IC Markets Europe Fundamental Forecast | 27 January 2025

What happened in the Asia session?

China released its latest PMI reports for the manufacturing and services sectors which missed market expectations. Despite a range of economic stimulus measures released by Beijing towards the end of last year, manufacturing activity contracted in January following three consecutive months of expansion while the services sector expanded at a much slower pace of 50.2. Not only has the recent data cast doubts on the effectiveness of the latest round of stimulus, but it also weighed heavily on crude oil prices as WTI oil tumbled under $74 per barrel during this session.

What does it mean for the Europe & US sessions?

ECB President Christine Lagarde will be speaking at an event hosted by the Hungarian National Bank in Budapest followed by the Ifo Business Climate indicator for Germany. This indicator decreased for a second consecutive month to 84.7 in December 2024, the lowest level since May 2020, while November’s figures saw a downward revision to 85.6. The weakness of the German economy has become chronic as business sentiment fell considerably in the manufacturing and services sectors and sentiment has also declined for retailers. Should January’s report point to another month of deterioration, the Euro could face overhead pressures during the European trading hours.

SNB Governing Board Chairman Martin Schlege will be speaking in an interview conducted by Swiss TV where any remarks on the outlook for future monetary policy action in Switzerland could inject higher volatility for the franc. The SNB has already moved ahead with four successive rate cuts in 2024 and the bias remains on the ‘dovish’ side as GDP growth was modest while underlying inflationary pressure decreased further in the third quarter of 2024.

The Dollar Index (DXY)

Key news events today

New Home Sales (3:00 pm GMT)

What can we expect from DXY today?

With housing starts surging by nearly 16% in December of 2024, the most since March 2021, markets will be looking to see if this momentum continues with new home sales in January. Sales were relatively strong for most parts of 2024 but figures tapered off in October and November. Should new home sales miss market forecasts, it could signal some weakness in the residential construction sector and place further downward pressure on the greenback.

Central Bank Notes:

• The Board of Governors of the Federal Reserve System voted by a majority to lower the Federal Funds Rate target range by 25 basis points to 4.25 to 4.50% on 18 December. Voting against the action was Beth M. Hammack, who preferred to maintain the target range at 4.5 to 4.75%.
• The Committee seeks to achieve maximum employment and inflation at the rate of 2% over the longer run and judges that the risks to achieving its employment and inflation goals are roughly in balance.
• The economic outlook is uncertain, and the Committee is attentive to the risks to both sides of its dual mandate.
• Recent indicators suggest that economic activity has continued to expand at a solid pace while labour market conditions have generally eased, and the unemployment rate has moved up but remains low.
• Inflation has made further progress toward the Committee’s 2% objective but remains somewhat elevated.
• The Summary of Economic Projections (SEP) now indicates just two rate cuts in 2025 totalling 50 bps, compared to the full percentage point of reductions projected in the previous quarter.
• GDP growth forecasts were revised upward for 2024 (2.5% vs. 2% in the September projection) and 2025 (2.1% vs. 2%), while remaining steady at 2% for 2026. Similarly, PCE inflation projections have been adjusted higher for 2024 (2.4% vs. 2.3%), 2025 (2.5% vs. 2.1%), and 2026 (2.1% vs. 2%).
• In considering any adjustments to the target range for the federal funds rate, the Committee will carefully assess incoming data, the evolving outlook, and the balance of risks.
• In assessing the appropriate stance of monetary policy, the Committee will continue to monitor the implications of incoming information for the economic outlook and would be prepared to adjust the stance of monetary policy as appropriate if risks emerge that could impede the attainment of the Committee’s goals.
• In addition, the Committee will continue reducing its holdings of Treasury securities, and agency debt and agency mortgage-backed securities. Beginning in June, the Committee slowed the pace of decline of its securities holdings by reducing the monthly redemption cap on Treasury securities from $60 billion to $25 billion.
• The Committee will maintain the monthly redemption cap on agency debt and agency mortgage-backed securities at $35 billion and will reinvest any principal payments in excess of this cap into Treasury securities.
• The next meeting runs from 28 to 29 January 2025.

Next 24 Hours Bias

Weak Bearish

Gold (XAU)

Key news events today

New Home Sales (3:00 pm GMT)

What can we expect from Gold today?

With housing starts surging by nearly 16% in December of 2024, the most since March 2021, markets will be looking to see if this momentum continues with new home sales in January. Sales were relatively strong for most parts of 2024 but figures tapered off in October and November. Should new home sales miss market forecasts, it could signal some weakness in the residential construction sector and place further downward pressure on the greenback – a result that could lift gold prices even higher.

Next 24 Hours Bias

Weak Bullish

The Australian Dollar (AUD)

Key news events today

No major news events.

What can we expect from AUD today?

The Aussie rose strongly over the last couple of weeks as it surged nearly 2.8% before closing at 0.6313 last Friday. This currency pair gapped lower to open at 0.6293 but looks set to climb above the 0.6300 level again on Monday.

Central Bank Notes:

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

Next 24 Hours Bias

Weak Bullish

The Kiwi Dollar (NZD)

Key news events today

No major news events.

What can we expect from NZD today?

Like its Pacific neighbour, the Kiwi rallied sharply over the past two weeks to gain almost 3%. After closing at 0.5709 on Friday, this currency pair dropped lower to open at 0.5690 but it could attempt to fill this gap as the day progresses.

Central Bank Notes:

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

Next 24 Hours Bias

Weak Bullish

The Japanese Yen (JPY)

Key news events today

No major news events.

What can we expect from JPY today?

The yen appreciated slightly following a 25-bps rate hike by the Bank of Japan (BoJ) last Friday. This move by the central bank was in line with market expectations and caused USD/JPY to briefly fall under the 155 level. However, due to a cautious outlook concerning further hikes in the future, this currency pair reversed the initial loss to surge past 156.50 before the start of the U.S. session. As markets reopened on Monday, USD/JPY was trading around 155.50 as demand for the yen picked up once more.

Central Bank Notes:

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

Next 24 Hours Bias

Weak Bearish

The Euro (EUR)

Key news events today

ECB President Lagarde’s Speech (8:10 am GMT)

German ifo Business Climate (9:00 am GMT)

What can we expect from EUR today?

ECB President Christine Lagarde will be speaking at an event hosted by the Hungarian National Bank in Budapest followed by the Ifo Business Climate indicator for Germany. This indicator decreased for a second consecutive month to 84.7 in December 2024, the lowest level since May 2020, while November’s figures saw a downward revision to 85.6. The weakness of the German economy has become chronic as business sentiment fell considerably in the manufacturing and services sectors and sentiment has also declined for retailers. Should January’s report point to another month of deterioration, the Euro could face overhead pressures during the European trading hours.

Central Bank Notes:

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

Next 24 Hours Bias

Weak Bullish

The Swiss Franc (CHF)

Key news events today

NB Chairman Schlegel’s Speech (9:25 pm GMT)

What can we expect from CHF today?

SNB Governing Board Chairman Martin Schlege will be speaking in an interview conducted by Swiss TV where any remarks on the outlook for future monetary policy action in Switzerland could inject higher volatility for the franc. The SNB has already moved ahead with four successive rate cuts in 2024 and the bias remains on the ‘dovish’ side as GDP growth was modest while underlying inflationary pressure decreased further in the third quarter of 2024.

Central Bank Notes:

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

Next 24 Hours Bias

Weak Bullish

The Pound (GBP)

Key news events today

No major news events.

What can we expect from GBP today?

The pound appreciated sharply as it rallied over 2.6% last week before closing at 1.2481. However, this currency pair gapped lower to open at 1.2466 and was edging lower at the beginning of the Asia session.

Central Bank Notes:

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

Next 24 Hours Bias

Weak Bullish

The Canadian Dollar (CAD)

Key news events today

No major news events.

