Global Markets:

•  Asian Stock Markets : Nikkei down 0.81%, Shanghai Composite up 0.02%, Hang Seng down 0.27% ASX down 0.07%
• Commodities : Gold at $2658.35 (0.24%), Silver at $31.2 (0.48%), Brent Oil at $72.94 (0.16%), WTI Oil at $68.9 (0.19%)
• Rates : US 10-year yield at 4.406, UK 10-year yield at 4.469, Germany 10-year yield at 2.341

News & Data:

• (USD) Crude Oil Inventories 0.5M vs -0.1M expected

Markets Update:

  Asia-Pacific markets largely declined on Thursday, with investors focused on tech shares following Nvidia’s robust quarterly results. The chipmaker reported a 94% year-on-year revenue surge to $35.08 billion for the third quarter, though growth slowed compared to prior quarters’ triple-digit gains. Net income rose to $19.3 billion, nearly doubling from $9.24 billion a year ago.

Indian markets faced turbulence as Adani Group stocks plummeted after its chairman, Gautam Adani, was indicted in a New York federal court on charges related to bribery and fraud. Flagship Adani Enterprises plunged 20%, Adani Green Energy fell 18.19%, and other group companies like Adani Power, Adani Ports, and Adani Wilmar saw losses between 10% and 20%. The Nifty 50 and BSE Sensex dropped 0.84% and 0.8%, respectively.

Japan’s Nikkei 225 declined 0.8%, with the Topix down 0.54%. Semiconductor supplier Advantest, linked to Nvidia, lost 3%. In South Korea, the Kospi rose 0.38%, while Samsung Electronics gained 2.53%, offsetting a 0.41% drop in SK Hynix. Australia’s S&P/ASX 200 dipped 0.17%, while Hong Kong’s Hang Seng index fell 0.13%, and China’s CSI300 slid 0.22%.

In the U.S., the S&P 500 ended flat Wednesday as Nvidia shares slipped 1% ahead of its earnings report. The Nasdaq Composite edged down 0.11%, while the Dow Jones Industrial Average gained 0.32%, buoying investor sentiment.

Upcoming Events: 

• 01:30 PM GMT – USD Unemployment Claims
• 03:00 PM GMT – USD Existing Home Sales

The post Thursday 21st November 2024: Asian Markets Slip Amid Nvidia’s Slowdown and Adani Group Controversy first appeared on IC Markets | Official Blog.

IC Markets Europe Fundamental Forecast | 21 November 2024

What happened in the Asia session?

RBA Governor Michele Bullock will be speaking at the Women in Payments Symposium in Sydney at 8:00 am GMT. Although the topic will be focused on payment systems, Governor Bullock could touch on the outlook for future monetary policy action. Meanwhile, Bank of Japan (BoJ) Governor Kazuo Ueda will be speaking at the Paris EUROPLACE Tokyo International Financial Forum in Tokyo although the timing of his speech has yet to be officially confirmed by the central bank. Governor Bullock’s and Governor Ueda’s remarks could inject higher volatility for their respective currencies during this session.

What does it mean for the Europe & US sessions?

Unemployment claims have moderated lower since the surge in early October, due to impact of strikes at Boeing as well as disruptions caused by various hurricane-related incidents in cities in the Gulf of Mexico, falling from 260K to 217K in the latest reading. The 4-week average has also drifted lower since October and it currently sits at 221K while this week’s forecast of 220K points to another week of ‘anchored’ figures. Should claims continue to edge lower, it will likely provide a near-term tailwind for the greenback.

The Dollar Index (DXY)

Key news events today

Unemployment Claims (1:30 pm GMT)

What can we expect from DXY today?

Unemployment claims have moderated lower since the surge in early October, due to impact of strikes at Boeing as well as disruptions caused by various hurricane-related incidents in cities in the Gulf of Mexico, falling from 260K to 217K in the latest reading. The 4-week average has also drifted lower since October and it currently sits at 221K while this week’s forecast of 220K points to another week of ‘anchored’ figures. Should claims continue to edge lower, it will likely provide a near-term tailwind for the greenback.

