IC Markets Asia Fundamental Forecast | 20 January 2025

What happened in the U.S. session?

Robust macroeconomic data on Friday highlighted a resilient residential construction sector as building permits – a leading indicator of the residential housing market – and housing starts both exceeded their respective estimates for the month of December. In addition, industrial production rebounded strongly as it surged 0.9% MoM with the production of aircraft and parts category being a key driver of growth. Not only did the latest output beat the forecast of a 0.3% gain by a wide margin, but it also marked the highest output since February 2024. These data points functioned as strong tailwinds for the dollar index (DXY) as it bucked a four-day downtrend to rebound swiftly on Friday. This index jumped nearly 0.5% as it reversed off its lows at 108.83 to close at 109.40 last week.

What does it mean for the Asia Session?

As Asian markets digest the latest U.S. macroeconomic data, traders should note that U.S. banks and financial markets will be closed in observance of Martin Luther King Jr. Day on Monday. Trading activity and volume are likely to taper off significantly following the end of the European trading hours later today.

The Dollar Index (DXY)

Key news events today

Martin Luther King Jr. Day (All Day)

What can we expect from DXY today?

With U.S. banks and financial markets closed in observance of Martin Luther King Jr. Day on Monday, trading activity and volume are likely to taper off significantly following the end of the European trading hours.

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

Martin Luther King Jr. Day (All Day)

What can we expect from Gold today?

With U.S. banks and financial markets closed in observance of Martin Luther King Jr. Day on Monday, trading activity and volume are likely to taper off significantly following the end of the European trading hours.

Next 24 Hours Bias

Medium Bearish

The Australian Dollar (AUD)

Key news events today

No major news events.

What can we expect from AUD today?

The Aussie rebounded 0.8% last week to gain nearly 50 pips as it closed at 0.6190 last Friday. This currency pair gapped slightly higher to open at 0.6196 and should edge higher as the day progresses.

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?

After falling for six straight weeks, the Kiwi found its footing around 0.5557 to jump as much as 1.9% before closing at 0.5580 last Friday. This currency pair gapped higher to open at 0.5591 and it could continue to grind higher.

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 has strengthened over the last week causing USD/JPY to tumble over 1.7% at its lowest point before closing at 156.25 on Friday. As markets reopened this morning, this currency pair slid lower towards the 156 level.

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 Bearish

The Euro (EUR)

Key news events today

No major news events.

What can we expect from EUR today?

After declining for five straight weeks, the Euro stabilized around 1.0228 to notch a weekly gain of 0.4% as it closed at 1.0270 on Friday. This currency pair remained lifted as markets re-opened on Monday and was rising towards the 1.0300 mark.

Central Bank Notes:

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

Next 24 Hours Bias

Weak Bullish

The Swiss Franc (CHF)

Key news events today

No major news events.

What can we expect from CHF today?

The franc strengthened marginally to break a five-week streak of higher gains for the USD/CHF. After hitting a high of 0.9195 last week, this currency pair closed at 0.9139 on Friday.

Central Bank Notes:

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

Next 24 Hours Bias

Medium Bullish

The Pound (GBP)

Key news events today

No major news events.

What can we expect from GBP today?

The pound was one of the worst-performing major currencies as Cable dived over 3.2% since the beginning of 2025. This currency pair found its footing around 1.2160 as markets re-opened this morning and it could edge higher as the day progresses.

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 remained under intense overhead pressures as USD/CAD rose 0.4% last week to close at 1.4476 on Friday. This currency pair gapped lower this morning to open at 1.4455 but it should remain elevated as the day progresses.

Central Bank Notes:

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

Next 24 Hours Bias

Weak Bullish

Oil

Key news events today

No major news events.

What can we expect from Oil today?

Crude oil prices settled lower last Thursday and Friday but they managed to register a fourth successive week of higher gains as WTI oil closed at $77.39 per barrel. This benchmark rose nearly 2.2% last week to gain over 10% since the third week of December; it was hovering around $77.55 as markets reopened this morning.

Next 24 Hours Bias

Medium Bearish

The post IC Markets Asia Fundamental Forecast | 20 January 2025 first appeared on IC Markets | Official Blog.

US Markets Rally into the Weekend – Nasdaq Up 1.5%

US stock markets rallied strongly into the weekend, with the S&P and Dow achieving their best weekly performance since the election. The Dow gained 0.78%, the S&P rose by 1.00%, and the Nasdaq outperformed both, closing up 1.51%. The dollar and Treasury yields also climbed during the day, with the DXY rising 0.39% to 109.35. The 2-year yield increased by 5.3 basis points to 4.283%, while the 10-year yield edged up 1.5 basis points to 4.627%.

Oil prices declined further amid confirmation of a ceasefire between Israel and Hamas, with Brent dipping 0.6% to $80.79 and WTI dropping 1% to $77.88. Gold prices fell in line with the stronger dollar, losing 0.4% to close just above the $2,700 mark at $2,701.03 an ounce.