What can we expect from CAD today?

The Loonie strengthened strongly causing USD/CAD to dive almost 1.5% at its lowest point last week before recovering to post a decline of 1% on Friday. This currency pair gapped higher to open at 1.4357 this morning to rise towards 1.4400.

Central Bank Notes:

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

Next 24 Hours Bias

Weak Bearish

Oil

Key news events today

China Manufacturing and Services PMI (1:30 am GMT)

What can we expect from Oil today?

China released its latest PMI reports for the manufacturing and services sectors which missed market expectations. Despite a range of economic stimulus measures released by Beijing towards the end of last year, manufacturing activity contracted in January following three consecutive months of expansion while the services sector expanded at a much slower pace of 50.2. Not only has the recent data cast doubts on the effectiveness of the latest round of stimulus, but it also weighed heavily on crude oil prices as WTI oil tumbled under $74 per barrel during this session.

Next 24 Hours Bias

Medium Bearish

The post IC Markets Europe Fundamental Forecast | 27 January 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 towards the 1st resistance.

Pivot: 107.70

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

1st support: 106.08
Supporting reasons: Identified as an overlap support that aligns close to the 78.6% Fibonacci retracement, indicating a potential level where price could find support once more.

1st resistance: 109.49
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 continuation towards the 1st support.

Pivot: 1.0461

Supporting reasons: Identified as an overlap resistance that aligns close to the 127.2% Fibonacci extension, indicating a potential area where selling pressures could intensify

1st support: 1.0311

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

1st resistance: 1.0614
Supporting reasons:  Identified as an overlap resistance that aligns close to the 161.8% Fibonacci extension, indicating a potential area that could halt any further upward movement.

EUR/JPY:

Potential Direction: Bearish
Overall momentum of the chart: Bullish

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

Pivot: 165.15

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

1st support: 159.94

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

1st resistance: 168.29
Supporting reasons: Identified as a pullback resistance , indicating a potential area that could halt any further upward movement.

EUR/GBP:

Potential Direction: Bearish

Overall momentum of the chart: Bullish

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

Pivot: 0.8449
Supporting reasons: Identified as a multi-swing high resistance, indicating a potential area where selling pressures could intensify

1st support: 0.8361

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: 0.8511
Supporting reasons: Identified as a pullback resistance, indicating a potential area that could halt any further upward movement.

GBP/USD:

Potential Direction: Bearish

Overall momentum of the chart: Bearish

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

Pivot: 1.2495

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

1st support: 1.2241

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

1st resistance: 1.2690
Supporting reasons: Identified as an overlap resistance that aligns close to the 78.6% Fibonacci retracement, indicating a potential area that could halt any further upward movement.

GBP/JPY:

Potential Direction: Bearish
Overall momentum of the chart: Bearish

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

Pivot: 194.50

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

1st support: 189.21
Supporting reasons: Identified as a swing low support, indicating a potential level where price could find support.

1st resistance: 197.58
Supporting reasons: Identified as a pullback resistance, indicating a potential area that could halt any further upward movement.

USD/CHF:

Potential Direction: Bearish

Overall momentum of the chart: Bullish

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

Pivot: 0.9091

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

1st support: 0.8914
Supporting reasons: Identified as an overlap support that aligns with the 61.8% Fibonacci retracement, indicating a potential level where price could find support once again.

1st resistance: 0.9194
Supporting reasons: Identified as a multi swing high resistance, indicating a potential area that could halt any further upward movement.

USD/JPY:

Potential Direction: Bearish

Overall momentum of the chart: Bullish

Price could potentially make a bearish continuation towards the 1st support.

Pivot: 156.72
Supporting reasons: Identified as an overlap resistance, indicating a potential area where selling pressures could intensify

1st support: 152.76
Supporting reasons: Identified as a pullback support that aligns close to the 50% Fibonacci retracement, indicating a potential level where price could find support once more.

1st resistance: 160.18
Supporting reasons: Identified as a pullback resistance, indicating a potential area that could halt any further upward movement.

USD/CAD:

Potential Direction: Bearish

Overall momentum of the chart: Neutral

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

Pivot: 1.4517
Supporting reasons: Identified as a multi-swing-high resistance, indicating a potential area where selling pressures could intensify

1st support: 1.4299
Supporting reasons: Identified as multi-swing-low support that aligns close to a 23.65% Fibonacci retracement, indicating a key level where the price could stabilize once more.

1st resistance: 1.4690
Supporting reasons: Identified as a swing-high resistance, indicating a potential area that could halt any further upward movement.

AUD/USD:

Potential Direction: Bearish
Overall momentum of the chart: Bearish

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

Pivot: 0.6301

Supporting reasons: Identified as a pullback resistance that aligns close to a 23.6% Fibonacci retracement, indicating a potential area where selling pressures could intensify. The presence of the red Ichimoku Cloud adds further significance to the strength of the bearish momentum.

1st support: 0.6183

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

1st resistance: 0.6397
Supporting reasons: Identified as a pullback resistance, indicating a potential area that could halt any further upward movement.

NZD/USD

Potential Direction: Bearish
Overall momentum of the chart: Bearish

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

Pivot: 0.5684

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

1st support: 0.5553

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

1st resistance: 0.5758

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

US30 (DJIA):

Potential Direction: Bearish
Overall momentum of the chart: Bullish

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

Pivot: 44,527.60

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

1st support: 43,330.76

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: 46.048.47

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

DE40 (DAX):

Potential Direction: Bullish
Overall momentum of the chart: Bullish

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

Pivot: 20,446.03
Supporting reasons: Identified as a pullback support that aligns with a 23.6% Fibonacci retracement, indicating a potential area where buying interests could pick up to resume the uptrend.

1st support: 19,673.95

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

1st resistance: 21,471.10
Supporting reasons: Identified as a swing-high resistance that aligns with a 100% Fibonacci projection, indicating a potential area that could halt any further upward movement.

US500 (S&P 500): 

Potential Direction: Bullish
Overall momentum of the chart: Bullish

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

Pivot: 5,981.20

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: 5,822.54

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

1st resistance: 6,174.50

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.

BTC/USD (Bitcoin):

Potential Direction: Bearish
Overall momentum of the chart: Neutral

Price is falling towards the pivot and could potentially make a bearish break below this level to fall towards the 1st support.

Pivot: 101,637.89

Supporting reasons: Identified as a potential breakout level where intense selling pressures could increase the bearish momentum.

1st support: 91,742.32
Supporting reasons: Identified as an overlap support, indicating a potential level where the price could stabilize once more.

1st resistance: 106,800.00
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: Bullish
Overall momentum of the chart: Neutral

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

Pivot: 2,928.97

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

1st support: 2,347.98
Supporting reasons: Identified as a multi-swing-low support, indicating a potential level where the price could stabilize once again.

1st resistance: 3,539.16
Supporting reasons: Identified as an overlap resistance that aligns close to the 78.6% Fibonacci retracement, indicating a potential area that could halt any further upward movement.

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: 72.73
Supporting reasons: Identified as an overlap support that aligns close to a 61.8% Fibonacci retracement, indicating a potential level where buying interests could pick up to stage a rebound.

1st support: 66.98
Supporting reasons: Identified as a multi-swing-low support, indicating a key level where the price could stabilize.

1st resistance: 77.76
Supporting reasons: Identified as a pullback resistance, indicating a potential area that could halt any further upward movement.

XAU/USD (GOLD):

Potential Direction: Bearish

Overall momentum of the chart: Bullish

Price could potentially make a bearish continuation towards the 1st support.

Pivot: 2778

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

1st support: 2,718.90

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

1st resistance: 2815.39

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

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The post Monday 27th January 2025: Technical Outlook and Review first appeared on IC Markets | Official Blog.

