API Crude Oil Stock (9:30 pm GMT)

What can we expect from Oil today?

Following Monday’s ‘soft’ Caixin Manufacturing PMI report and the decision by OPEC+ to stick to its policy of gradually raising oil output from April on Monday while removing the U.S. government’s Energy Information Administration (EIA) from the sources used to monitor its production and adherence to supply pacts caused crude oil prices remained under pressure overnight. Moving over to U.S. inventories, the API stockpiles have increased over the last couple of weeks which is usually a sign of weaker demand for crude oil. Should inventory levels continue to build further, it could weigh on oil prices later today – WTI oil was hovering above the $72 per barrel mark at the beginning of Tuesday’s Asia session.

Next 24 Hours Bias

Medium Bearish

The post IC Markets Asia Fundamental Forecast | 4 February 2025 first appeared on IC Markets | Official Blog.

Tariff Volatility Rocks Markets – Nasdaq Down 1.2%

Updates on tariff implementation from the US have led to a significant increase in market volatility over the last few sessions. Over the weekend, announcements that tariffs against Canada, Mexico, and China would commence today—followed by a subsequent pullback from President Trump—have triggered sharp movements across financial products. All three major US indices ended in the red, with the Dow down 0.28%, the S&P falling 0.76%, and the Nasdaq dropping 1.20%.

The dollar experienced a rollercoaster ride, rallying over 1% before fully retracing those gains later in the day on updates regarding tariff delays. The DXY ultimately finished down 0.1% at 108.41. US Treasury yields pushed higher, with the 2-year yield gaining 5.2 basis points to 4.249% and the 10-year yield rising by 1.4 basis points to 4.553%.

Oil prices were also volatile but ended the session close to flat, with Brent down 0.21% at $75.51 and WTI falling 0.14% to $72.15. Gold, meanwhile, continued its upward trajectory, reaching fresh record highs as market uncertainty persists, finishing the day up 0.59% at $2,814.50.

Trump 2.0 Is a Lot Like Trump 1.0

Traders with long market experience are beginning to feel a sense of déjà vu. Donald Trump’s second stint in the White House is shaping up to resemble his first, with market volatility increasing as he delivers strong initial statements before dramatically reversing course a day later.

Over the past few days, tariff-related updates have triggered large swings in the market, as the President initially adopts a hardline stance on trading partners before offering a reprieve. The market has no choice but to react strongly to both updates, given their potential impact on global growth and underlying economic data. Traders now expect similar patterns going forward and are adjusting their strategies accordingly. Long-term trend followers are likely to struggle until greater certainty returns to the market—something that does not appear imminent.

Geopolitics to Dominate on a Thin Calendar Day

Geopolitical developments are set to dictate market movements today, given the lack of major economic data releases. Asian traders will be closely monitoring Chinese markets as they fully return from a week-long holiday and react to US tariff threats.

With little on the economic calendar in the early trading sessions, geopolitical events—particularly those related to tariffs—will likely drive market sentiment. However, the New York session does feature the first of four key jobs reports this week: the JOLTS Job Openings data. This report will provide traders (and the Federal Reserve) with tier-one employment data to analyse. Expectations suggest job openings will have declined slightly, from 8.10 million to 8.01 million. While unlikely to move the market significantly unless it deviates sharply from expectations, this report has previously been the first indicator of a shifting labour market.

The post General Market Analysis – 04/02/2025 first appeared on IC Markets | Official Blog.

The post Ex-Dividend 4/2/2025 first appeared on IC Markets | Official Blog.

Global Markets:

•  Asian Stock Markets : Nikkei down 2.69%, Shanghai Composite down 0.06%, Hang Seng down 0.38% ASX down 1.65%
• Commodities : Gold at $2817.35 (-0.43%), Silver at $32.05 (-0.68%), Brent Oil at $76.59 (1.59%), WTI Oil at $74.14 (2.13%)
• Rates : US 10-year yield at 4.536, UK 10-year yield at 4.5340, Germany 10-year yield at 2.458

News & Data:

• (CAD) GDP m/m  -0.2% vs -0.1% expected
• (USD) Core PCE Price Index m/m  0.2 to 0.2 expected

Markets Update:

Asia-Pacific markets opened lower on Monday following U.S. President Donald Trump’s decision to impose tariffs on Canada, Mexico, and China over the weekend. Australia’s S&P/ASX 200 declined 1.61%, while Japan’s Nikkei 225 and Topix lost 1.99% and 1.87%, respectively. South Korea’s Kospi fell 2.52%, and the Kosdaq dropped 2.79%. Hong Kong’s Hang Seng Index opened 1.23% lower.

In India, the Nifty 50 slipped 0.69%, and the Sensex fell 0.88% at the open. Over the weekend, India’s Union Budget introduced major income tax relief for the middle class and pledged to reduce the fiscal deficit to 4.4% of GDP for the next financial year, down from the revised 4.8%. Meanwhile, Chinese markets remained closed for the Lunar New Year holiday. Later in the day, China’s Caixin/S&P Global services PMI data is set for release, with forecasts estimating a reading of 50.5, according to a Reuters poll.

On Saturday, Trump signed an order implementing a 25% tariff on imports from Mexico and Canada and a 10% tariff on Chinese goods. Canadian energy exports, however, will face a reduced 10% tariff. These tariffs are set to take effect on Tuesday. The U.S. engages in approximately $1.6 trillion in annual trade with these three nations, making the new tariffs a significant policy shift.

On Wall Street, stocks closed lower Friday. The S&P 500 fell 0.50% to 6,040.53, while the Dow Jones Industrial Average dropped 337.47 points (0.75%) to 44,544.66, weighed down by a decline in Chevron. The tech-heavy Nasdaq Composite also ended the session lower.