All Eyes on Washington in Markets Today

The focus of the trading world today is on Washington, D.C., where Donald Trump will be sworn in as the 47th President of the United States. Traders and investors anticipate significant market volatility.

During President Trump’s previous tenure, his frequent Twitter updates often triggered sharp market moves. Today and in the coming days, tariff updates are likely to take centre stage. A moderate approach could result in ‘risk-on’ sentiment, while stricter tariff policies – which the President seems inclined towards – may lead to risk aversion, strengthening the dollar and US yields.

A Game of Two Halves for Traders Today

While the macroeconomic calendar offers few scheduled data releases to excite traders, the day could still prove highly volatile, particularly later on. Although US markets are closed for a holiday, Donald Trump’s inauguration and potential executive orders in the coming days are expected to spark market reactions.

Earlier in the day, the People’s Bank of China (PBOC) will announce any updates to its Loan Prime Rates. With no changes anticipated, any unexpected move could trigger fresh volatility. However, until key announcements and updates from the US begin to emerge, market conditions are expected to remain largely rangebound.

The post General Market Analysis – 20/01/24 first appeared on IC Markets | Official Blog.

It looks like a potentially pivotal week ahead for investors, as the new administration takes control of the US government. Traders are expecting significant volatility in the New York session on Monday, despite US markets being closed for a holiday.

The week is expected to be dominated by the numerous updates likely to emerge from the new political setup in the US. However, there is also a substantial focus on tier-one data updates from other jurisdictions throughout the week, including the key Bank of Japan rate decision.

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

The initial focus during the Asian session will be on China, with key Loan Prime Rate updates expected midway through the session. However, with little else on the event calendar for the rest of the day, updates from the United States, particularly from the new president, are likely to dominate as we move into the latter part of the day.

There is nothing notable on the event calendar during the Asian session, but traders will continue to monitor updates from the United States, with plenty of volatility anticipated. In the European session, initial focus will shift to the UK, where employment data is due early in the day, before the markets transition into the New York session. The early focus in North America will be on Canada, with CPI numbers being released, although sentiment is expected to be shaped by US market reactions to updates from the new government.

New Zealand markets will be in focus for Asian traders, with CPI data released early in the day. Beyond this, the only major scheduled event is a speech by ECB President Christine Lagarde later in the day, leaving little else to drive market movements.

The first two trading sessions of the day are expected to remain quiet. However, attention will shift to Canadian markets once the New York session opens, with Retail Sales numbers scheduled for release. In addition, the usual weekly Unemployment Claims figures and Crude Oil Inventory data will be published in the United States during the session.

The most significant scheduled event of the week comes on Friday, with the Bank of Japan expected to announce its latest rate decision, typically around lunchtime in Tokyo during the Asian session. The remainder of the day will be dominated by Flash Services and Manufacturing PMI releases from various markets, including France, Germany, the Eurozone, the UK, and the US. Additionally, Existing Home Sales data and Revised University of Michigan consumer sentiment figures are due during the New York session.

The post The Week Ahead – Week Commencing 20 January 2025 first appeared on IC Markets | Official Blog.

The post Ex-Dividend 20/1/2025 first appeared on IC Markets | Official Blog.

Global Markets:

•  Asian Stock Markets : Nikkei down 0.46%, Shanghai Composite up 0.31%, Hang Seng up 0.14% ASX down 0.20%
• Commodities : Gold at $2742.35 (-0.26%), Silver at $31.5 (-0.68%), Brent Oil at $81.69 (0.69%), WTI Oil at $78.4 (0.53%)
• Rates : US 10-year yield at 4.609, UK 10-year yield at 4.6805, Germany 10-year yield at 2.520

News & Data:

• (USD) Core Retail Sales m/m  0.4% vs 0.5% expected
• (USD) Retail Sales m/m  0.4% vs 0.6% expected
• (USD) Unemployment Claims  217K vs 210K expected

Markets Update:

Asian markets had a mixed session on Friday as investors analyzed key economic data from China. The country’s economy grew 5% in 2024, with a stronger-than-expected 5.4% expansion in the fourth quarter. Retail sales in December increased 3.7% year-on-year, exceeding forecasts of 3.5%, while industrial output rose 6.2%, beating expectations of 5.4%.

Stock markets in the region showed varied movements. Hong Kong’s Hang Seng index gained 0.23%, and China’s CSI 300 rose 0.63%. Meanwhile, Japan’s Nikkei 225 fell 0.54%, and the Topix lost 0.46%. South Korea’s Kospi declined 0.26%, with the Kosdaq slipping 0.18%. Australia’s S&P/ASX 200 also edged down 0.2% to close at 8,310.4. The offshore yuan strengthened slightly, rising 0.06% to 7.3419 per U.S. dollar.

In the U.S., markets lost momentum after earlier gains, with major indices pulling back. The S&P 500 declined 0.21% to 5,937.34, ending a three-day winning streak. The Nasdaq Composite dropped 0.89% to 19,338.29, pressured by a selloff in tech stocks. The Dow Jones Industrial Average slipped 68.42 points, or 0.16%, closing at 43,153.13.