IC Markets Asia Fundamental Forecast | 27 January 2025

What happened in the U.S. session?

The flash Composite PMI showed manufacturing activity expanding for the first time in seven months, beating market expectations of 49.7 and signalling a slight improvement in manufacturing conditions, while services fell from 56.8 in the previous month to 52.8 for the month of January. Not only did the services PMI miss market forecasts of 56.5, but it also marked the softest pace of expansion since April 2024. After expanding strongly from May through December of last year, overall PMI activity has slowed noticeably putting downward pressure on the greenback. The dollar index (DXY) fell from 107.67 to as low as 107.21 before retracing slightly higher to end the session at 107.46, registering a second successive week of closing in the red.

What does it mean for the Asia Session?

China will release its latest PMI reports for the manufacturing and services sectors for the month of January on Monday. Manufacturing activity unexpectedly fell to 50.1 in December 2024 from November’s 7-month high. However, it marked the third straight month of expansion in factory activity. On the other hand, services activity jumped strongly to 52.2 in December to register the highest figure since March. The recent flurry of stimulus measures by the government and the central bank is beginning to yield results and should January’s PMIs come in strong, it could function as a strong tailwind not only for crude oil prices but for the domestic stock market as well.

The Dollar Index (DXY)

Key news events today

New Home Sales (3:00 pm GMT)

What can we expect from DXY today?

With housing starts surging by nearly 16% in December of 2024, the most since March 2021, markets will be looking to see if this momentum continues with new home sales in January. Sales were relatively strong for most parts of 2024 but figures tapered off in October and November. Should new home sales miss market forecasts, it could signal some weakness in the residential construction sector and place further downward pressure on the greenback.

Central Bank Notes:

• The Board of Governors of the Federal Reserve System voted by a majority to lower the Federal Funds Rate target range by 25 basis points to 4.25 to 4.50% on 18 December. Voting against the action was Beth M. Hammack, who preferred to maintain the target range at 4.5 to 4.75%.
• The Committee seeks to achieve maximum employment and inflation at the rate of 2% over the longer run and judges that the risks to achieving its employment and inflation goals are roughly in balance.
• The economic outlook is uncertain, and the Committee is attentive to the risks to both sides of its dual mandate.
• Recent indicators suggest that economic activity has continued to expand at a solid pace while labour market conditions have generally eased, and the unemployment rate has moved up but remains low.
• Inflation has made further progress toward the Committee’s 2% objective but remains somewhat elevated.
• The Summary of Economic Projections (SEP) now indicates just two rate cuts in 2025 totalling 50 bps, compared to the full percentage point of reductions projected in the previous quarter.
• GDP growth forecasts were revised upward for 2024 (2.5% vs. 2% in the September projection) and 2025 (2.1% vs. 2%), while remaining steady at 2% for 2026. Similarly, PCE inflation projections have been adjusted higher for 2024 (2.4% vs. 2.3%), 2025 (2.5% vs. 2.1%), and 2026 (2.1% vs. 2%).
• In considering any adjustments to the target range for the federal funds rate, the Committee will carefully assess incoming data, the evolving outlook, and the balance of risks.
• In assessing the appropriate stance of monetary policy, the Committee will continue to monitor the implications of incoming information for the economic outlook and would be prepared to adjust the stance of monetary policy as appropriate if risks emerge that could impede the attainment of the Committee’s goals.
• In addition, the Committee will continue reducing its holdings of Treasury securities, and agency debt and agency mortgage-backed securities. Beginning in June, the Committee slowed the pace of decline of its securities holdings by reducing the monthly redemption cap on Treasury securities from $60 billion to $25 billion.
• The Committee will maintain the monthly redemption cap on agency debt and agency mortgage-backed securities at $35 billion and will reinvest any principal payments in excess of this cap into Treasury securities.
• The next meeting runs from 28 to 29 January 2025.

Next 24 Hours Bias

Weak Bearish

Gold (XAU)

Key news events today

New Home Sales (3:00 pm GMT)

What can we expect from Gold today?

With housing starts surging by nearly 16% in December of 2024, the most since March 2021, markets will be looking to see if this momentum continues with new home sales in January. Sales were relatively strong for most parts of 2024 but figures tapered off in October and November. Should new home sales miss market forecasts, it could signal some weakness in the residential construction sector and place further downward pressure on the greenback – a result that could lift gold prices even higher.

Next 24 Hours Bias

Weak Bullish

The Australian Dollar (AUD)

Key news events today

No major news events.

What can we expect from AUD today?

The Aussie rose strongly over the last couple of weeks as it surged nearly 2.8% before closing at 0.6313 last Friday. This currency pair gapped lower to open at 0.6293 but looks set to climb above the 0.6300 level again on Monday.

Central Bank Notes:

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

Next 24 Hours Bias

Weak Bullish

The Kiwi Dollar (NZD)

Key news events today

No major news events.

What can we expect from NZD today?

Like its Pacific neighbour, the Kiwi rallied sharply over the past two weeks to gain almost 3%. After closing at 0.5709 on Friday, this currency pair dropped lower to open at 0.5690 but it could attempt to fill this gap as the day progresses.

Central Bank Notes:

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

Next 24 Hours Bias

Weak Bullish

The Japanese Yen (JPY)

Key news events today

No major news events.

What can we expect from JPY today?

The yen appreciated slightly following a 25-bps rate hike by the Bank of Japan (BoJ) last Friday. This move by the central bank was in line with market expectations and caused USD/JPY to briefly fall under the 155 level. However, due to a cautious outlook concerning further hikes in the future, this currency pair reversed the initial loss to surge past 156.50 before the start of the U.S. session. As markets reopened on Monday, USD/JPY was trading around 155.50 as demand for the yen picked up once more.

Central Bank Notes:

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

Next 24 Hours Bias

Weak Bearish

The Euro (EUR)

Key news events today

ECB President Lagarde’s Speech (8:10 am GMT)

German ifo Business Climate (9:00 am GMT)

What can we expect from EUR today?

ECB President Christine Lagarde will be speaking at an event hosted by the Hungarian National Bank in Budapest followed by the Ifo Business Climate indicator for Germany. This indicator decreased for a second consecutive month to 84.7 in December 2024, the lowest level since May 2020, while November’s figures saw a downward revision to 85.6. The weakness of the German economy has become chronic as business sentiment fell considerably in the manufacturing and services sectors and sentiment has also declined for retailers. Should January’s report point to another month of deterioration, the Euro could face overhead pressures during the European trading hours.

Central Bank Notes:

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

Next 24 Hours Bias

Weak Bullish

The Swiss Franc (CHF)

Key news events today

NB Chairman Schlegel’s Speech (9:25 pm GMT)

What can we expect from CHF today?

SNB Governing Board Chairman Martin Schlege will be speaking in an interview conducted by Swiss TV where any remarks on the outlook for future monetary policy action in Switzerland could inject higher volatility for the franc. The SNB has already moved ahead with four successive rate cuts in 2024 and the bias remains on the ‘dovish’ side as GDP growth was modest while underlying inflationary pressure decreased further in the third quarter of 2024.

Central Bank Notes:

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

Next 24 Hours Bias

Weak Bullish

The Pound (GBP)

Key news events today

No major news events.

What can we expect from GBP today?

The pound appreciated sharply as it rallied over 2.6% last week before closing at 1.2481. However, this currency pair gapped lower to open at 1.2466 and was edging lower at the beginning of the Asia session.

Central Bank Notes:

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

Next 24 Hours Bias

Weak Bullish

The Canadian Dollar (CAD)

Key news events today

No major news events.

What can we expect from CAD today?

The Loonie strengthened strongly causing USD/CAD to dive almost 1.5% at its lowest point last week before recovering to post a decline of 1% on Friday. This currency pair gapped higher to open at 1.4357 this morning to rise towards 1.4400.