Upcoming Events: 

• 02:45 PM GMT – USD ISM Manufacturing PMI
• 03:00 PM GMT – USD ISM Manufacturing Prices

The post Monday 3rd February 2025: Asia-Pacific Markets Slide as U.S. Imposes New Tariffs on Canada, Mexico, and China first appeared on IC Markets | Official Blog.

IC Markets Europe Fundamental Forecast | 3 February 2025

What happened in the Asia session?

Following eight months of increased spending, retail sales in Australia declined 0.1% MoM in December as categories such as clothing, footwear, and personal accessories; and cafes, restaurants, and takeaway food experienced contractions. Despite the smaller-than-expected decline, the result points to weakening consumer spending and fuels expectations that the RBA may start cutting interest rates at the upcoming board meeting on 18th February. Combined with tariffs imposed on Canadian and Mexican imports into the U.S. by President Donald Trump over the weekend, demand for the dollar surged causing the Aussie to gap significantly lower as it opened at 0.6150 before diving as low as 0.6087 – this currency pair had closed at 0.6198 last Friday.

Although the Caixin Manufacturing PMI expanded for the fourth consecutive month, the reading of 50.1 in January missed the market consensus of 50.6 as it highlighted the slowest pace of growth since October 2024. Foreign orders shrank for the second month amidst rising challenges in global trade policies while employment fell the most since February 2024. Combined with the latest tariffs announced by the White House, crude oil prices remained under pressure during this session. WTI oil was hovering under the $74 mark by midday in Asia.

What does it mean for the Europe & US sessions?

Manufacturing output in the Euro Area has been depressed since mid-2022 and January flash estimate showed a reading of 46.1 as output, new business and employment all continued to decline. The final PMI reading is anticipated to remain unchanged, highlighting the ongoing weakness in this sector. Meanwhile, the flash estimates for consumer inflation are expected to show headline CPI remaining unchanged at 2.4% YoY after accelerating for three successive months while the core is now expected to edge lower from 2.7% in the previous month to 2.6% in January. The Euro reversed sharply last week as it fell 1.1% and should macroeconomic data weaken further for this economic zone, additional headwinds could build for the Euro.

Manufacturing activity in the U.K. contracted in the final quarter of 2024 and the final estimate for January is expected to show a fourth month of decline as output, new orders and employment all continued to decline, based on the flash estimates. Should the final PMI reading for January print weaker than originally anticipated, the Pound could come under pressure during the European trading hours.

Meanwhile, the OPEC+ meeting will convene in Vienna, Austria, on Monday where key members such as Saudi Arabia, Russia and Iran will deliberate measures aiming to support the stability and balance of oil markets by making any potential voluntary adjustments to the production levels of each member country. Crude oil prices are likely to experience high volatility should any unexpected and/or additional adjustments are announced by the committee.

The Dollar Index (DXY)

Key news events today

ISM Manufacturing PMI (3:00 pm GMT)

What can we expect from DXY today?

Manufacturing activity in the U.S. has contracted over the past nine months as reported by the Institute for Supply Management (ISM) with a reading of 49.3 in December. The forecasts for January point to an unchanged PMI figure highlighting the ongoing depressed levels of manufacturing output and could potentially create near-term headwinds for the dollar later today.

Central Bank Notes:

• The Board of Governors of the Federal Reserve System voted unanimously to maintain the Federal Funds Rate in a target range of 4.25 to 4.50% on 29 January.
• 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 the unemployment rate has stabilized at a low level in recent months, and labour market conditions remain solid. However, inflation remains somewhat elevated.
• December’s Summary of Economic Projections (SEP) now indicates just two rate cuts in 2025 totalling 50 bps, compared to the full percentage point of reductions projected in the previous quarter.
• GDP growth forecasts were revised upward for 2024 (2.5% vs. 2% in the September projection) and 2025 (2.1% vs. 2%), while remaining steady at 2% for 2026. Similarly, PCE inflation projections have been adjusted higher for 2024 (2.4% vs. 2.3%), 2025 (2.5% vs. 2.1%), and 2026 (2.1% vs. 2%).
• In 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.
• The Committee will roll over at auction the amount of principal payments from the Federal Reserve’s holdings of Treasury securities maturing in each calendar month that exceeds a cap of $25 billion per month and redeem Treasury coupon securities up to this monthly cap and Treasury bills to the extent that coupon principal payments are less than the monthly cap.
• In addition, the Committee will reinvest the amount of principal payments from the Federal Reserve’s holdings of agency debt and agency mortgage-backed securities (MBS) received in each calendar month that exceeds a cap of $35 billion per month into Treasury securities to roughly match the maturity composition of Treasury securities outstanding.
• The next meeting runs from 18 to 19 March 2025.

Next 24 Hours Bias

Strong Bullish

Gold (XAU)

Key news events today

ISM Manufacturing PMI (3:00 pm GMT)

What can we expect from Gold today?

Manufacturing activity in the U.S. has contracted over the past nine months as reported by the Institute for Supply Management (ISM) with a reading of 49.3 in December. The forecasts for January point to an unchanged PMI figure highlighting the ongoing depressed levels of manufacturing output and could potentially create near-term headwinds for the dollar and lift gold prices later today.

Next 24 Hours Bias

Medium Bearish

The Australian Dollar (AUD)

Key news events today

Retail Sales (12:30 am GMT)

What can we expect from AUD today?

Following eight months of increased spending, retail sales in Australia declined 0.1% MoM in December as categories such as clothing, footwear, and personal accessories; and cafes, restaurants, and takeaway food experienced contractions. Despite the smaller-than-expected decline, the result points to weakening consumer spending and fuels expectations that the RBA may start cutting interest rates at the upcoming board meeting on 18th February. Combined with tariffs imposed on Canadian and Mexican imports into the U.S. by President Donald Trump over the weekend, demand for the dollar surged causing the Aussie to gap significantly lower as it opened at 0.6150 before diving as low as 0.6087 – this currency pair had closed at 0.6198 last Friday.