Global investors are closely watching China’s economic performance, as its resilience could influence broader market trends. While the latest data indicates steady growth, uncertainties remain regarding future economic policies and global demand.

Upcoming Events: 

• 01:30 PM GMT – USD Building Permits
• 01:30 PM GMT – USD Housing Starts
• 01:30 PM GMT – CAD Foreign Securities Purchases

The post Friday 17th January 2025: Asian Markets Mixed as China’s Economy Shows Resilience first appeared on IC Markets | Official Blog.

IC Markets Europe Fundamental Forecast | 17 January 2025

What happened in the Asia session?

China released its key macroeconomic data which showed GDP output expanding strongly in the fourth quarter of 2024 as economic output surged from 4.6% in the previous quarter to rise at an annualised rate of 5.4%. This latest result beat market estimates of 5.0% effortlessly and brought the full-year output to match their growth target of around 5%. Industrial production and retail sales also saw robust growth for the month of December with the former rising at an annualised rate of 6.2% – exceeding the market forecast of 5.4% by a wide margin – while consumer spending accelerated from 3.0% in the prior month to 3.7%. Robust data out of China – the world’s largest importer of crude oil – are likely to lift oil prices with WTI oil all set to notch its fourth consecutive week of higher gains.

What does it mean for the Europe & US sessions?

Consumer spending in the U.K. was weak throughout 2024. After declining for two consecutive months in September and October, retail sales eked out a minor gain of 0.2% in November but December’s forecast of a 0.4% gain points to a relatively strong rebound, which will likely be attributed to Black Friday sales that took place at the end of November and early December. Should sales rebound stronger than anticipated, the pound could receive a much-needed boost before the start of the European trading session.

Headline inflation in the Euro Area has accelerated over the last three months rising from 1.7% to 2.4% YoY while the core reading remained unchanged at 2.7% YoY from September through December. The final estimates for December point to an unchanged reading from its preliminary results but any variance could create higher volatility for the Euro during the European trading hours.

The Dollar Index (DXY)

Key news events today

Building Permits (1:30 pm GMT)

Industrial Production (2:15 pm GMT)

What can we expect from DXY today?

The monthly growth in building permits – a leading indicator of the residential housing market – has been mixed throughout 2024, sending mixed signals about the state of this sector. Meanwhile, industrial production has contracted since October to mark three straight months of decline highlighting the weakness of the manufacturing sector. Should these data points miss market expectations, the dollar could face overhead pressures once more.

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

Medium Bearish

Gold (XAU)

Key news events today

Building Permits (1:30 pm GMT)

Industrial Production (2:15 pm GMT)

What can we expect from Gold today?

The monthly growth in building permits – a leading indicator of the residential housing market – has been mixed throughout 2024, sending mixed signals about the state of this sector. Meanwhile, industrial production has contracted since October to mark three straight months of decline highlighting the weakness of the manufacturing sector. Should these data points miss market expectations, the dollar could face overhead pressures once more increasing volatility for gold.

Next 24 Hours Bias

Medium Bullish

The Australian Dollar (AUD)

Key news events today

No major news events.

What can we expect from AUD today?

After Thursday’s robust job gains, the Aussie climbed as high as 0.6228 on Thursday before edging lower overnight. This currency pair was sliding towards the threshold of 0.6200 as Asian markets came online.

Central Bank Notes:

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

Next 24 Hours Bias

Weak Bullish

The Kiwi Dollar (NZD)

Key news events today

No major news events.

What can we expect from NZD today?

After declining over the past six consecutive weeks, the Kiwi finally looks set to register its first weekly gain by the end of Friday’s trading session. This currency pair found its footing around 0.5560 at the beginning of this week to rise as high as 0.5650 on Wednesday.

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 has appreciated strongly over the last couple of days, gaining nearly 2% as UDS/JPY tumbled from 157.94 to as low as 155.10 on Thursday. This currency pair has appeared to stabilize on Friday as it edged higher towards 155.50 at the beginning of the Asia session.

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

Medium Bearish

The Euro (EUR)

Key news events today

CPI (10:00 am GMT)

What can we expect from EUR today?

Headline inflation in the Euro Area has accelerated over the last three months rising from 1.7% to 2.4% YoY while the core reading remained unchanged at 2.7% YoY from September through December. The final estimates for December point to an unchanged reading from its preliminary results but any variance could create higher volatility for the Euro 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

No major news events.

What can we expect from CHF today?

The franc looks to register its first weekly gain in four weeks, a rare feat for a currency that has been underperforming the dollar significantly since the end of September 2024. USD/CHF has fallen almost 0.5% this week and it could make a clean break below the threshold of 0.9100 on the final trading day of the week.

Central Bank Notes:

• The SNB eased monetary policy by lowering its key policy rate by 50 basis points, going from 1.00% to 0.50% on 12 December, marking 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

Retail Sales (7:00 am GMT)

What can we expect from GBP today?