Central Bank Notes:

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

Next 24 Hours Bias

Weak Bearish

Oil

Key news events today

China Manufacturing and Services PMI (1:30 am GMT)

What can we expect from Oil today?

China will release its latest PMI reports for the manufacturing and services sectors for the month of January on Monday. Manufacturing activity unexpectedly fell to 50.1 in December 2024 from November’s 7-month high. However, it marked the third straight month of expansion in factory activity. On the other hand, services activity jumped strongly to 52.2 in December to register the highest figure since March. The recent flurry of stimulus measures by the government and the central bank is beginning to yield results and should January’s PMIs come in strong, it could function as a strong tailwind for crude oil prices.

Next 24 Hours Bias

Medium Bearish

The post IC Markets Asia Fundamental Forecast | 27 January 2025 first appeared on IC Markets | Official Blog.

US Markets Drift After Mixed Data – Nasdaq Down 0.5%

US stock markets pulled back on Friday as investors digested a mixed bag of data and earnings reports. All three major indices dropped on the day: the Dow lost 0.32%, the S&P 0.29%, and the Nasdaq fell 0.50%. The dollar suffered a substantial hit against most major currencies, with the DXY falling 0.6% to 107.44. US Treasury yields also pulled back, with the 2-year yield losing 2.3 basis points to 4.266% and the 10-year falling 2.2 basis points to 4.621%. Oil prices saw quieter trading, with Brent adding 0.27% to $78.50 and WTI closing just 0.05% higher at $74.66 per barrel. Meanwhile, gold attempted a fresh all-time high on the back of haven demand and a weaker dollar, ultimately closing 0.57% higher at $2,769.27 per ounce.

Dollar Under Pressure on Tariff Uncertainty

The US dollar slipped further on Friday as FX traders looked to President Trump and the new administration for clarity on trade tariffs. The dollar had appreciated strongly in recent months on the prospect of hard tariffs and inflationary conditions in the US, with many expecting continued gains after Trump’s inauguration. However, the President has yet to confirm the size of tariffs to be implemented, leading traders to hit the dollar hard, with the DXY losing over 2.5% from its January high. Traders will now monitor updates closely for clarity on these decisions, as stronger and more aggressive tariffs could push the dollar back to recent highs, while ongoing uncertainty or weaker tariff implementation could trigger further declines.

Quiet Calendar Day to Kick Off the Trading Week

It is a relatively quiet start to a central bank-heavy trading week. Chinese markets are open today but will close for the rest of the week for Lunar New Year celebrations. Key data is expected from the world’s second-largest economy midway through the Asian session, with manufacturing and non-manufacturing figures forecast at 50.1 and 52.1, respectively. Volatility is anticipated around the event. During the European session, ECB President Christine Lagarde is set to speak ahead of this week’s crucial rate decision, accompanied by the release of German IFO Business Climate data. The US session is relatively light, with US New Home Sales data the main release. However, some traders remain cautious about a scheduled TV interview with the SNB’s Martin Schlegel near the New York close, when Swiss franc liquidity tends to be at its lowest.

The post General Market Analysis – 27/01/24 first appeared on IC Markets | Official Blog.

There is another significant week ahead for financial markets, with a series of major central banks making rate decisions, key data releases, and potential liquidity issues as Lunar New Year celebrations begin.

Central bank rate decisions dominate the event calendar this week, and traders expect market movements around these announcements, as many remain “live”. Newswires will also be closely monitored, with markets anticipating increased volatility from any updates related to the US and the new administration.

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

Liquidity could be an issue throughout the week in the Asian session due to holidays across the region. Australian markets are closed on Monday, and the initial focus for traders will be on China, with key PMI data scheduled for release before Chinese markets close for the remainder of the week for Lunar New Year. European markets will open with a focus on the ECB, as President Christine Lagarde speaks ahead of the release of German IFO Business Climate data. In the US session, New Home Sales data will be published.

The trading day is expected to start quietly, with little on the calendar during the Asian and European sessions. However, activity should pick up once New York opens, as Durable Goods and CB Consumer Confidence data are due for release in the US.

Asian markets will be active on Wednesday morning, with the Bank of Japan’s Monetary Policy Meeting Minutes and key Australian CPI data being released mid-morning. Central banks will dominate the rest of the day. The focus will be on the UK during the European session, with BOE Governor Andrew Bailey set to testify on the Financial Stability Report before the Treasury Select Committee. As the New York session opens, attention will shift to the Bank of Canada’s latest rate decision. Later in the day, the FOMC will deliver its latest rate update, closing out the session.

Thursday is expected to bring quieter markets, though traders anticipate continued fallout from the FOMC update affecting the Asian session. There are no significant events scheduled for Asia, but the key European Central Bank rate decision will take place midway through the London session. In the US session, crucial data will be released, including the latest Advance GDP figures and Weekly Unemployment Claims.

Friday will likely be another subdued session in Asia, but tier-one data from Europe and North America will provide direction in the latter part of the day. The European session will focus on Germany, with the release of Preliminary CPI data. Once the New York session begins, Canadian GDP data will be released alongside the US Core PCE Price Index and Employment Cost Index figures.

The post The Week Ahead – Week Commencing 27 January 2025 first appeared on IC Markets | Official Blog.

The post Ex-Dividend 27/1/2025 first appeared on IC Markets | Official Blog.

At IC Markets Global, we’re always looking for ways to improve your trading experience and enhance risk management. We’re excited to announce the launch of our new Dynamic Leverage Execution Plugin, a powerful tool designed to dynamically adjust margin requirements based on exposure levels. This innovative feature will go live on 27th January.

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The post Introducing the Dynamic Leverage Execution Plugin: Smarter Risk Management for Traders first appeared on IC Markets | Official Blog.

Global Markets:

•  Asian Stock Markets : Nikkei up 0.01%, Shanghai Composite up 0.64%, Hang Seng up 2.14% ASX up 0.36%
• Commodities : Gold at $2782.35 (0.6%), Silver at $31.25 (1.48%), Brent Oil at $78.39 (-0.09%), WTI Oil at $74.54 (-0.03%)
• Rates : US 10-year yield at 4.634, UK 10-year yield at 4.6355, Germany 10-year yield at 2.513

News & Data:

• (CAD) Core Retail Sales m/m  -0.7% vs 0.1% expected
• (CAD) Retail Sales m/m  0.0% vs 0.2% expected
• (USD) Unemployment Claims 223K vs 221K expected

Markets Update:

Asia-Pacific markets climbed on Friday after the S&P 500 hit record highs overnight, driven by U.S. President Donald Trump’s push for lower interest rates and cheaper oil. Japan’s central bank raised its policy rate by 25 basis points to 0.5%, the highest since 2008, in line with expectations. Following the decision, the yen slightly weakened to 155.18 per dollar. Meanwhile, Japan’s core inflation rate rose to a 16-month high of 3% in December.

Japan’s Nikkei 225 edged up 0.09%, while the Topix gained 0.16%. Hong Kong’s Hang Seng surged 2.06%, and China’s CS1300 advanced 0.83%. In South Korea, the Kospi added 0.58%, while the Kosdaq climbed 0.87%. Australia’s S&P/ASX 200 closed 0.36% higher at 8,408.9. Singapore’s central bank also eased its monetary policy in response to rising core inflation.

In the U.S., the S&P 500 gained 0.53%, setting an all-time intraday high for the second straight session, closing at 6,118.71. The Dow Jones Industrial Average rose 408.34 points (0.92%) to 44,565.07, while the Nasdaq Composite inched up 0.22% to 20,053.68. These gains marked the fourth consecutive winning session for all three major indexes, reflecting strong investor sentiment.