Central Bank Notes:

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

Next 24 Hours Bias

Strong Bearish

The Kiwi Dollar (NZD)

Key news events today

No major news events.

What can we expect from NZD today?

After rising over 3% in mid-January, the Kiwi posted its first decline in three weeks as it fell 1.1% to close at 0.5630 last Friday. This currency pair gapped lower this morning to open at 0.5580 before tumbling under 0.5550 at the beginning of the Asia session.

Central Bank Notes:

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

Next 24 Hours Bias

Strong Bearish

The Japanese Yen (JPY)

Key news events today

S&P Global Manufacturing PMI (12:30 am GMT)

What can we expect from JPY today?

Japan’s manufacturing sector has contracted over the last six months with PMI activity expected to come in with a reading of 48.8 in January. Categories such as output fell the most since last April while new orders continued to drop, marking the fastest decline in six months. The yen appreciated over the past three weeks as USD/JPY declined 1.6% over this period. However, weak macroeconomic data combined with renewed demand for the dollar could lift this currency pair higher this week.

Central Bank Notes:

• The Policy Board of the Bank of Japan decided on 24 January, by an 8-1 majority vote, to set the following guidelines for money market operations for the inter-meeting period:
  1. The Bank will encourage the uncollateralized overnight call rate to remain at around 0.5%.
  2. The Bank will embark on a plan to reduce the amount of its monthly outright purchases of JGBs so that it will be about 3 trillion yen in January-March 2026; the amount will be cut down by about 400 billion yen each calendar quarter in principle.
• Japan’s economy has recovered moderately, although some weakness has been seen in part. Exports and industrial production have been more or less flat while corporate profits have been on an improving trend and business sentiment has stayed at a favourable level.
• The employment and income situation has improved moderately while private consumption has been on a moderately increasing trend despite the impact of price rises and other factors.
• On the price front, the year-on-year rate of increase in the consumer price index (CPI, all items less fresh food) has been at around 3% recently, as services prices have continued to rise moderately, reflecting factors such as wage increases, although the effects of a pass-through to consumer prices of cost increases led by the past rise in import prices have waned.
• Inflation expectations have risen moderately while underlying CPI inflation has been increasing gradually toward the price stability target of 2%. With wages continuing to rise, there has been an increase in moves to reflect higher costs, such as increased personnel expenses and distribution costs, in selling prices.
• Japan’s economy is likely to keep growing at a pace above its potential growth rate, with overseas economies continuing to grow moderately and as a virtuous cycle from income to spending gradually intensifies against the background of factors such as accommodative financial conditions.
• The next meeting is on 19 March 2025.

Next 24 Hours Bias

Strong Bullish

The Euro (EUR)

Key news events today

S&P Global Manufacturing PMI (9:00 am GMT)

Euro Area CPI (10:00 am GMT)

What can we expect from EUR today?

Manufacturing output in the Euro Area has been depressed since mid-2022 and January flash estimate showed a reading of 46.1 as output, new business and employment all continued to decline. The final PMI reading is anticipated to remain unchanged, highlighting the ongoing weakness in this sector. Meanwhile, the flash estimates for consumer inflation are expected to show headline CPI remaining unchanged at 2.4% YoY after accelerating for three successive months while the core is now expected to edge lower from 2.7% in the previous month to 2.6% in January. The Euro reversed sharply last week as it fell 1.1% and should macroeconomic data weaken further for this economic zone, additional headwinds could build for the Euro.

Central Bank Notes:

• The Governing Council reduced the three key ECB interest rates by 25 basis points on 30 January to mark the fourth 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 2.90%, 3.15% and 2.75% respectively.
• The disinflation process is well on track and inflation is set to return to the Governing Council’s 2% medium-term target in the course of this year. Most measures of underlying inflation suggest that inflation will settle at around the 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 asset purchase programme (APP) and pandemic emergency purchase programme (PEPP) portfolios are declining at a measured and predictable pace, as the Eurosystem no longer reinvests the principal payments from maturing securities.
• 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 6 March 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?

The franc weakened in the final week of January as USD/CHF stabilized around the threshold of 0.9000 last Monday before rising strongly to close at 0.9112, climbing 1.6% from its lowest point. This currency pair gapped higher this morning to open at 0.9143 and was ascending towards 0.9160 as Asian markets came online.

Central Bank Notes:

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

Next 24 Hours Bias

Medium Bullish

The Pound (GBP)

Key news events today

S&P Global Manufacturing PMI (9:30 am GMT)

What can we expect from GBP today?

Manufacturing activity in the U.K. contracted in the final quarter of 2024 and the final estimate for January is expected to show a fourth month of decline as output, new orders and employment all continued to decline, based on the flash estimates. Should the final PMI reading for January print weaker than originally anticipated, the Pound could come under pressure during the European trading hours.

Central Bank Notes:

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

Next 24 Hours Bias

Medium Bearish

The Canadian Dollar (CAD)

Key news events today

No major news events.

What can we expect from CAD today?

Following a reiteration from the White House on Friday that President Donald Trump will impose tariffs on Canadian imports over the weekend, demand for the dollar surged causing USD/CAD to rally strongly past 1.4500 to hit an overnight high of 1.4559 before closing at 1.4537. This currency pair gapped higher this morning to open at 1.4722 before briefly dipping under 1.4700 at the beginning of the Asia session.