Central Bank Notes:

• The Board of Governors of the Federal Reserve System voted unanimously to lower the Federal Funds Rate target range by 25 basis points to 4.50% to 4.75% on 7th November.
• 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.
• 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.
• Next meeting runs from 17 to 18 December 2024.

Next 24 Hours Bias

Strong Bullish

Gold (XAU)

Key news events today

Unemployment Claims (1:30 pm GMT)

What can we expect from Gold today?

Unemployment claims have moderated lower since the surge in early October, due to impact of strikes at Boeing as well as disruptions caused by various hurricane-related incidents in cities in the Gulf of Mexico, falling from 260K to 217K in the latest reading. The 4-week average has also drifted lower since October and it currently sits at 221K while this week’s forecast of 220K points to another week of ‘anchored’ figures. Should claims continue to edge lower, it will likely provide a near-term tailwind for the greenback and potentially weigh on gold prices.

Next 24 Hours Bias

Medium Bullish

The Australian Dollar (AUD)

Key news events today

RBA Gov Bullock Speaks (8:00 am GMT)

What can we expect from AUD today?

RBA Governor Michele Bullock will be speaking at the Women in Payments Symposium in Sydney today. Although the topic will be focused on payment systems, Governor Bullock could touch on the outlook for future monetary policy action – her remarks could inject higher volatility for the Aussie during the event.

Central Bank Notes:

• The RBA kept the cash rate target unchanged at 4.35% on 5th November, marking the eighth 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 but the forecasts published in today’s Statement on Monetary Policy (SMP) do not see inflation returning sustainably to the midpoint of the target until 2026.
• Headline inflation was 2.8% over the year to the September quarter, down from 3.8% over the year to the June quarter; this was as expected due to declines in fuel and electricity prices in the September quarter.
• However, this decline reflects a temporary cost of living relief; abstracting from these effects, underlying inflation (as represented by the trimmed mean) was 3.5% over the year to the September quarter and is still some way from the 2.5% midpoint of the inflation target.
• Growth in output has been weak as past declines in real disposable incomes and the ongoing effect of restrictive financial conditions continue to weigh on household consumption, particularly discretionary consumption.
• However, growth in aggregate consumer demand, which includes spending by temporary residents such as students and tourists, has remained more resilient.
• A range of indicators suggest that labour market conditions remain tight, and while conditions have been easing gradually, some indicators have recently stabilised.
• Employment grew strongly over the three months to September, by an average of 0.4% per month but the unemployment rate was 4.1% in September, up from the trough of 3.5% in late 2022.
• While headline inflation has declined substantially and will remain lower for a time, underlying inflation is more indicative of inflation momentum, and it remains too high while the November SMP forecasts suggest that it will be some time yet before inflation is sustainably in the target range and approaching the midpoint.
• This reinforces the need to remain vigilant to upside risks to inflation and the Board is not ruling anything in or out.
• Policy will need to be sufficiently restrictive until the Board is confident that inflation is moving sustainably towards the target range and it will continue to rely upon the data and the evolving assessment of risks to guide its decisions.
• Next meeting is on 10 December 2024.

Next 24 Hours Bias

Medium Bearish

The Kiwi Dollar (NZD)

Key news events today

No major news events.

What can we expect from NZD today?

Elevated demand for the dollar caused the Kiwi to hit an overnight low of 0.5863 before finding its footing around this zone. This currency pair was edging higher towards 0.5900 at the beginning of the Asia session but it could resume the downtrend in the latter part of the day – the support and resistance levels for today.