Global markets remained optimistic amid monetary policy adjustments and inflation trends. Investors closely watched central bank moves, with Japan and Singapore making key policy changes. The continued strength of U.S. stocks further reinforced confidence in economic resilience despite inflation concerns.

Upcoming Events: 

• 02:45 PM GMT – USD Flash Manufacturing PMI
• 02:45 PM GMT – USD Flash Services PMI

The post Friday 24th January 2025: Global Markets Rally as U.S. Stocks Hit Record Highs and Japan Raises Interest Rates first appeared on IC Markets | Official Blog.

IC Markets Europe Fundamental Forecast | 24 January 2025

What happened in the Asia session?

During the Asian trading session today, the Bank of Japan (BOJ) raised its policy interest rate by 25 basis points to 0.5%, the highest level since 2008. Following the announcement, the Japanese yen experienced volatile trading but ultimately remained stable at around 156 per U.S. dollar. Investors are now focusing on BOJ Governor Kazuo Ueda’s upcoming briefing for insights into future monetary policy directions.

What does it mean for the Europe & US sessions?

The Bank of Japan’s recent 25 basis point rate hike to 0.5%—its highest since 2008—has led to a stronger yen, which may influence European and U.S. forex sessions by increasing demand for yen-denominated assets. This shift could result in a reallocation of investments, potentially affecting currency pairs such as EUR/JPY and USD/JPY. 

Additionally, U.S. President Donald Trump’s preference for negotiations over tariffs with China has bolstered market sentiment, leading to a weaker U.S. dollar. This development may impact USD-related currency pairs during the European and U.S. trading sessions

The Dollar Index (DXY)

Key news events today

Flash Manufacturing PMI (2:45 pm GMT)

Flash Services PMI (2:45 pm GMT)

What can we expect from DXY today?

The U.S. Dollar Index (DXY) is expected to be influenced by the upcoming Flash Manufacturing and Services PMIs, scheduled for release at 2:45 PM GMT today. Stronger-than-expected PMI readings could bolster the DXY, reflecting economic resilience, while weaker data may exert downward pressure. Additionally, the U.S. plans to impose a 25% tariff on goods from Mexico and Canada starting February 1, 2025, which may further impact the DXY. 

Central Bank Notes:

• The Board of Governors of the Federal Reserve System voted by a majority to lower the Federal Funds Rate target range by 25 basis points to 4.25 to 4.50% on 18 December. Voting against the action was Beth M. Hammack, who preferred to maintain the target range at 4.5 to 4.75%.
• The Committee seeks to achieve maximum employment and inflation at the rate of 2% over the longer run and judges that the risks to achieving its employment and inflation goals are roughly in balance.
• The economic outlook is uncertain, and the Committee is attentive to the risks to both sides of its dual mandate.
• Recent indicators suggest that economic activity has continued to expand at a solid pace while labour market conditions have generally eased, and the unemployment rate has moved up but remains low.
• Inflation has made further progress toward the Committee’s 2% objective but remains somewhat elevated.
• The Summary of Economic Projections (SEP) now indicates just two rate cuts in 2025 totalling 50 bps, compared to the full percentage point of reductions projected in the previous quarter.
• GDP growth forecasts were revised upward for 2024 (2.5% vs. 2% in the September projection) and 2025 (2.1% vs. 2%), while remaining steady at 2% for 2026. Similarly, PCE inflation projections have been adjusted higher for 2024 (2.4% vs. 2.3%), 2025 (2.5% vs. 2.1%), and 2026 (2.1% vs. 2%).
• In considering any adjustments to the target range for the federal funds rate, the Committee will carefully assess incoming data, the evolving outlook, and the balance of risks.
• In assessing the appropriate stance of monetary policy, the Committee will continue to monitor the implications of incoming information for the economic outlook and would be prepared to adjust the stance of monetary policy as appropriate if risks emerge that could impede the attainment of the Committee’s goals.
• In addition, the Committee will continue reducing its holdings of Treasury securities, and agency debt and agency mortgage-backed securities. Beginning in June, the Committee slowed the pace of decline of its securities holdings by reducing the monthly redemption cap on Treasury securities from $60 billion to $25 billion.
• The Committee will maintain the monthly redemption cap on agency debt and agency mortgage-backed securities at $35 billion and will reinvest any principal payments in excess of this cap into Treasury securities.
• The next meeting runs from 28 to 29 January 2025.

Next 24 Hours Bias

Weak Bullish

Gold (XAU)

Key news events today

Flash Manufacturing PMI (2:45 pm GMT)

Flash Services PMI (2:45 pm GMT)

What can we expect from Gold today?

As of January 24, 2025, gold prices have retreated from near three-month highs, with spot gold at $2,751.99 per ounce, influenced by a strengthening U.S. dollar and anticipation of President Donald Trump’s tariff policies. 

Factors Influencing Gold Prices Today:

• U.S. Dollar Strength: A stronger dollar makes gold more expensive for holders of other currencies, typically applying downward pressure on gold prices.

• Upcoming Economic Data: Investors are monitoring U.S. Flash Manufacturing and Services PMIs, scheduled for release at 2:45 PM GMT. Positive data could bolster the dollar, potentially leading to a decline in gold prices.

• Geopolitical Developments: President Trump’s proposed 25% tariffs on imports from Mexico and Canada, effective February 1, 2025, may increase market uncertainty, enhancing gold’s appeal as a safe-haven asset. 

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 Australian dollar is trading at approximately 0.6272, with no major economic news expected today; its movements will likely be influenced by external factors such as U.S. economic data. 

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?

the New Zealand dollar (NZD) is trading at approximately 0.5665 against the U.S. dollar. 

In the absence of major economic news today, the NZD’s movements are expected to be influenced by external factors, particularly U.S. economic data and global market sentiment. 

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

BOJ Press Conference (Tentative)

BOJ Policy Rate (Tentative)
Monetary Policy Statement (Tentative)
BOJ Outlook Report (Tentative)

What can we expect from JPY today?

The Bank of Japan (BOJ) raised its interest rate by 25bps to 0.5%, the highest since 2008, causing JPY volatility but keeping it stable at around 156 per USD. The rate hike reflects confidence in sustained inflation near 2%, with traders now focusing on Governor Ueda’s briefing for policy direction. 

Further tightening signals could strengthen JPY, while uncertainty may lead to market volatility. Investors should monitor BOJ statements and global economic developments for potential shifts in JPY valuation throughout the day.

Central Bank Notes:

• The Policy Board of the Bank of Japan decided on 19 December, 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 0.25%.
  2. The Bank will embark on a plan to reduce the amount of its monthly outright purchases of JGBs so that it will be about 3 trillion yen in January-March 2026; the amount will be cut down by about 400 billion yen each calendar quarter in principle.
• Japan’s economy has recovered moderately, although some weakness has been seen in part. Exports and industrial production have been more or less flat while corporate profits have been on an improving trend and business sentiment has stayed at a favourable level.
• The employment and income situation has improved moderately while private consumption has been on a 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 in the range of 2.0-2.5% recently, as services prices have continued to rise moderately, reflecting factors such as wage increases, although the effects of a passthrough to consumer prices of cost increases led by the past rise in import prices have waned; inflation expectations have risen moderately.
• With regard to the CPI (all items less fresh food), while the effects of the pass-through to consumer prices of cost increases led by the past rise in import prices are expected to wane, underlying CPI inflation is expected to increase gradually, since it is projected that the output gap will improve and that medium- to long-term inflation expectations will rise with a virtuous cycle between wages and prices continuing to intensify.
• Japan’s economy is likely to keep growing at a pace above its potential growth rate, with overseas economies continuing to grow moderately and as a virtuous cycle from income to spending gradually intensifies against the background of factors such as accommodative financial conditions.
• The next meeting is on 24 January 2025.