Central Bank Notes:

• The Bank of Canada reduced its target for the overnight rate by 25 basis points bringing it down to 3% on 29 January; this marked the sixth consecutive meeting where rates were reduced.
• The bank announced its plan to complete the normalization of its balance sheet, ending quantitative tightening, and will restart asset purchases in early March, beginning gradually so that its balance sheet stabilizes and then grows modestly, in line with growth in the economy.
• Past cuts to interest rates have started to boost the economy and the recent strengthening in both consumption and housing activity is expected to continue. However, business investment remains weak while the outlook for exports is being supported by new export capacity for oil and gas.
• The Bank forecasts GDP growth will strengthen in 2025 and now projects GDP will grow by 1.8% in both 2025 and 2026, somewhat higher than potential growth.
• The labour market remains soft, with the unemployment rate at 6.7% in December. Job growth has strengthened in recent months, after lagging growth in the labour force for more than a year. Wage pressures, which have proven sticky, are showing some signs of easing.
• CPI inflation remains close to 2%, with some volatility due to the temporary suspension of the GST/HST on some consumer products. Shelter price inflation is still elevated but it is easing gradually, as expected
• A broad range of indicators, including surveys of inflation expectations and the distribution of price changes among components of the CPI, suggests that underlying inflation is close to 2% with forecasts that CPI inflation will be around the 2% target over the next two years.
• 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 a further 25 basis points to support growth and keep inflation close to the middle of the 1-3% target range.
• The cumulative reduction in the policy rate since last June is substantial as lower interest rates are boosting household spending and the economy is expected to strengthen gradually and inflation to stay close to target. However, if broad-based and significant tariffs were imposed, the resilience of Canada’s economy would be tested.
• The Bank is committed to maintaining price stability for Canadians by keeping inflation close to the 2% target.
• The next meeting is on 12 March 2025.

Next 24 Hours Bias

Strong Bullish

Oil

Key news events today

Caixin Manufacturing PMI (1:45 am GMT)

OPEC-JMMC Meeting (All Day)

What can we expect from Oil today?

Although the Caixin Manufacturing PMI expanded for the fourth consecutive month, the reading of 50.1 in January missed the market consensus of 50.6 as it highlighted the slowest pace of growth since October 2024. Foreign orders shrank for the second month amidst rising challenges in global trade policies while employment fell the most since February 2024. Combined with the latest tariffs announced by the White House, crude oil prices remained under pressure – WTI oil was hovering under the $74 mark by midday in Asia.

Meanwhile, the OPEC+ meeting will convene in Vienna, Austria, on Monday where key members such as Saudi Arabia, Russia and Iran will deliberate measures aiming to support the stability and balance of oil markets by making any potential voluntary adjustments to the production levels of each member country. Crude oil prices are likely to experience high volatility should any unexpected and/or additional adjustments are announced by the committee.

Next 24 Hours Bias

Medium Bearish

The post IC Markets Europe Fundamental Forecast | 3 February 2025 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: 107.49

Supporting reasons: Identified as an overlap support, indicating a potential area where buying interests could pick up to stage a rebound. Additionally, price is above the cloud, indicating a bullish trend

1st support: 106.10
Supporting reasons: Identified as a swing-low support, indicating a potential level where price could find support once more.

1st resistance: 109.64
Supporting reasons: Identified as a multi-swing high resistance, indicating a potential area that could halt any further upward movement.

EUR/USD:

Potential Direction: Bearish

Overall momentum of the chart: Bearish

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

Pivot: 1.0512

Supporting reasons: Identified as an overlap resistance that aligns with the 78.6% Fibonacci retracement, indicating a potential area where selling pressures could intensify. Additionally, price is below the cloud, indicating a bearish trend

1st support: 1.0224

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

1st resistance: 1.0601
Supporting reasons:  Identified as an overlap resistance that aligns close to the 38.2% Fibonacci retracement, 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 reversal off the pivot and drop toward the 1st support

Pivot: 159.80

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

1st support: 155.99

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

1st resistance: 163.78
Supporting reasons: Identified as a swing high resistance, indicating a potential area that could halt any further upward movement.

EUR/GBP:

Potential Direction: Bullish

Overall momentum of the chart: Bullish

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

Pivot: 0.8321

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

1st support: 0.8224

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

1st resistance: 0.8454
Supporting reasons: Identified as an overlap resistance that aligns close to the 61.8% Fibonacci retracement, indicating a potential area that could halt any further upward movement.

GBP/USD:

Potential Direction: Bearish

Overall momentum of the chart: Bearish

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

Pivot: 1.2493

Supporting reasons: Identified as an overlap resistance that aligns close to the 61.8% Fibonacci retracement, indicating a potential area where selling pressures could intensify. Additionally, price is within the bearish channel, indicating a bearish trend

1st support: 1.2162

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

1st resistance: 1.2770
Supporting reasons: Identified as a multi-swing high resistance that aligns close to the 50% Fibonacci retracement, indicating a potential area that could halt any further upward movement.

GBP/JPY:

Potential Direction: Bullish
Overall momentum of the chart: Bearish

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

Pivot: 189.28

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

1st support: 184.60
Supporting reasons: Identified as a swing-low support that aligns close to the 100% Fibonacci projection, indicating a potential level where price could find support once again.

1st resistance: 194.65
Supporting reasons: Identified as an overlap resistance that aligns close to the 61.8% Fibonacci retracement, 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 off the pivot and rise toward the 1st resistance.

Pivot: 0.9010

Supporting reasons: Identified as an overlap support that aligns with the 23.6% Fibonacci retracement, indicating a potential area where buying interests could pick up to stage a rebound.

1st support: 0.8913
Supporting reasons: Identified as an overlap support that aligns close to the 38.2% Fibonacci retracement, indicating a potential level where price could find support once again.

1st resistance: 0.9193
Supporting reasons: Identified as a swing high resistance, indicating a potential area that could halt any further upward movement.

USD/JPY:

Potential Direction: Bullish

Overall momentum of the chart: Bearish

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

Pivot: 153.39

Supporting reasons: Identified as an overlap support that aligns close to the 23.6% and 50% Fibonacci retracement, indicating a potential area where buying interests could pick up to stage a rebound.