Consumer spending in the U.K. was weak throughout 2024. After declining for two consecutive months in September and October, retail sales eked out a minor gain of 0.2% in November but December’s forecast of a 0.4% gain points to a relatively strong rebound, which will likely be attributed to Black Friday sales that took place at the end of November and early December. Should sales rebound stronger than anticipated, the pound could receive a much-needed boost before the start of the European trading 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 has shown some strength over the last couple of weeks with USD/CAD looking set to notch its second successive week of decline. This currency pair reached a high of 1.4446 at the beginning of this week before dropping as low as 1.4300 on Wednesday – it has since stabilized to retrace higher but overhead pressures remain.

Central Bank Notes:

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

Next 24 Hours Bias

Weak Bullish

Oil

Key news events today

GDP (2:00 am GMT)

Industrial Production (2:00 am GMT)

Retail Sales (2:00 am GMT)

What can we expect from Oil today?

China released its key macroeconomic data which showed GDP output expanding strongly in the fourth quarter of 2024 as economic output surged from 4.6% in the previous quarter to rise at an annualised rate of 5.4%. This latest result beat market estimates of 5.0% effortlessly and brought the full-year output to match their growth target of around 5%. Industrial production and retail sales also saw robust growth for the month of December with the former rising at an annualised rate of 6.2% – exceeding the market forecast of 5.4% by a wide margin – while consumer spending accelerated from 3.0% in the prior month to 3.7%. Robust data out of China – the world’s largest importer of crude oil – are likely to lift oil prices with WTI oil all set to notch its fourth consecutive week of higher gains.

Next 24 Hours Bias

Weak Bullish

The post IC Markets Europe Fundamental Forecast | 17 January 2025 first appeared on IC Markets | Official Blog.

DXY (US Dollar Index):

Potential Direction: Bearish
Overall momentum of the chart: Bullish

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

Pivot: 109.40
Supporting reasons: Identified as an overlap resistance that aligns with the 50% Fibonacci retracement, indicating a potential area where selling pressures could intensify.

1st support: 108.48
Supporting reasons: Identified as a pullback support, indicating a potential level where price could find support once more.

1st resistance: 110.16
Supporting reasons: Identified as a swing-high resistance, indicating a potential area that could halt any further upward movement.

EUR/USD:

Potential Direction: Bearish

Overall momentum of the chart: Bearish

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

Pivot: 1.0340
Supporting reasons: Identified as an overlap resistance that aligns with the 61.8% Fibonacci retracement,  indicating a potential area where selling pressures could intensify

1st support: 1.0225

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

1st resistance: 1.0453
Supporting reasons:  Identified as an overlap resistance, indicating a potential area that could halt any further upward movement.

EUR/JPY:

Potential Direction: Bullish
Overall momentum of the chart: Bearish

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

Pivot: 159
Supporting reasons: Identified as an overlap support that aligns close to the 127.2% Fibonacci extension, indicating a potential level where buying interests could pick up to stage a rebound.

1st support: 157.63

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

1st resistance: 160.89
Supporting reasons: Identified as an overlap 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 reversal off the pivot to fall towards the 1st support.

Pivot: 0.8445
Supporting reasons: Identified as a swing high resistance that aligns with the 161.8% Fibonacci extension, indicating a potential area where selling pressures could intensify

1st support: 0.8371

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 again.

1st resistance: 0.8497
Supporting reasons: Identified as a swing high resistance that aligns close to the 161.8% Fibonacci extension, indicating a potential area that could halt any further upward movement.

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: 1.2321
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: 1.2109

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

1st resistance: 1.2408
Supporting reasons: Identified as a pullback 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: Bullish
Overall momentum of the chart: Bearish

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

Pivot: 188.59
Supporting reasons: Identified as a swing low support that aligns close to the 161.8% Fibonacci extension, indicating a potential level where buying interests could pick up to stage a rebound.

1st support: 186.40
Supporting reasons: Identified as a swing low support, indicating a potential level where price could find support.

1st resistance: 192.47
Supporting reasons: Identified as an overlap resistance, indicating a potential area that could halt any further upward movement.

USD/CHF:

Potential Direction: Bearish

Overall momentum of the chart: Bullish

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

Pivot: 0.9135
Supporting reasons: Identified as an overlap resistance, indicating a potential area where selling pressures could intensify.

1st support: 0.9012
Supporting reasons: Identified as an overlap support that aligns close to the 61.8% Fibonacci retracement, indicating a potential level where price could find support once again.

1st resistance: 0.9278
Supporting reasons: Identified as a resistance that aligns close to the 161.8% Fibonacci extension, indicating a potential area that could halt any further upward movement.

USD/JPY:

Potential Direction: Bearish

Overall momentum of the chart: Bullish

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

Pivot: 156.57
Supporting reasons: Identified as a pullback resistance,  indicating a potential area where selling pressures could intensify

1st support: 154.23
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: 158.66
Supporting reasons: Identified as a swing high resistance, indicating a potential area that could halt any further upward movement.

USD/CAD:

Potential Direction: Bullish

Overall momentum of the chart: Neutral

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

Pivot: 1.4300

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

1st support: 1.4243
Supporting reasons: Identified as a pullback support that aligns close to a 50% Fibonacci retracement, indicating a key level where the price could stabilize.