Support: 0.5840

Resistance: 0.5940

Central Bank Notes:

• The Monetary Policy Committee agreed to reduce the OCR by 50 basis points, bringing it down to 4.75% in October as inflation converges to target.
• The Committee assesses that annual consumer price inflation is within its 1 to 3% inflation target range and converging on the 2% midpoint.
• Economic activity in New Zealand is subdued, in part due to restrictive monetary policy while business investment and consumer spending have been weak, and employment conditions continue to soften.
• The economy is now in a position of excess capacity, encouraging price- and wage-setting to adjust to a low-inflation economy; lower import prices have assisted the disinflation.
• High-frequency indicators point to continued subdued growth in the near term, mostly due to weak consumer spending and business investment while labour market conditions are expected to ease further, with filled jobs and advertised vacancy rates continuing to decline.
• The Committee confirmed that future changes to the OCR would depend on its evolving assessment of the economy.
• Next meeting is on 27 November 2024.

Next 24 Hours Bias

Medium Bearish

The Japanese Yen (JPY)

Key news events today

BoJ Governor Kazuo Ueda (Tentative)

What can we expect from JPY today?

Bank of Japan (BoJ) Governor Kazuo Ueda will be speaking at the Paris EUROPLACE Tokyo International Financial Forum in Tokyo although the timing of his speech has yet to be officially confirmed by the central bank. His remarks are likely to have a huge impact on the yen during this event.

Central Bank Notes:

• The Policy Board of the Bank of Japan decided on 31st October, by a unanimous vote, to set the following guideline for money market operations for the intermeeting period:
  1. The Bank will encourage the uncollateralized overnight call rate to remain at around 0.25%.
  2. The Bank will embark on a plan to reduce the amount of its monthly outright purchases of JGBs so that it will be about 3 trillion yen in January-March 2026; the amount will be cut down by about 400 billion yen each calendar quarter in principle.
• The year-on-year rate of increase in the consumer price index (CPI, all items less fresh food) is likely to be at around 2.5% for fiscal 2024 and then be at around 2% for fiscal 2025 and 2026.
• While the effects of a pass-through to consumer prices of cost increases led by the past rise in import prices are expected to wane, underlying CPI inflation is expected to increase gradually, since it is projected that the output gap will improve and that medium- to long-term inflation expectations will rise with a virtuous cycle between wages and prices continuing to intensify.
• Comparing the projections with those presented in the previous Outlook for Economic Activity and Prices (Outlook Report), the projected real GDP growth rates are more or less unchanged. The projected year-on-year rate of increase in the CPI (all items less fresh food) for fiscal 2025 is somewhat lower due to factors such as the recent decline in crude oil and other resource prices.
• Japan’s economy is likely to keep growing at a pace above its potential growth rate, with overseas economies continuing to grow moderately and as a virtuous cycle from income to spending gradually intensifies against the background of factors such as accommodative financial conditions.
• Next meeting is on 19 December 2024.

Next 24 Hours Bias

Weak Bullish

The Euro (EUR)

Key news events today

No major news events.

What can we expect from EUR today?

Robust demand for the dollar drove the Euro to hit a low of 1.0506 on Wednesday before stabilizing around 1.0520. This currency pair was climbing steadily towards 1.0550 as Asian markets came online but overhead pressures remain – these are the support and resistance levels for today.

Support: 1.0500

Resistance: 1.0600

Central Bank Notes:

• The Governing Council reduced the three key ECB interest rates by 25 basis points on 17th October to mark the second 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 3.40%, 3.65% and 3.25% respectively.
• The incoming information on inflation shows that the disinflationary process is well on track while the inflation outlook is also affected by recent downside surprises in indicators of economic activity.
• Inflation is expected to rise in the coming months, before declining to target in the course of next year. Domestic inflation remains high, as wages are still rising at an elevated pace. At the same time, labour cost pressures are set to continue easing gradually, with profits partially buffering their impact on inflation.
• 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 Council is determined to ensure that inflation returns to its 2% medium-term target in a timely manner and will keep policy rates sufficiently restrictive for as long as necessary to achieve this aim and is not pre-committing to a particular rate path.
• Next meeting is on 12 December 2024.