1st support: 149.27
Supporting reasons: Identified as an overlap support that aligns close to the 50% Fibonacci retracement, indicating a potential level where price could find support once more.

1st resistance: 161.72
Supporting reasons: Identified as a swing-high resistance that aligns close to the 161.8% Fibonacci extension, indicating a potential area that could halt any further upward movement.

USD/CAD:

Potential Direction: Bullish

Overall momentum of the chart: Bullish

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

Pivot: 1.4602
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 up to resume the uptrend.

1st support: 1.4449
Supporting reasons: Identified as a pullback support that aligns with a confluence of Fibonacci levels i.e. the 23.6% and 61.8% retracements, indicating a key level where the price could stabilize.

1st resistance: 1.4733
Supporting reasons: Identified as a resistance that aligns with a 161.8% Fibonacci extension, indicating a potential area that could halt any further upward movement.

AUD/USD:

Potential Direction: Bearish
Overall momentum of the chart: Bearish

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

Pivot: 0.6144

Supporting reasons: Identified as a potential breakout level where the strong bearish momentum could cause the price to continue its descent. The presence of the red Ichimoku Cloud adds further significance to the strength of the downward momentum.

1st support: 0.5990

Supporting reasons: Identified as a swing-low support that aligns with a 61.8% Fibonacci projection, suggesting a potential area where the price could stabilize once again.

1st resistance: 0.6301
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 is making a bearish break through the pivot and could potentially fall towards the 1st support.

Pivot: 0.5550

Supporting reasons: Identified as a potential breakout level where the strong bearish momentum could cause the price to continue its descent. The presence of the red Ichimoku Cloud adds further significance to the strength of the downward momentum.

1st support: 0.5468

Supporting reasons: Identified as a swing-low support that aligns with a 61.8% Fibonacci projection, suggesting a potential area where the price could stabilize once more.

1st resistance: 0.5709

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

US30 (DJIA):

Potential Direction: Bullish
Overall momentum of the chart: Neutral

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

Pivot: 43,308.85

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

1st support: 41,777.16

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

1st resistance: 44,454.00

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: Neutral

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

Pivot: 20,476.10

Supporting reasons: Identified as a pullback support that aligns with a 61.8% Fibonacci retracement, indicating a potential level where buying interests could pick up to stage a rebound.

1st support: 19,681.50

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

1st resistance: 21,754.10
Supporting reasons: Identified as a swing-high resistance that aligns close to the all-time high, indicating a potential area that could halt any further upward movement.

US500 (S&P 500): 

Potential Direction: Bullish
Overall momentum of the chart: Neutral

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

Pivot: 5,818.18

Supporting reasons: Identified as a multi-swing-low support, indicating a potential level where buying interests could pick up to stage a rebound.

1st support: 5,673.33

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

1st resistance: 5,979.20

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

BTC/USD (Bitcoin):

Potential Direction: Bullish
Overall momentum of the chart: Neutral

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

Pivot: 91,742.32

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

1st support: 73,176.19
Supporting reasons: Identified as a pullback support that aligns close to a 61.8% Fibonacci retracement, indicating a potential level where the price could stabilize once more.

1st resistance: 100,018.24
Supporting reasons: Identified as a pullback resistance that aligns with a 50% Fibonacci retracement, indicating a potential area that could halt any further upward movement.

ETH/USD (Ethereum):

Potential Direction: Bearish
Overall momentum of the chart: Bearish

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

Pivot: 2,811.75

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

1st support: 2,124.79
Supporting reasons: Identified as an overlap support, indicating a potential level where the price could stabilize once again.

1st resistance: 3,035.70
Supporting reasons: Identified as a pullback resistance that aligns close to a 50% Fibonacci retracement, indicating a potential area that could halt any further upward movement.

WTI/USD (Oil):

Potential Direction: 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: 76.02
Supporting reasons: Identified as a pullback resistance that aligns with a 38.2% Fibonacci retracement, indicating a potential area where selling pressures could intensify.

1st support: 72.43
Supporting reasons: Identified as an overlap support that aligns with a 61.8% Fibonacci retracement, indicating a key level where the price could stabilize once more.

1st resistance: 78.08
Supporting reasons: Identified as an overlap resistance that aligns close to a 61.8% Fibonacci retracement, indicating a potential area that could halt any further upward movement.

XAU/USD (GOLD):

Potential Direction: Bearish

Overall momentum of the chart: Bullish

Price could make a bearish breakout through the pivot and fall toward the 1st support. Additionally, a bearish divergence versus price is also displayed, therefore it is likely that there will be a rapid price decline.

Pivot: 2771.72

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

1st support: 2717.31

Supporting reasons: Identified as a pullback support that aligns close to the 38.2% Fibonacci retracement, indicating a potential level where price could find support once again.

1st resistance: 2,816.54

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

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The post Monday 3rd February 2025: Technical Outlook and Review first appeared on IC Markets | Official Blog.

IC Markets Asia Fundamental Forecast | 3 February 2025

What happened in the U.S. session?

The PCE Price Index – which is the Federal Reserve’s preferred gauge of inflation – showed headline PCE accelerating for the third consecutive month as it rose from 2.1% in September to 2.6% YoY in December, coming in line with estimates, while the core reading remained unchanged at 2.8% YoY, also for the third month in a row. Although the headline reading increased further in December, results came in line with all estimates providing some near-term relief for markets. Combined with a Chicago PMI which contracted for the 14th successive month, demand for the dollar initially waned as the dollar index (DXY) dropped a low of 107.78 on Friday. However, the dollar advanced following a reiteration from the White House that President Donald Trump will impose tariffs on Canadian and Mexican imports – the DXY reversed off its lows to close at 108.50 as it broke a 2-week downward streak to gain just over 1% on the week.

What does it mean for the Asia Session?