1st resistance: 1.4435
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: 0.6243

Supporting reasons: Identified as a swing-high 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: 0.6136
Supporting reasons: Identified as a swing-low support, suggesting a potential area where the price could stabilize once again.

1st resistance: 0.6292
Supporting reasons: Identified as a swing-high resistance that aligns with a 38.2% Fibonacci retracement, indicating a potential area that could halt any further upward movement.

NZD/USD

Potential Direction: Bearish
Overall momentum of the chart: Bearish

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

Pivot: 0.5646

Supporting reasons: Identified as a swing-high 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: 0.5542
Supporting reasons: Identified as a swing-low support, suggesting a potential area where the price could stabilize once more.

1st resistance: 0.5684
Supporting reasons: Identified as a multi-swing-high resistance that aligns close to a 38.2% Fibonacci retracement, indicating a potential area that could halt any further upward movement.

US30 (DJIA):

Potential Direction: Bearish
Overall momentum of the chart: Neutral

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

Pivot: 43,241.57

Supporting reasons: Identified as a swing-high resistance that aligns close to a 50% Fibonacci retracement, indicating a potential level where selling pressures could intensify.

1st support: 42,241.24

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

1st resistance: 43,822.77

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

DE40 (DAX):

Potential Direction: Bullish
Overall momentum of the chart: Bullish

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

Pivot: 20,498.00
Supporting reasons: Identified as a pullback support that aligns close to a 23.6% Fibonacci retracement, indicating a potential area where buying interests could pick up to resume the uptrend.

1st support: 20,070.80

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

1st resistance: 20,770.68
Supporting reasons: Identified as a resistance that aligns with a confluence of Fibonacci levels i.e. the 127.2% and 161.8% extensions, indicating a potential area that could halt any further upward movement.

US500 (S&P 500): 

Potential Direction: Bearish
Overall momentum of the chart: Neutral

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

Pivot: 6,001.70
Supporting reasons: Identified as a swing-high resistance, indicating a potential level where selling pressures could intensify.

1st support: 5,895.00

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

1st resistance: 6,099.60

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

BTC/USD (Bitcoin):

Potential Direction: Bearish
Overall momentum of the chart: Neutral

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

Pivot: 102,031.83

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

1st support: 97,572.65
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 more.

1st resistance: 107,574.55
Supporting reasons: Identified as a swing-high resistance that aligns close to the all-time high, indicating a potential area that could halt any further upward movement.

ETH/USD (Ethereum):

Potential Direction: Bullish
Overall momentum of the chart: Neutral

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

Pivot: 3,319.70

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

1st resistance: 3,528.21
Supporting reasons: Identified as an overlap resistance that aligns close to a 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: Bullish

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

Pivot: 79.08
Supporting reasons: Identified as an overlap 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: 77.86
Supporting reasons: Identified as an overlap support that aligns with a confluence of Fibonacci levels i.e. the 23.6% and 38.2% retracements, indicating a key level where price could stabilize once more.

1st resistance: 80.82
Supporting reasons: Identified as an overlap 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: 2727.84
Supporting reasons: Identified as a pullback resistance that aligns close to the 78.6% Fibonacci projection and the 161.8% Fibonacci extension, indicating a potential area where selling pressures could intensify

1st support: 2,689.67

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

1st resistance: 2,758.93

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

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The post Friday 17th January 2025: Technical Outlook and Review first appeared on IC Markets | Official Blog.

IC Markets Asia Fundamental Forecast | 17 January 2025

What happened in the U.S. session?

Consumer spending rose 0.4% MoM in December, missing market estimates of a 0.6% gain, but November’s sales figures were revised slightly higher from 0.7% to 0.8%. The latest result marked a fourth consecutive month of higher sales but it was the least increase over this period. Despite the slower rate of higher sales, the figures continue to point to a robust consumer spending with the biggest increases seen in categories such as miscellaneous store retailers; sporting goods, hobby, musical instrument, & books; and furniture. Meanwhile, unemployment claims bounced sharply from 203K to 217K, firmly above market expectations of 210K, after moderating lower over the prior four weeks. This bounce in claims suggests some potential weakness in the labour market moving forward. After reaching a high of 109.38, the dollar index (DXY) reversed to fall sharply as it tumbled under 109 to hit an overnight low of 108.82 as ‘soft’ retail sales and higher claims functioned as the catalysts. This index stabilized around the 109 level by the end of this session.

What does it mean for the Asia Session?

China will release key macroeconomic data on Friday where we will get the latest results on GDP output, and industrial production and retail sales figures. Following the announcement of various stimulus packages by Beijing in the final two months of 2024, market participants will be waiting to see if the recent measures have made a notable impact on the economy. With China being the world’s largest importer of crude oil, this commodity could experience strong tailwinds should GDP and industrial activity rebound strongly – WTI oil was hovering around $78 per barrel this morning.