Next 24 Hours Bias

Medium Bearish

The Swiss Franc (CHF)

Key news events today

No major news events.

What can we expect from CHF today?

With no real pull in either direction this week, USD/CHF has ranged between the bounds between 0.8800 and 0.8900 thus far. This currency pair was floating around 0.8830 at the beginning of the Asia session and it could edge lower as the day progresses – these are the support and resistance levels for today.

Support: 0.8800

Resistance: 0.8900

Central Bank Notes:

• The SNB eased monetary policy by lowering its key policy rate by 25 basis points for the third consecutive meeting, going from 1.25% to 1.00% in September.
• Inflationary pressure has again decreased significantly compared to the previous quarter, reflecting the appreciation of the Swiss franc over the last three months.
• Inflation in the period since the last monetary policy assessment was lower than expected, standing at 1.1% in August compared to 1.4% in May.
• The new conditional inflation forecast is significantly lower than that of June: 1.2% for 2024, 0.6% for 2025 and 0.7% for 2026, based on the assumption that the SNB policy rate is 1.0% over the entire forecast horizon.
• Swiss GDP growth was solid in the second quarter of 2024 as momentum in the chemicals/pharmaceuticals industry was particularly strong.
• However, growth is likely to remain rather modest in the coming quarters due to the recent appreciation of the Swiss franc and the moderate development of the global economy.
• The SNB anticipates GDP growth of around 1% this year while currently expecting growth of around 1.5% for 2025.
• Further cuts in the SNB policy rate may become necessary in the coming quarters to ensure price stability over the medium term.
• Next meeting is on 12 December 2024.

Next 24 Hours Bias

Weak Bullish

The Pound (GBP)

Key news events today

No major news events.

What can we expect from GBP today?

Following Wednesday’s hot inflation print, demand for the pound initially spiked causing Cable to briefly surge past 1.2700 to touch 1.2715 before reversing sharply. This currency pair fell under 1.2700 overnight and continued to slide lower as Asian markets came online – these are the support and resistance levels for today.

Support: 1.2615

Resistance: 1.2730

Central Bank Notes:

• The Bank of England’s Monetary Policy Committee (MPC) voted by a majority of 8 to 1 to reduce the Bank Rate by 25 basis points, to 4.75% on 7th November 2024 – one member preferred to maintain the Bank rate at 5.0%.
• The MPC also voted unanimously to reduce the stock of UK government bond purchases held for monetary policy purposes, and financed by the issuance of central bank reserves, by £100B over the next 12 months to a total of £558B, starting in October 2024.
• Twelve-month CPI inflation fell to 1.7% in September but is expected to increase to around 2.5% by the end of the year as weakness in energy prices falls out of the annual comparison; services consumer price inflation has declined to 4.9%.
• CPI inflation is expected to increase to around 2.75% by the second half of 2025 as weakness in energy prices falls out of the annual comparison, revealing more clearly the continuing persistence of domestic inflationary pressures.
• The MPC’s latest projections for activity and inflation are also set out in the accompanying November Report; this forecast is based on the second case where CPI inflation is projected to fall back to around the 2% target in the medium term as a margin of slack emerges later in the forecast period that acts against second-round effects in domestic prices and wages.
• GDP had grown by 0.5% in 2024 Q2, 0.2% weaker than had been expected in the August Report, and 0.1% weaker than the earlier outturn had indicated at the time of the MPC’s previous meeting. Through the second half of 2024, GDP was projected to grow at a somewhat slower rate than in Q2 – headline GDP growth is expected to fall back to its recent underlying pace of around 0.25% per quarter over the second half of this year.
• The combined effects of the measures announced in Autumn Budget 2024 are provisionally expected to boost the level of GDP by around 0.75% at their peak in a year’s time, relative to the August projections, while the Budget is provisionally expected to boost CPI inflation by just under 0.5% at the peak.
• Annual private sector regular average weekly earnings growth has continued to fall but remained elevated at 4.8% in the three months to August; the MPC judges that the labour market continues to loosen, although it appears relatively tight by historical standards.
• Based on the evolving evidence, a gradual approach to removing policy restraint remains appropriate but monetary policy will need to continue to remain restrictive for sufficiently long until the risks to inflation returning sustainably to the 2% target in the medium term have dissipated further.
• The Committee continues to monitor closely the risks of inflation persistence and will decide the appropriate degree of monetary policy restrictiveness at each meeting.
• Next meeting is on 19 December 2024.