Following eight months of increased spending, retail sales in Australia declined 0.1% MoM in December as categories such as clothing, footwear, and personal accessories; and cafes, restaurants, and takeaway food experienced contractions. Despite the smaller-than-expected decline, the result points to weakening consumer spending and fuels expectations that the RBA may start cutting interest rates at the upcoming board meeting on 18th February. Combined with tariffs imposed on Canadian and Mexican imports into the U.S. by President Donald Trump over the weekend, demand for the dollar surged causing the Aussie to gap significantly lower as it opened at 0.6150 before diving as low as 0.6113 – this currency pair had closed at 0.6198 last Friday.

Following November’s 5-month high of 51.5, the Caixin Manufacturing PMI edged down to 50.5 in December, missing market estimates of 51.7. It marked the third straight month of growth in factory activity but both output and new orders expanded at slower rates while foreign orders shrank after increasing at the fastest pace for seven months in the prior month. January’s forecast of 50.6 points to a fourth successive month of expansion, albeit at a slower pace once more. Should the PMI activity show slower signs of growth, it could weigh on crude oil prices in the near- to medium-term.

The Dollar Index (DXY)

Key news events today

ISM Manufacturing PMI (3:00 pm GMT)

What can we expect from DXY today?

Manufacturing activity in the U.S. has contracted over the past nine months as reported by the Institute for Supply Management (ISM) with a reading of 49.3 in December. The forecasts for January point to an unchanged PMI figure highlighting the ongoing depressed levels of manufacturing output and could potentially create near-term headwinds for the dollar later today.

Central Bank Notes:

• The Board of Governors of the Federal Reserve System voted unanimously to maintain the Federal Funds Rate in a target range of 4.25 to 4.50% on 29 January.
• 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 the unemployment rate has stabilized at a low level in recent months, and labour market conditions remain solid. However, inflation remains somewhat elevated.
• December’s Summary of Economic Projections (SEP) now indicates just two rate cuts in 2025 totalling 50 bps, compared to the full percentage point of reductions projected in the previous quarter.
• GDP growth forecasts were revised upward for 2024 (2.5% vs. 2% in the September projection) and 2025 (2.1% vs. 2%), while remaining steady at 2% for 2026. Similarly, PCE inflation projections have been adjusted higher for 2024 (2.4% vs. 2.3%), 2025 (2.5% vs. 2.1%), and 2026 (2.1% vs. 2%).
• In 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.
• The Committee will roll over at auction the amount of principal payments from the Federal Reserve’s holdings of Treasury securities maturing in each calendar month that exceeds a cap of $25 billion per month and redeem Treasury coupon securities up to this monthly cap and Treasury bills to the extent that coupon principal payments are less than the monthly cap.
• In addition, the Committee will reinvest the amount of principal payments from the Federal Reserve’s holdings of agency debt and agency mortgage-backed securities (MBS) received in each calendar month that exceeds a cap of $35 billion per month into Treasury securities to roughly match the maturity composition of Treasury securities outstanding.
• The next meeting runs from 18 to 19 March 2025.

Next 24 Hours Bias

Strong Bullish

Gold (XAU)

Key news events today

ISM Manufacturing PMI (3:00 pm GMT)

What can we expect from Gold today?

Manufacturing activity in the U.S. has contracted over the past nine months as reported by the Institute for Supply Management (ISM) with a reading of 49.3 in December. The forecasts for January point to an unchanged PMI figure highlighting the ongoing depressed levels of manufacturing output and could potentially create near-term headwinds for the dollar and lift gold prices later today.

Next 24 Hours Bias

Medium Bearish

The Australian Dollar (AUD)

Key news events today

Retail Sales (12:30 am GMT)

What can we expect from AUD today?

Following eight months of increased spending, retail sales in Australia declined 0.1% MoM in December as categories such as clothing, footwear, and personal accessories; and cafes, restaurants, and takeaway food experienced contractions. Despite the smaller-than-expected decline, the result points to weakening consumer spending and fuels expectations that the RBA may start cutting interest rates at the upcoming board meeting on 18th February. Combined with tariffs imposed on Canadian and Mexican imports into the U.S. by President Donald Trump over the weekend, demand for the dollar surged causing the Aussie to gap significantly lower as it opened at 0.6150 before diving as low as 0.6113 – this currency pair had closed at 0.6198 last Friday.

Central Bank Notes:

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

Next 24 Hours Bias

Strong Bearish

The Kiwi Dollar (NZD)

Key news events today

No major news events.

What can we expect from NZD today?

After rising over 3% in mid-January, the Kiwi posted its first decline in three weeks as it fell 1.1% to close at 0.5630 last Friday. This currency pair gapped lower this morning to open at 0.5580 before tumbling under 0.5550 at the beginning of the Asia session.

Central Bank Notes:

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

Next 24 Hours Bias

Strong Bearish

The Japanese Yen (JPY)

Key news events today

S&P Global Manufacturing PMI (12:30 am GMT)

What can we expect from JPY today?

Japan’s manufacturing sector has contracted over the last six months with PMI activity expected to come in with a reading of 48.8 in January. Categories such as output fell the most since last April while new orders continued to drop, marking the fastest decline in six months. The yen appreciated over the past three weeks as USD/JPY declined 1.6% over this period. However, weak macroeconomic data combined with renewed demand for the dollar could lift this currency pair higher this week.