The Dollar Index (DXY)

Key news events today

Building Permits (1:30 pm GMT)

Industrial Production (2:15 pm GMT)

What can we expect from DXY today?

The monthly growth in building permits – a leading indicator of the residential housing market – has been mixed throughout 2024, sending mixed signals about the state of this sector. Meanwhile, industrial production has contracted since October to mark three straight months of decline highlighting the weakness of the manufacturing sector. Should these data points miss market expectations, the dollar could face overhead pressures once more.

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

Medium Bearish

Gold (XAU)

Key news events today

Building Permits (1:30 pm GMT)

Industrial Production (2:15 pm GMT)

What can we expect from Gold today?

The monthly growth in building permits – a leading indicator of the residential housing market – has been mixed throughout 2024, sending mixed signals about the state of this sector. Meanwhile, industrial production has contracted since October to mark three straight months of decline highlighting the weakness of the manufacturing sector. Should these data points miss market expectations, the dollar could face overhead pressures once more increasing volatility for gold.

Next 24 Hours Bias

Medium Bullish

The Australian Dollar (AUD)

Key news events today

No major news events.

What can we expect from AUD today?

After Thursday’s robust job gains, the Aussie climbed as high as 0.6228 on Thursday before edging lower overnight. This currency pair was sliding towards the threshold of 0.6200 as Asian markets came online.

Central Bank Notes:

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

Next 24 Hours Bias

Weak Bullish

The Kiwi Dollar (NZD)

Key news events today

No major news events.

What can we expect from NZD today?

After declining over the past six consecutive weeks, the Kiwi finally looks set to register its first weekly gain by the end of Friday’s trading session. This currency pair found its footing around 0.5560 at the beginning of this week to rise as high as 0.5650 on Wednesday.

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 has appreciated strongly over the last couple of days, gaining nearly 2% as UDS/JPY tumbled from 157.94 to as low as 155.10 on Thursday. This currency pair has appeared to stabilize on Friday as it edged higher towards 155.50 at the beginning of the Asia session.

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

Medium Bearish

The Euro (EUR)

Key news events today

CPI (10:00 am GMT)

What can we expect from EUR today?

Headline inflation in the Euro Area has accelerated over the last three months rising from 1.7% to 2.4% YoY while the core reading remained unchanged at 2.7% YoY from September through December. The final estimates for December point to an unchanged reading from its preliminary results but any variance could create higher volatility for the Euro 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

No major news events.

What can we expect from CHF today?

The franc looks to register its first weekly gain in four weeks, a rare feat for a currency that has been underperforming the dollar significantly since the end of September 2024. USD/CHF has fallen almost 0.5% this week and it could make a clean break below the threshold of 0.9100 on the final trading day of the week.

Central Bank Notes:

• The SNB eased monetary policy by lowering its key policy rate by 50 basis points, going from 1.00% to 0.50% on 12 December, marking 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

Retail Sales (7:00 am GMT)

What can we expect from GBP today?

Consumer spending in the U.K. was weak throughout 2024. After declining for two consecutive months in September and October, retail sales eked out a minor gain of 0.2% in November but December’s forecast of a 0.4% gain points to a relatively strong rebound, which will likely be attributed to Black Friday sales that took place at the end of November and early December. Should sales rebound stronger than anticipated, the pound could receive a much-needed boost before the start of the European trading 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 has shown some strength over the last couple of weeks with USD/CAD looking set to notch its second successive week of decline. This currency pair reached a high of 1.4446 at the beginning of this week before dropping as low as 1.4300 on Wednesday – it has since stabilized to retrace higher but overhead pressures remain.

Central Bank Notes:

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

Next 24 Hours Bias

Weak Bullish

Oil

Key news events today

GDP (2:00 am GMT)

Industrial Production (2:00 am GMT)

Retail Sales (2:00 am GMT)

What can we expect from Oil today?

China will release key macroeconomic data on Friday where we will get the latest results on GDP output, and industrial production and retail sales figures. Following the announcement of various stimulus packages by Beijing in the final two months of 2024, market participants will be waiting to see if the recent measures have made a notable impact on the economy. With China being the world’s largest importer of crude oil, this commodity could experience strong tailwinds should GDP and industrial activity rebound strongly.

Next 24 Hours Bias

Weak Bullish

The post IC Markets Asia Fundamental Forecast | 17 January 2025 first appeared on IC Markets | Official Blog.

Mixed Day for US Markets – Nasdaq Drops 0.8%

It was a mixed day for US markets yesterday as the optimism from the previous day’s trading quickly subsided. All three major US stock indices declined, with the Dow losing 0.16%, the S&P 500 falling by 0.21%, and the Nasdaq dropping 0.81%. US Treasury yields also retreated further, with the 2-year yield losing 3.4 basis points to settle at 4.230%, and the 10-year yield dropping 4 basis points to 4.613%.

Oil prices fell from their previous day’s surge, with Brent crude losing 0.9% to settle at $81.29 per barrel, and WTI crude declining 1.7% to $78.68. Meanwhile, gold prices pushed higher, nearing levels not seen since mid-December, finishing the day up 0.8% at $2,716.91.