Next 24 Hours Bias

Medium Bearish

The Canadian Dollar (CAD)

Key news events today

No major news events.

What can we expect from CAD today?

Hotter-than-expected consumer inflation data on Tuesday continued to bolster the Loonie on Wednesday as USD/CAD fell under the threshold of 1.4000 once again. This currency pair was sliding lower towards 1.3940 at the beginning of the Asia session – these are the support and resistance levels for today.

Support: 1.3940

Resistance: 1.4050

Central Bank Notes:

• The Bank of Canada reduced its target for the overnight rate by 50 basis points bringing it down to 3.75% while continuing its policy of balance sheet normalization on 23rd October; this marked the fourth consecutive meeting where rates were reduced.
• Canada’s economy grew at around 2% in the first half of the year and growth of 1.75% is expected in the second half; consumption has continued to grow but is declining on a per person basis while exports have been boosted by the opening of the Trans Mountain Expansion pipeline.
• Overall, the Bank forecasts GDP growth of 1.2% in 2024, 2.1% in 2025, and 2.3% in 2026 – as the economy strengthens, excess supply is gradually absorbed.
• The labour market remains soft with unemployment at 6.5% in September while wage growth remains elevated relative to productivity growth. Overall, the economy continues to be in excess supply.
• 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%.
• Excess supply elsewhere in the economy has reduced inflation in the prices of many goods and services while the drop in global oil prices has led to lower gasoline prices – these factors have all combined to bring inflation down.
• The Bank expects inflation to remain close to the target over the projection horizon, with the upward and downward pressures on inflation roughly balancing out; the upward pressure from shelter and other services gradually diminishes, and the downward pressure on inflation recedes as excess supply in the economy is absorbed.
• With inflation now back around the 2% target, the Governing Council decided to reduce the policy rate by 50 basis points to support economic growth and keep inflation close to the middle of the 1% to 3% range.
• If the economy evolves broadly in line with the latest forecast, further reduction of the policy rate can be expected but the timing and pace of additional reductions in the policy rate will be guided by incoming information and assessment of its implications for the inflation outlook.
• The Bank is committed to maintaining price stability for Canadians by keeping inflation close to the 2% target.
• Next meeting is on 11 December 2024.

Next 24 Hours Bias

Weak Bearish

Oil

Key news events today

No major news events.

What can we expect from Oil today?

A third successive week of higher-than-anticipated builds in the EIA inventories capped oil prices on Wednesday as 0.55M barrels of crude were added to storage. However crude prices remain supported on concerns about the intensifying conflict between Russia and Ukraine as WTI oil remained above $68.50 per barrel. This benchmark has failed to climb above the $70-mark this week but should geopolitical tensions escalate further, oil prices are likely to close out the week with strong gains.

Next 24 Hours Bias

Weak Bearish

The post IC Markets Europe Fundamental Forecast | 21 November 2024 first appeared on IC Markets | Official Blog.