Central Bank Notes:

• The Policy Board of the Bank of Japan decided on 24 January, by an 8-1 majority vote, to set the following guidelines for money market operations for the inter-meeting period:
  1. The Bank will encourage the uncollateralized overnight call rate to remain at around 0.5%.
  2. The Bank will embark on a plan to reduce the amount of its monthly outright purchases of JGBs so that it will be about 3 trillion yen in January-March 2026; the amount will be cut down by about 400 billion yen each calendar quarter in principle.
• Japan’s economy has recovered moderately, although some weakness has been seen in part. Exports and industrial production have been more or less flat while corporate profits have been on an improving trend and business sentiment has stayed at a favourable level.
• The employment and income situation has improved moderately while private consumption has been on a moderately increasing trend despite the impact of price rises and other factors.
• On the price front, the year-on-year rate of increase in the consumer price index (CPI, all items less fresh food) has been at around 3% recently, as services prices have continued to rise moderately, reflecting factors such as wage increases, although the effects of a pass-through to consumer prices of cost increases led by the past rise in import prices have waned.
• Inflation expectations have risen moderately while underlying CPI inflation has been increasing gradually toward the price stability target of 2%. With wages continuing to rise, there has been an increase in moves to reflect higher costs, such as increased personnel expenses and distribution costs, in selling prices.
• Japan’s economy is likely to keep growing at a pace above its potential growth rate, with overseas economies continuing to grow moderately and as a virtuous cycle from income to spending gradually intensifies against the background of factors such as accommodative financial conditions.
• The next meeting is on 19 March 2025.

Next 24 Hours Bias

Strong Bullish

The Euro (EUR)

Key news events today

S&P Global Manufacturing PMI (9:00 am GMT)

Euro Area CPI (10:00 am GMT)

What can we expect from EUR today?

Manufacturing output in the Euro Area has been depressed since mid-2022 and January flash estimate showed a reading of 46.1 as output, new business and employment all continued to decline. The final PMI reading is anticipated to remain unchanged, highlighting the ongoing weakness in this sector. Meanwhile, the flash estimates for consumer inflation are expected to show headline CPI remaining unchanged at 2.4% YoY after accelerating for three successive months while the core is now expected to edge lower from 2.7% in the previous month to 2.6% in January. The Euro reversed sharply last week as it fell 1.1% and should macroeconomic data weaken further for this economic zone, additional headwinds could build for the Euro.

Central Bank Notes:

• The Governing Council reduced the three key ECB interest rates by 25 basis points on 30 January to mark the fourth 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 2.90%, 3.15% and 2.75% respectively.
• The disinflation process is well on track and inflation is set to return to the Governing Council’s 2% medium-term target in the course of this year. Most measures of underlying inflation suggest that inflation will settle at around the 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 asset purchase programme (APP) and pandemic emergency purchase programme (PEPP) portfolios are declining at a measured and predictable pace, as the Eurosystem no longer reinvests the principal payments from maturing securities.
• 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 6 March 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?

The franc weakened in the final week of January as USD/CHF stabilized around the threshold of 0.9000 last Monday before rising strongly to close at 0.9112, climbing 1.6% from its lowest point. This currency pair gapped higher this morning to open at 0.9143 and was ascending towards 0.9160 as Asian markets came online.

Central Bank Notes:

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

Next 24 Hours Bias

Medium Bullish

The Pound (GBP)

Key news events today

S&P Global Manufacturing PMI (9:30 am GMT)

What can we expect from GBP today?

Manufacturing activity in the U.K. contracted in the final quarter of 2024 and the final estimate for January is expected to show a fourth month of decline as output, new orders and employment all continued to decline, based on the flash estimates. Should the final PMI reading for January print weaker than originally anticipated, the Pound could come under pressure during the European trading hours.

Central Bank Notes:

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

Next 24 Hours Bias

Medium Bearish

The Canadian Dollar (CAD)

Key news events today

No major news events.

What can we expect from CAD today?

Following a reiteration from the White House on Friday that President Donald Trump will impose tariffs on Canadian imports over the weekend, demand for the dollar surged causing USD/CAD to rally strongly past 1.4500 to hit an overnight high of 1.4559 before closing at 1.4537. This currency pair gapped higher this morning to open at 1.4722 before briefly dipping under 1.4700 at the beginning of the Asia session.

Central Bank Notes:

• The Bank of Canada reduced its target for the overnight rate by 25 basis points bringing it down to 3% on 29 January; this marked the sixth consecutive meeting where rates were reduced.
• The bank announced its plan to complete the normalization of its balance sheet, ending quantitative tightening, and will restart asset purchases in early March, beginning gradually so that its balance sheet stabilizes and then grows modestly, in line with growth in the economy.
• Past cuts to interest rates have started to boost the economy and the recent strengthening in both consumption and housing activity is expected to continue. However, business investment remains weak while the outlook for exports is being supported by new export capacity for oil and gas.
• The Bank forecasts GDP growth will strengthen in 2025 and now projects GDP will grow by 1.8% in both 2025 and 2026, somewhat higher than potential growth.
• The labour market remains soft, with the unemployment rate at 6.7% in December. Job growth has strengthened in recent months, after lagging growth in the labour force for more than a year. Wage pressures, which have proven sticky, are showing some signs of easing.
• CPI inflation remains close to 2%, with some volatility due to the temporary suspension of the GST/HST on some consumer products. Shelter price inflation is still elevated but it is easing gradually, as expected
• A broad range of indicators, including surveys of inflation expectations and the distribution of price changes among components of the CPI, suggests that underlying inflation is close to 2% with forecasts that CPI inflation will be around the 2% target over the next two years.
• 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 a further 25 basis points to support growth and keep inflation close to the middle of the 1-3% target range.
• The cumulative reduction in the policy rate since last June is substantial as lower interest rates are boosting household spending and the economy is expected to strengthen gradually and inflation to stay close to target. However, if broad-based and significant tariffs were imposed, the resilience of Canada’s economy would be tested.
• The Bank is committed to maintaining price stability for Canadians by keeping inflation close to the 2% target.
• The next meeting is on 12 March 2025.

Next 24 Hours Bias

Strong Bullish

Oil

Key news events today

Caixin Manufacturing PMI (1:45 am GMT)

OPEC-JMMC Meeting (All Day)

What can we expect from Oil today?