Next 24 Hours Bias

Weak Bullish

The Euro (EUR)

Key news events today

French Flash Manufacturing PMI (8:15 am GMT)

French Flash Services PMI (8:15 am GMT)

German Flash Manufacturing PMI (8:30 am GMT)

German Flash Services PMI (8:30 am GMT)

What can we expect from EUR today?

As of January 24, 2025, the euro (EUR) is trading near $1.04, approaching parity with the U.S. dollar. This decline is attributed to a strengthening dollar, driven by robust U.S. economic data and expectations of pro-growth policies under President Donald Trump’s administration.

 In contrast, the eurozone faces economic challenges, including weakened manufacturing sectors and policy uncertainties in major economies like Germany and France. The International Monetary Fund has revised its 2025 growth forecast for the euro area downward, citing these concerns. Additionally, the European Central Bank is anticipated to implement interest rate cuts to counteract potential adverse effects on eurozone growth, especially amid easing fears of U.S. trade tariffs. 

Central Bank Notes:

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

Next 24 Hours Bias

Weak Bearish

The Swiss Franc (CHF)

Key news events today

No major news events.

What can we expect from CHF today?

The USD/CHF pair is trading near 0.9038-0.9110, with no major news expected today. Market sentiment and technical factors will drive movement, with indicators showing a bearish bias. 

Central Bank Notes:

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

Next 24 Hours Bias

Weak Bearish

The Pound (GBP)

Key news events today

Flash Manufacturing PMI (9:30 am GMT)

Flash Services PMI (9:30 am GMT)

What can we expect from GBP today?

The British pound (GBP) is trading at approximately $1.24 against the U.S. dollar. The upcoming release of the UK’s Flash Manufacturing and Services PMIs is anticipated to influence the GBP/USD pair. 

The Manufacturing PMI is projected to remain in contraction territory, with a forecast of 46.9, slightly below the previous 47.0. Conversely, the Services PMI is expected to show modest expansion, with a forecast of 50.8, down from the prior 51.1. If these PMIs meet or exceed expectations, the GBP may strengthen; however, weaker-than-expected data could exert downward pressure

Central Bank Notes:

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

Next 24 Hours Bias

Weak Bullish

The Canadian Dollar (CAD)

Key news events today

No major news events.

What can we expect from CAD today?

The USD/CAD pair is trading near 1.4359, with no major news expected today. Technical indicators suggest a bearish outlook, with resistance levels limiting upward movement. Market sentiment, oil prices, and unexpected geopolitical developments could influence price action

Central Bank Notes:

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

Next 24 Hours Bias

Medium Bearish

Oil

Key news events today

No major news events.

What can we expect from Oil today?

In the absence of major news today, oil prices are expected to remain relatively stable, influenced by routine market factors such as supply-demand dynamics and investor sentiment. Analysts forecast Brent crude to average around $74 per barrel in 2025

Next 24 Hours Bias

Weak Bullish

The post IC Markets Europe Fundamental Forecast | 24 January 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 towards the 1st resistance.

Pivot: 107.56

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

1st support: 106.61
Supporting reasons: Identified as an overlap support that aligns close to the 78.6% Fibonacci retracement, indicating a potential level where price could find support once more.

1st resistance: 108.93
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.

EUR/USD:

Potential Direction: Bearish

Overall momentum of the chart: Bearish

Price could potentially make a bearish continuation towards the 1st support.

Pivot: 1.0462

Supporting reasons: Identified as an overlap resistance that aligns with the 61.8% Fibonacci retracement and the 100% Fibonacci projection, indicating a potential area where selling pressures could intensify

1st support: 1.0346

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

1st resistance: 1.0540
Supporting reasons:  Identified as an overlap resistance, indicating a potential area that could halt any further upward movement.

EUR/JPY:

Potential Direction: Bullish
Overall momentum of the chart: Bullish

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

Pivot: 162.16

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

1st support: 160.10

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

1st resistance: 163.80
Supporting reasons: Identified as an overlap resistance that aligns with the 127.20% Fibonacci extension and the 100% Fibonacci projection, indicating a potential area that could halt any further upward movement.

EUR/GBP:

Potential Direction: Bearish

Overall momentum of the chart: Bullish

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

Pivot: 0.8463
Supporting reasons: Identified as a multi-swing high resistance, indicating a potential area where selling pressures could intensify

1st support: 0.8409

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

1st resistance: 0.8517
Supporting reasons: Identified as a resistance that aligns with the 61.8% Fibonacci projection, indicating a potential area that could halt any further upward movement.

GBP/USD:

Potential Direction: Bullish

Overall momentum of the chart: Bearish

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

Pivot: 1.2241

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

1st support: 1.2099

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

1st resistance: 1.2480
Supporting reasons: Identified as a pullback resistance that aligns close to the 50% Fibonacci retracement, 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 to fall towards the 1st support.

Pivot: 194.12

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

1st support: 191.83
Supporting reasons: Identified as an overlap support, indicating a potential level where price could find support.

1st resistance: 197.16
Supporting reasons: Identified as a pullback resistance, indicating a potential area that could halt any further upward movement.

USD/CHF:

Potential Direction: Bearish

Overall momentum of the chart: Bullish

Price could potentially make a bearish continuation towards the 1st support.

Pivot: 0.9089
Supporting reasons: Identified as a pullback resistance, indicating a potential area where selling pressures could intensify

1st support: 0.9009
Supporting reasons: Identified as an overlap support that aligns with the 38.2% Fibonacci retracement and the 100% Fibonacci projection, indicating a potential level where price could find support once again.

1st resistance: 0.9181
Supporting reasons: Identified as a multi swing high resistance, indicating a potential area that could halt any further upward movement.

USD/JPY:

Potential Direction: Bearish

Overall momentum of the chart: Bullish

Price could potentially make a bearish continuation towards the 1st support.

Pivot: 156.58
Supporting reasons: Identified as an overlap resistance, indicating a potential area where selling pressures could intensify

1st support: 154.47
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 more.

1st resistance: 158.55
Supporting reasons: Identified as a multi swing high resistance, indicating a potential area that could halt any further upward movement.

USD/CAD:

Potential Direction: Bearish

Overall momentum of the chart: Neutral

Price could potentially make a bearish continuation towards the 1st support.

Pivot: 1.4398
Supporting reasons: Identified as an overlap resistance that aligns close to the 50% Fibonacci retracement, indicating a potential area where selling pressures could intensify

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

1st resistance: 1.4476
Supporting reasons: Identified as a swing-high resistance, indicating a potential area that could halt any further upward movement.

AUD/USD:

Potential Direction: Bearish
Overall momentum of the chart: Bullish

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

Pivot: 0.6307

Supporting reasons: Identified as a resistance that aligns with the 78.6% Fibonacci projection, indicating a potential area where selling pressures could intensify

1st support: 0.6218

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

1st resistance: 0.6405
Supporting reasons: Identified as an overlap resistance that aligns with the 161.8%% Fibonacci extension, indicating a potential area that could halt any further upward movement.

NZD/USD

Potential Direction: Bearish
Overall momentum of the chart: Bearish

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

Pivot: 0.5732

Supporting reasons: Identified as a resistance that aligns close to the 78.6% Fibonacci projection and the 161.8% Fibonacci extension, indicating a potential level where selling pressures could intensify. 

1st support: 0.5646

Supporting reasons: Identified as an overlap support, suggesting a potential area where the price could stabilize once more.

1st resistance: 0.5807

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

US30 (DJIA):

Potential Direction: Bearish
Overall momentum of the chart: Bullish

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

Pivot: 44,527.60

Supporting reasons: Identified as a pullback resistance that aligns close to a 78.6% Fibonacci retracement,  and the 61.8% Fibonacci projection, indicating a potential level where selling pressures could intensify.