Gold Pushes Higher on Market Uncertainty

Gold prices climbed higher in trading yesterday, nearing highs last seen in both November and December of last year. This rise was supported by weaker US Treasury yields, a softer US dollar, and increasing market uncertainty stemming from recent US economic data and the forthcoming transition of government power next week.

Traders are now watching for a clear break above the recent highs, just above $2,725, which could push the precious metal into a new trading range and potentially towards the all-time high of $2,790.15. Many expect heightened market volatility surrounding Donald Trump’s inauguration on Monday. Should the incoming government deliver unclear or conflicting signals on policy direction and implementation, gold prices are likely to continue their upward trajectory.

More Busy Markets to End the Week
Traders are anticipating another active trading day to close the week, with a variety of significant data releases scheduled across global markets. The most notable data drop comes during the Asian session, with key releases including GDP, Industrial Production, and Retail Sales figures from China expected mid-day. In the London session, the focus shifts to the UK’s Retail Sales data, with an anticipated month-on-month increase of 0.4%. Meanwhile, the US session will see the release of Building Permits data, which is unlikely to have a substantial impact. Traders will also continue to analyse inflation and Retail Sales data from earlier in the week as trading unfolds.

The post General Market Analysis – 17/01/24 first appeared on IC Markets | Official Blog.

The post Ex-Dividend 17/1/2025 first appeared on IC Markets | Official Blog.

Global Markets:

•  Asian Stock Markets : Nikkei up 0.01%, Shanghai Composite up 0.07%, Hang Seng up 0.77% ASX up 1.38%
• Commodities : Gold at $2725.35 (0.26%), Silver at $31.4 (0.18%), Brent Oil at $82.09 (0.29%), WTI Oil at $78.7 (0.03%)
• Rates : US 10-year yield at 4.654, UK 10-year yield at 4.7305, Germany 10-year yield at 2.5275

News & Data:

• (USD) Core CPI m/m  0.2% vs 0.3% expected
• (USD) CPI m/m  0.4% vs 0.4% expected
• (USD) CPI y/y  2.9% vs 2.9% expected

Markets Update:

Asia-Pacific markets mostly advanced Thursday, buoyed by strong U.S. market gains driven by a surprising decline in December’s core inflation and robust bank earnings. South Korea’s central bank held its benchmark rate steady at 3%, defying expectations of a 25-basis-point cut. Following the announcement, the Kospi rose 1.16%, and the Kosdaq climbed 1.65%, with the won trading at 1,456.91 per dollar.

Japan’s Nikkei 225 increased 0.27%, and the Topix edged up 0.09%. Meanwhile, Japan’s producer price index rose 3.8% in December, aligning with forecasts. Hong Kong’s Hang Seng gained 0.57%, while mainland China’s CSI 300 slipped 0.35%. Australia’s S&P/ASX 200 climbed 1.38%, as the nation’s unemployment rate ticked up to 4% in December, meeting estimates.

In the U.S., stocks had their best day since November 6. The Nasdaq Composite surged 2.45%, the S&P 500 added 1.83%, and the Dow Jones fell slightly by 1.65%. The benchmark 10-year Treasury yield dropped 13 basis points to 4.65%, following the CPI report.

Oil prices rose amid news of an Israel-Hamas ceasefire and hostage deal. Brent crude increased 3.22%, while WTI gained 0.3%, settling at $80.28 per barrel.

Upcoming Events: 

• 01:30 PM GMT – USD Core Retail Sales m/m
• 01:30 PM GMT – USD Retail Sales m/m
• 01:30 PM GMT – USD Unemployment Claims

The post Thursday 16th January 2025: Asia-Pacific Markets Rise Amid U.S. Gains and Central Bank Decisions first appeared on IC Markets | Official Blog.

IC Markets Europe Fundamental Forecast | 16 January 2025

What happened in the Asia session?

Employment growth rose strongly in Australia for the second month in a row as 56.3K workers were added to the economy in December, easily surpassing market estimates of 14.5K while the unemployment rate remained unchanged at 4.0% in line with forecasts. However, November’s job gains were revised lower from 35.6K down to 28.2K. The Aussie initially surged to a session high of 0.6246 before running out of steam and retreating away from this level. This currency pair continued to slide lower and was floating above 0.6200 by midday Asia.

What does it mean for the Europe & US sessions?

After contracting in the fourth quarter of 2023, the British economy expanded steadily throughout 2024 as it grew at an annual rate of 0.9% in the third quarter. Monthly GDP output had been pretty strong in the first half of the year but September and October saw consecutive monthly declines, suggesting a slowdown in the final quarter. However, November’s estimate points to a relatively strong rebound with GDP expected to expand 0.2% MoM – a stronger result could provide a much-needed boost for the pound before the start of the European trading hours.

After recording a trade surplus of €6.8B in October, the balance of trade is set to increase further with a surplus of €10.6B in November. This latest result would highlight the improvement in exports out of the Euro Area and could function as a near-term bullish catalyst for the Euro.