Following November’s 5-month high of 51.5, the Caixin Manufacturing PMI edged down to 50.5 in December, missing market estimates of 51.7. It marked the third straight month of growth in factory activity but both output and new orders expanded at slower rates while foreign orders shrank after increasing at the fastest pace for seven months in the prior month. January’s forecast of 50.6 points to a fourth successive month of expansion, albeit at a slower pace once more. Should the PMI activity show slower signs of growth, it could weigh on crude oil prices in the near- to medium-term – WTI oil was trading around $74 per barrel as Asian markets came online.

Meanwhile, the OPEC+ meeting will convene in Vienna, Austria, on Monday where key members such as Saudi Arabia, Russia and Iran will deliberate measures aiming to support the stability and balance of oil markets by making any potential voluntary adjustments to the production levels of each member country. Crude oil prices are likely to experience high volatility should any unexpected and/or additional adjustments are announced by the committee.

Next 24 Hours Bias

Medium Bearish

The post IC Markets Asia Fundamental Forecast | 3 February 2025 first appeared on IC Markets | Official Blog.

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Tariffs to Hit Markets Today – 25% on Canada and Mexico

US markets fell on Friday ahead of the now-confirmed tariffs on Canadian, Mexican, and Chinese imports. All three major US indices closed lower, with the Dow down 0.75%, the S&P 500 down 0.5%, and the Nasdaq losing 0.28%. Investors anticipate further declines in today’s sessions following the weekend’s developments.

Currencies saw gapping at the open this morning, particularly in CAD, as markets reacted to the tariff news. The US Dollar Index (DXY) pushed higher, trading over 0.7% above Friday’s close at 109.37. US Treasury yields remained steady on Friday, but traders expect them to open higher once New York trading begins. Oil prices dipped, with Brent down 0.29% to $75.67 and WTI off 0.28% to $72.53. Meanwhile, gold hit a new all-time high of $2,817.23 before retreating to close at $2,801.12.

FX Volatility Rises on Tariffs

FX traders are bracing for heightened volatility following extreme ‘gapping’ in the Asian Monday morning session. Several major currencies saw significant differences between Friday’s closing levels and this morning’s opening trades as markets reacted to President Trump’s tariff updates.

USDCAD surged 168 pips higher in thin trading this morning and was the most affected, but gapping was also observed in the Euro, as well as in MXN and CNH in emerging markets. Further FX movements are expected throughout the day, with the US dollar strengthening on continued tariff confirmation and pulling back if any signs of a potential reprieve emerge. However, most traders anticipate that the US will proceed with implementation tomorrow and are looking for short-term dollar-buying opportunities.

Geopolitics to Dominate Market Moves Today

Markets are set for a volatile session as traders react to ongoing tariff and counter-tariff developments. While several economic data releases are scheduled today, they are expected to have only a minor impact compared to the geopolitical situation.

The Asian session has an early focus on Australian Retail Sales figures, with a 0.7% month-on-month decline expected. In Europe, Eurozone CPI data is due, with the core inflation rate forecasted to rise by 2.6% year-on-year. In the US, the first major economic release of the week will be the ISM Manufacturing PMI, expected to print at 49.3. However, geopolitical developments are likely to overshadow these data points in the short term.

The post General Market Analysis – 03/02/25 first appeared on IC Markets | Official Blog.

It looks like an interesting week ahead, with markets kicking off on the back of the global trade war reigniting over the weekend. President Trump confirmed tariffs of 25% on Canadian and Mexican imports and 10% on Chinese goods, prompting counter-tariffs and responses from all three nations.

Traders expect to see gapping on the Monday morning open as markets react to the latest updates. In addition to the heightened geopolitical situation, we have the usual data releases associated with the first week of the month, with US employment numbers taking centre stage, as well as a key interest rate update from the UK.

Here is our usual day-by-day breakdown of the major risk events this week:

Traders anticipate a lively start to the Asian open, with gapping likely across financial products as markets digest the weekend’s trade developments. Chinese markets remain on holiday, delaying their reaction for another day. On the data front, Australian Retail Sales figures are due early in the session, followed by Eurozone CPI numbers at the European open. However, the major data release of the day will come from the US, with ISM Manufacturing PMI figures scheduled for early in the US session. Despite this, US markets are expected to be dominated by the trade tariff updates from the weekend.

The macroeconomic calendar is relatively quiet on Tuesday, with little of note during the Asian and European sessions. However, the first key US employment update of the week arrives in the New York session with the latest JOLTS Job Openings data. Later in the session, we will also hear from Federal Reserve members Bostic and Daly.

The data calendar picks up early on Wednesday, with key New Zealand employment figures due in the Asian session. However, the rest of the session, including the European trading day, remains relatively uneventful. Activity increases in New York with the release of the ADP Non-Farm Employment data, followed by ISM Services PMI figures and the US Crude Oil Inventory update.

Thursday marks Waitangi Day in New Zealand, so Kiwi markets will be closed. The Asian market calendar remains light, but focus will shift to the UK once Europe opens, with Construction PMI figures scheduled before the Bank of England announces its latest interest rate decision. In the New York session, key data releases include the usual weekly US unemployment claims and Canadian Ivey PMI figures. Additionally, scheduled speeches from FOMC members Waller and Daly will be closely watched.

Friday is set to be a classic Non-Farms trading day. There are no notable data releases in the Asian or European sessions, but volatility is expected to rise significantly once New York opens. The highlight of the day is the release of the US Non-Farm Payrolls report, accompanied by Average Hourly Earnings and the Unemployment Rate. Meanwhile, Canadian traders will have their own employment data to contend with, released at the same time as the US figures. The week’s event calendar concludes later in the session with the release of the Preliminary University of Michigan Consumer Confidence and Inflation Expectations data.

The post The Week Ahead – Week Commencing 03 February 2025 first appeared on IC Markets | Official Blog.