1st support: 43,619.25

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

1st resistance: 45.098.53

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

DE40 (DAX):

Potential Direction: Bullish
Overall momentum of the chart: Bullish

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

Pivot: 20,502.44
Supporting reasons: Identified as a pullback support, indicating a potential area where buying interests could pick up to resume the uptrend.

1st support: 19,673.95

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

1st resistance: 22,464.05
Supporting reasons: Identified as a resistance that aligns with the 161.8%% Fibonacci projection, indicating a potential area that could halt any further upward movement.

US500 (S&P 500): 

Potential Direction: Bullish
Overall momentum of the chart: Bullish

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

Pivot: 6,099.60

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

1st support: 6,039.40

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

1st resistance: 6,174.50

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.

BTC/USD (Bitcoin):

Potential Direction: Bullish
Overall momentum of the chart: Neutral

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

Pivot: 100,113.73

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

1st support: 95,426.45
Supporting reasons: Identified as an overlap support, indicating a potential level where the price could stabilize once more.

1st resistance: 108,087.51
Supporting reasons: Identified as aswing high resistance that aligns close to the 100% Fibonacci projection, indicating a potential area that could halt any further upward movement.

ETH/USD (Ethereum):

Potential Direction: Bullish
Overall momentum of the chart: Neutral

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

Pivot: 3,198.44

Supporting reasons: Identified as a multi-swing-low support that aligns close to a 61.8% Fibonacci retracement, indicating a potential level where buying interests could pick up to stage a rebound.

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

1st resistance: 3,527.48
Supporting reasons: Identified as an overlap resistance that aligns close to the 78.6% Fibonacci retracement, indicating a potential area that could halt any further upward movement.

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: 77.71
Supporting reasons: Identified as an overlap resistance, indicating a potential level where selling pressures could intensify. The price is also trading within a downward channel which highlights the ongoing bearish momentum.

1st support: 75.05
Supporting reasons: Identified as a pullback support that aligns close to a 38.2% Fibonacci retracement, indicating a key level where the price could stabilize.

1st resistance: 80.81
Supporting reasons: Identified as a swing high resistance, indicating a potential area that could halt any further upward movement.

XAU/USD (GOLD):

Potential Direction: Bearish

Overall momentum of the chart: Bullish

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

Pivot: 2,778
Supporting reasons: Identified as a pullback resistance that aligns with the 161.8% Fibonacci extension and the 61.8% Fibonacci projection, indicating a potential area where selling pressures could intensify

1st support: 2,743

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

1st resistance: 2,790.58

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

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The post Friday 24th January 2025: Technical Outlook and Review first appeared on IC Markets | Official Blog.

IC Markets Asia Fundamental Forecast | 24 January 2025

What happened in the U.S. session?

Yesterday, The U.S. Department of Labor reported that initial jobless claims rose by 6,000 to a seasonally adjusted 223,000 for the week ending January 18, indicating a stable labor market. 

Continuing claims, representing individuals receiving unemployment benefits after an initial claim, increased by 46,000 to 1.9 million for the week ending January 11, the highest since November 2021. 

In December 2024, employers added 256,000 jobs, and the unemployment rate decreased to 4.1%, highlighting the economy’s resilience. 

Economists note that while layoffs remain low, new job opportunities are becoming scarcer as employers exercise caution in expanding their workforce. 

The Federal Reserve is expected to consider these labor market indicators in its upcoming policy meeting, with current data suggesting that immediate interest rate cuts are unlikely. 

On the same day, the U.S. dollar index held steady at 108.25 as traders awaited clarity on President Donald Trump’s tariff policies and upcoming central bank decisions. 

What does it mean for the Asia Session?

Recent U.S. labor market data indicates a slight increase in initial jobless claims, suggesting a stable employment landscape. The U.S. dollar remains steady as markets await clarity on potential tariff policies and upcoming central bank decisions. In the upcoming Asian trading session, investors are expected to exercise caution due to uncertainties surrounding U.S. economic policies. Asian currencies may experience volatility in response to U.S. dollar movements and labor data

The Dollar Index (DXY)

Key news events today

Flash Manufacturing PMI (2:45 pm GMT)

Flash Services PMI (2:45 pm GMT)

What can we expect from DXY today?

The U.S. Dollar Index (DXY) is expected to be influenced by the upcoming Flash Manufacturing and Services PMIs, scheduled for release at 2:45 PM GMT today. Stronger-than-expected PMI readings could bolster the DXY, reflecting economic resilience, while weaker data may exert downward pressure. Additionally, the U.S. plans to impose a 25% tariff on goods from Mexico and Canada starting February 1, 2025, which may further impact the DXY. 

Central Bank Notes:

• The Board of Governors of the Federal Reserve System voted by a majority to lower the Federal Funds Rate target range by 25 basis points to 4.25 to 4.50% on 18 December. Voting against the action was Beth M. Hammack, who preferred to maintain the target range at 4.5 to 4.75%.
• The Committee seeks to achieve maximum employment and inflation at the rate of 2% over the longer run and judges that the risks to achieving its employment and inflation goals are roughly in balance.
• The economic outlook is uncertain, and the Committee is attentive to the risks to both sides of its dual mandate.
• Recent indicators suggest that economic activity has continued to expand at a solid pace while labour market conditions have generally eased, and the unemployment rate has moved up but remains low.
• Inflation has made further progress toward the Committee’s 2% objective but remains somewhat elevated.
• The Summary of Economic Projections (SEP) now indicates just two rate cuts in 2025 totalling 50 bps, compared to the full percentage point of reductions projected in the previous quarter.
• GDP growth forecasts were revised upward for 2024 (2.5% vs. 2% in the September projection) and 2025 (2.1% vs. 2%), while remaining steady at 2% for 2026. Similarly, PCE inflation projections have been adjusted higher for 2024 (2.4% vs. 2.3%), 2025 (2.5% vs. 2.1%), and 2026 (2.1% vs. 2%).
• In considering any adjustments to the target range for the federal funds rate, the Committee will carefully assess incoming data, the evolving outlook, and the balance of risks.
• In assessing the appropriate stance of monetary policy, the Committee will continue to monitor the implications of incoming information for the economic outlook and would be prepared to adjust the stance of monetary policy as appropriate if risks emerge that could impede the attainment of the Committee’s goals.
• In addition, the Committee will continue reducing its holdings of Treasury securities, and agency debt and agency mortgage-backed securities. Beginning in June, the Committee slowed the pace of decline of its securities holdings by reducing the monthly redemption cap on Treasury securities from $60 billion to $25 billion.
• The Committee will maintain the monthly redemption cap on agency debt and agency mortgage-backed securities at $35 billion and will reinvest any principal payments in excess of this cap into Treasury securities.
• The next meeting runs from 28 to 29 January 2025.

Next 24 Hours Bias

Weak Bullish

Gold (XAU)

Key news events today

Flash Manufacturing PMI (2:45 pm GMT)

Flash Services PMI (2:45 pm GMT)

What can we expect from Gold today?

As of January 24, 2025, gold prices have retreated from near three-month highs, with spot gold at $2,751.99 per ounce, influenced by a strengthening U.S. dollar and anticipation of President Donald Trump’s tariff policies. 

Factors Influencing Gold Prices Today:

• U.S. Dollar Strength: A stronger dollar makes gold more expensive for holders of other currencies, typically applying downward pressure on gold prices.

• Upcoming Economic Data: Investors are monitoring U.S. Flash Manufacturing and Services PMIs, scheduled for release at 2:45 PM GMT. Positive data could bolster the dollar, potentially leading to a decline in gold prices.