• Federal Reserve speakers Thursday include Hammack, Goolsbee, Barr
• ICYMI – OPEC+ could further extend voluntary cuts at its December meeting
• Chinese government advisers call for steady 5% 2025 economic growth goal, strongr stimulus
• There are at least 10 European Central Bank officials speaking on Thursday
• U.S. Department of Justice asks judge to force Google to sell off Chrome internet browser
• US firms plan for Trump China tariffs – stockpiling, raising prices?, bailing out of China
• Bank of England’s Catherine Mann speaking Thursday
• CHF traders note – Two Swiss National Bank speakers due Thursday, November 21
• Heads up for Bank of Japan Governor Ueda speaking at 0510 GMT, 0010 US Eastern time
• Deutsche Bank is wary of a ‘significant correction’ for US equities
• Adani dollar bond prices fell sharply following charges against Chairman Adani
• TSMC expected to build one new fabrication facility a year in Taiwan over the next decade.
• PBOC sets USD/ CNY reference rate for today at 7.1934 (vs. estimate at 7.2482)
• Westpac revise its RBA forecast – see later but faster interest rate cuts
• South Korea 1 – 20 November trade data: Exports jump 5.8% y/y
• Japan’s economic package expected around 21.9 trillion yen
• UBS continue to see gold and oil as hedges against macroeconomic, geopolitical risk
• BoA Securites raised US growth and inflation forecasts, see fewer Fed interest rate cuts
• Trump aims to revive the Keystone XL pipeline (politics report)
• BlackRock bitcoin ETF options indicating BTC/USD to $176K in 2026
• New Zealand Treasury plans to cut economic and fiscal forecasts
• ICYMI – (nearly) 90% of economists expect the Federal Reserve to cut by 25bp in December
• More from Fed’s Collins – too early for Fed to factor in the election impact
• Trade ideas thread – Thursday, 21 November, insightful charts, technical analysis, ideas
• Nvidia shares down after Q3 results beat
• Nvidia earnings Q3 2024: Adj. EPS 0.81 (expected 0.75), Revenue 35.08bn (exp 33.12bn)
• Forexlive Americas FX news wrap 20 Nov: Fed’s Bowman more hawkish. 20 year auction ugly.
• Fed’s Collins looks to be on the fence re a December interest rate cut

The
US dollar lost some ground during the Asia session with a higher EUR,
AUD, CHF and, most notably, JPY.

There
was little news nor data out of Japan to account for the drop in
USD/JPY from its high in early trade above 155.50 to lows circa
154.90. We
did get a rumour of the size of the government fiscal package, NHK
(Japan’s national broadcaster) saying around 21.9 trillion yen
(circa 141bn USD equivalent).

We heard from Federal Reserve Bank of Boston President Susan Collins
after the US cash (equity) close. Collins was non-committal on her
December FOMC view. In brief:

• Some
  additional rate cuts needed.
• Policy
  still restrictive.
• Doesn’t
  want to cut rates too quickly.
• Overly
  slow rate cuts could hurt the labour market.
• Final
  destination of rate cuts is unclear.

No
such indecision from the People’s Bank of China at today’s
USD/CNY reference rate setting. The Bank sought to prop up the yuan
again, setting
the mid-rate about
550
points lower than the modelled
estimate of 7.2482.
The PBoC is seeking to support
the
yuan by
damping
USD/CNY gains.

For
tech traders,
the US Department of Justice has
asked a judge to make Google divest Chrome browser, along with other
punitive measures. This was foreshadowed in the days leading up to
today.

Bitcoin
rose
above USD96,000

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

OPEC+ is scheduled to meet on December 1.

Reuters (out overnight) cite unnamed sources for info:

• It may push back output increases when it meets on Dec. 1
• due to weak global oil demand
• according to three OPEC+ sources familiar with the discussions
• Ministers last shelved the increase for a month when they met virtually on Nov. 3
• Two other OPEC+ sources said it was too early to say what the group will decide.

If you think that OPEC+ is just Saudi Arabia and Russia you’d be off track … but not by too much, these two are the biggies.

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

Reuters with the info.

Chinese government advisers recommend a 2025 economic growth target of around 5%, despite challenges from U.S. tariff hikes and slowing global demand.

• Some advisers suggest lower targets of “above 4%” or a 4.5%-5% range.
• Maintaining a lofty target aligns with President Xi Jinping’s vision of doubling China’s economy by 2035.