The Dollar Index (DXY)

Key news events today

Retail Sales (1:30 pm GMT)

Unemployment Claims (1:30 pm GMT)

What can we expect from DXY today?

Consumer spending is anticipated to remain robust following the Christmas holiday shopping season. Sales have increased steadily from September through November and the final month of 2024 is likely to register a strong finish, marking the fourth successive month of higher sales. Meanwhile, unemployment claims have moderated lower over the last four weeks which is typically a sign of a resilient labour market. Claims dropped as low as 201K – the lowest reading in 11 months – while the 12-week average stands at 219K. Should claims print lower than the estimate of 210K, we could see a return of the dollar bulls during the U.S. session.

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

Medium Bearish

Gold (XAU)

Key news events today

Retail Sales (1:30 pm GMT)

Unemployment Claims (1:30 pm GMT)

What can we expect from Gold today?

Consumer spending is anticipated to remain robust following the Christmas holiday shopping season. Sales have increased steadily from September through November and the final month of 2024 is likely to register a strong finish, marking the fourth successive month of higher sales. Meanwhile, unemployment claims have moderated lower over the last four weeks which is typically a sign of a resilient labour market. Claims dropped as low as 201K – the lowest reading in 11 months – while the 12-week average stands at 219K. Should claims print lower than the estimate of 210K, we could see a return of the dollar bulls during the U.S. session and potentially trigger higher volatility for gold.

Next 24 Hours Bias

Medium Bullish

The Australian Dollar (AUD)

Key news events today

Labour Force Report (12:30 am GMT)

What can we expect from AUD today?

Employment growth rose strongly in Australia for the second month in a row as 56.3K workers were added to the economy in December, easily surpassing market estimates of 14.5K while the unemployment rate remained unchanged at 4.0% in line with forecasts. However, November’s job gains were revised lower from 35.6K down to 28.2K. The Aussie initially surged to a session high of 0.6246 before running out of steam and retreating away from this level. This currency pair continued to slide lower and was floating above 0.6200 by midday Asia.

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

Medium Bullish

The Kiwi Dollar (NZD)

Key news events today

No major news events.

What can we expect from NZD today?

The Kiwi hit an overnight high of 0.5650 following the cooler-than-expected core CPI results out of the U.S. – this currency pair pulled back slightly at the beginning of the Asia session but it should remain supported for the initial part of Thursday.

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

Medium Bullish

The Japanese Yen (JPY)

Key news events today

No major news events.

What can we expect from JPY today?

Softer-than-anticipated consumer inflation out of the U.S. triggered a sharp sell-off in the greenback causing USD/JPY to dive under 156. This currency pair stabilized around 156.40 as Asian markets came online but overhead pressures remain.

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

Medium Bearish

The Euro (EUR)

Key news events today

Trade Balance (10:00 am GMT)

What can we expect from EUR today?

After recording a trade surplus of €6.8B in October, the balance of trade is set to increase further with a surplus of €10.6B in November. This latest result would highlight the improvement in exports out of the Euro Area and could function as a near-term bullish catalyst for the Euro 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

No major news events.

What can we expect from CHF today?

Cooler-than-anticipated U.S. CPI triggered another intense round of selling in the greenback, driving USD/CHF under 0.9100. This currency pair dived as low as 0.9079 before recovering the initial loss to hover around 0.9120 at the beginning of the Asia session.

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

GDP (7:00 am GMT)

What can we expect from GBP today?

After contracting in the fourth quarter of 2023, the British economy expanded steadily throughout 2024 as it grew at an annual rate of 0.9% in the third quarter. Monthly GDP output had been pretty strong in the first half of the year but September and October saw consecutive monthly declines, suggesting a slowdown in the final quarter. However, November’s estimate points to a relatively strong rebound with GDP expected to expand 0.2% MoM – a stronger result could provide a much-needed boost for the pound before the start of the European trading hours.

Central Bank Notes:

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

Next 24 Hours Bias

Weak Bullish

The Canadian Dollar (CAD)

Key news events today

No major news events.

What can we expect from CAD today?

Softer-than-anticipated consumer inflation out of the U.S. triggered a sharp sell-off in the greenback causing USD/CAD to dive sharply towards 1.4300 overnight. This currency pair stabilized around this level before retracing higher towards 1.4350 as Asian markets came online.

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

No major news events.

What can we expect from Oil today?

In a similar outcome to the API stockpiles, the EIA inventories registered a larger-than-expected drawdown as 2.0M barrels of crude were removed from storage, double the estimate of 1.0M. Larger drawdowns – a sign of higher demand within the U.S. – combined with the latest U.S. sanctions on Russian oil exports have functioned as strong tailwinds with WTI oil surging more than 3% on Wednesday. This benchmark hit an overnight high of $80.77 before settling around $80.10 per barrel – crude prices are expected to remain well supported for the remainder of the trading week.

Next 24 Hours Bias

Medium Bullish

The post IC Markets Europe Fundamental Forecast | 16 January 2025 first appeared on IC Markets | Official Blog.