• Geopolitical Developments: President Trump’s proposed 25% tariffs on imports from Mexico and Canada, effective February 1, 2025, may increase market uncertainty, enhancing gold’s appeal as a safe-haven asset. 

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 Australian dollar is trading at approximately 0.6272, with no major economic news expected today; its movements will likely be influenced by external factors such as U.S. economic data. 

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?

the New Zealand dollar (NZD) is trading at approximately 0.5665 against the U.S. dollar. 

In the absence of major economic news today, the NZD’s movements are expected to be influenced by external factors, particularly U.S. economic data and global market sentiment. 

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

BOJ Press Conference (Tentative)

BOJ Policy Rate (Tentative)
Monetary Policy Statement (Tentative)
BOJ Outlook Report (Tentative)

What can we expect from JPY today?

The Japanese yen (JPY) is trading around 156.11 per USD, with markets expecting a 25bps rate hike by the BOJ to 0.5%, marking the highest level since 2008. While this move is largely priced in, traders will watch the BOJ policy statement and Governor Ueda’s press conference for future rate guidance. Analysts predict gradual hikes reaching 1% by year-end. External factors, including U.S. economic data and global market sentiment, may also influence JPY movement

Central Bank Notes:

• The Policy Board of the Bank of Japan decided on 19 December, 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 0.25%.
  2. The Bank will embark on a plan to reduce the amount of its monthly outright purchases of JGBs so that it will be about 3 trillion yen in January-March 2026; the amount will be cut down by about 400 billion yen each calendar quarter in principle.
• Japan’s economy has recovered moderately, although some weakness has been seen in part. Exports and industrial production have been more or less flat while corporate profits have been on an improving trend and business sentiment has stayed at a favourable level.
• The employment and income situation has improved moderately while private consumption has been on a 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 in the range of 2.0-2.5% recently, as services prices have continued to rise moderately, reflecting factors such as wage increases, although the effects of a passthrough to consumer prices of cost increases led by the past rise in import prices have waned; inflation expectations have risen moderately.
• With regard to the CPI (all items less fresh food), while the effects of the pass-through to consumer prices of cost increases led by the past rise in import prices are expected to wane, underlying CPI inflation is expected to increase gradually, since it is projected that the output gap will improve and that medium- to long-term inflation expectations will rise with a virtuous cycle between wages and prices continuing to intensify.
• Japan’s economy is likely to keep growing at a pace above its potential growth rate, with overseas economies continuing to grow moderately and as a virtuous cycle from income to spending gradually intensifies against the background of factors such as accommodative financial conditions.
• The next meeting is on 24 January 2025.

Next 24 Hours Bias

Weak Bullish

The Euro (EUR)

Key news events today

French Flash Manufacturing PMI (8:15 am GMT)

French Flash Services PMI (8:15 am GMT)

German Flash Manufacturing PMI (8:30 am GMT)

German Flash Services PMI (8:30 am GMT)

What can we expect from EUR today?

As of January 24, 2025, the euro (EUR) is trading near $1.04, approaching parity with the U.S. dollar. This decline is attributed to a strengthening dollar, driven by robust U.S. economic data and expectations of pro-growth policies under President Donald Trump’s administration.

 In contrast, the eurozone faces economic challenges, including weakened manufacturing sectors and policy uncertainties in major economies like Germany and France. The International Monetary Fund has revised its 2025 growth forecast for the euro area downward, citing these concerns. Additionally, the European Central Bank is anticipated to implement interest rate cuts to counteract potential adverse effects on eurozone growth, especially amid easing fears of U.S. trade tariffs. 

Central Bank Notes:

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

Next 24 Hours Bias

Weak Bearish

The Swiss Franc (CHF)

Key news events today

No major news events.

What can we expect from CHF today?

The USD/CHF pair is trading near 0.9038-0.9110, with no major news expected today. Market sentiment and technical factors will drive movement, with indicators showing a bearish bias. 

Central Bank Notes:

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

Next 24 Hours Bias

Weak Bearish

The Pound (GBP)

Key news events today

Flash Manufacturing PMI (9:30 am GMT)

Flash Services PMI (9:30 am GMT)

What can we expect from GBP today?

The British pound (GBP) is trading at approximately $1.24 against the U.S. dollar. The upcoming release of the UK’s Flash Manufacturing and Services PMIs is anticipated to influence the GBP/USD pair. 

The Manufacturing PMI is projected to remain in contraction territory, with a forecast of 46.9, slightly below the previous 47.0. Conversely, the Services PMI is expected to show modest expansion, with a forecast of 50.8, down from the prior 51.1. If these PMIs meet or exceed expectations, the GBP may strengthen; however, weaker-than-expected data could exert downward pressure

Central Bank Notes:

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

Next 24 Hours Bias

Weak Bullish

The Canadian Dollar (CAD)

Key news events today

No major news events.

What can we expect from CAD today?

The USD/CAD pair is trading near 1.4359, with no major news expected today. Technical indicators suggest a bearish outlook, with resistance levels limiting upward movement. Market sentiment, oil prices, and unexpected geopolitical developments could influence price action

Central Bank Notes:

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

Next 24 Hours Bias

Medium Bearish

Oil

Key news events today

No major news events.

What can we expect from Oil today?

In the absence of major news today, oil prices are expected to remain relatively stable, influenced by routine market factors such as supply-demand dynamics and investor sentiment. Analysts forecast Brent crude to average around $74 per barrel in 2025

Next 24 Hours Bias

Weak Bullish

The post IC Markets Asia Fundamental Forecast | 24 January 2025 first appeared on IC Markets | Official Blog.

We’ve now had four full trading days for the markets to react to Trump 2.0—Make America Great Again, Again—and, for some market participants, the impact has been far less severe than anticipated. Traders in CAD, MXN, and CNH markets may strongly disagree with that assessment, but overall, we’ve observed fairly orderly conditions and some solid trends worth capitalizing on.

Looking ahead, traders are focusing on a few key assets expected to see movement in the coming days and weeks as we navigate the new governing regime:

Dollar

FX traders are closely monitoring updates from Donald Trump and key members of his administration on how aggressively and swiftly tariffs will be implemented. In general, the consensus is that harder and faster tariff implementation will strengthen the dollar, while a more moderate approach could lead to further pullbacks for the greenback.

Treasury Yields

The story for treasury yields mirrors that of the dollar, as many anticipated policies are expected to drive inflation and, consequently, push yields higher. Confirmation of regulatory easing and tariffs could fuel further increases in yields, while less inflationary signals could result in sharp repricing within the bond market.

Stocks

U.S. stock markets have had a strong week, bolstered by Trump’s plans to increase spending and roll back regulations. The S&P 500 hit a record high in overnight trading, with the Nasdaq and Dow Jones also nearing all-time highs. So far, fears that Trump’s policies could trigger significant inflation and prompt the Federal Reserve to pull back or halt its easing cycle have not materialized. However, traders are keeping a close eye on the situation, anticipating potential volatility and sharp corrective moves.

Oil

Oil prices have experienced dramatic swings over the past few days, particularly with West Texas Intermediate (WTI) plunging after Trump declared a National Energy Emergency and requested OPEC+ to cut prices globally. Traders expect more volatility in “black gold” as the market seeks clarity on recent developments and grapples with ongoing geopolitical factors.

Gold

Gold has rallied to new highs over the past few trading days as markets continue to seek clarity on tariffs from President Trump and the new administration. Tariffs played a significant role in driving market movements after the Republican victory in November, and the current lack of transparency has fueled strong flows into gold, the ultimate safe-haven asset. Traders anticipate continued volatility, especially as gold approaches its all-time high. Increased uncertainty will likely push prices higher, whereas clearer guidance—particularly on tariffs—could lead to a pullback as the dollar strengthens.

The post Trump 2.0: How Markets Are Reacting first appeared on IC Markets | Official Blog.