Advisers advocate for stronger fiscal policies to counter tariff impacts, including raising the budget deficit above this year’s 3% of GDP and increasing domestic demand.

• Potential measures include issuing more special treasury bonds for infrastructure and offering consumer subsidies.
• Advisers emphasize balancing short-term stimulus with structural reforms (e.g., tax and welfare changes) to address long-term imbalances.
• Beijing recently announced a 10 trillion yuan debt package for municipal relief but may reserve further stimulus until U.S. tariff actions become clearer.

The background to the calls for ongoing stimulus includes Trump’s proposed tariffs exceeding 60% on Chinese imports that could reduce growth by up to 1 percentage point.

• Many manufacturers have already shifted production abroad to avoid existing tariffs.

• Exports accounted for 20% of China’s GDP in 2023 but contributed only 2.2% to net GDP growth.
• A hit to exports without offsetting domestic demand could exacerbate deflationary pressures and weaken growth.

/*/*

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

DXY (US Dollar Index):

Potential Direction: Bullish
Overall momentum of the chart: Bullish

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

Pivot: 105.27
Supporting reasons: Identified as pullback support that aligns with 50% Fibonacci retracement, indicating a potential area where buying interests could pick up to stage a rebound.

1st support: 104.33
Supporting reasons: Identified as an overlap support that aligns with the 78.6% Fibonacci retracement, indicating a potential level where price could find support once more.

1st resistance: 106.88
Supporting reasons: Identified as a multi-swing high resistance, indicating a potential area that could halt any further upward movement.

EUR/USD:

Potential Direction: Bearish

Overall momentum of the chart: Bearish

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

Pivot: 1.0653
Supporting reasons: Identified as an overlap resistance close to 38.2% Fibonacci retracement, indicating a potential area where selling pressures could intensify.

1st support: 1.0519

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

1st resistance: 1.0770
Supporting reasons: Identified as a pullback resistance that aligns with the 61.8% Fibonacci retracement, indicating a potential area that could halt any further upward movement.

EUR/JPY:

Potential Direction: Bearish
Overall momentum of the chart: Bearish

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

Pivot: 165.01
Supporting reasons: Identified as an overlap resistance, indicating a potential area where selling pressures could intensify.

1st support: 162.10

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

1st resistance: 166.67
Supporting reasons: Identified as a swing high resistance, indicating a potential area that could halt any further upward movement.

EUR/GBP:

Potential Direction: Bearish

Overall momentum of the chart: Bearish

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

Pivot: 0.8376
Supporting reasons: Identified as an overlap resistance close to 61.8% Fibonacci retracement, indicating a potential area where selling pressures could intensify.

1st support: 0.8303
Supporting reasons: Identified as an overlap support close to 61.8% Fibonacci retracement, indicating a potential level where price could find support once again.

1st resistance: 0.8443
Supporting reasons: Identified as an overlap resistance, indicating a potential area that could halt any further upward movement.

GBP/USD:

Potential Direction: Bearish

Overall momentum of the chart: Bearish

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

Pivot: 1.2796
Supporting reasons: Identified as an overlap resistance close to 38.2% Fibonacci retracement, indicating a potential area where selling pressures could intensify.

1st support: 1.2609

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

1st resistance: 1.2859
Supporting reasons: Identified as a pullback resistance close to 61.8% Fibonacci retracement, indicating a potential area that could halt any further upward movement.

GBP/JPY:

Potential Direction: Bullish
Overall momentum of the chart: Bearish

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

Pivot: 196.06
Supporting reasons: Identified as an overlap support, indicating a potential area where buying interests could pick up to stage a rebound.

1st support: 193.89

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

1st resistance: 199.55
Supporting reasons: Identified as a multi-swing high resistance that aligns, indicating a potential area that could halt any further upward movement.

USD/CHF:

Potential Direction: Bullish

Overall momentum of the chart: Bullish

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

Pivot: 0.8777
Supporting reasons: Identified as pullback support that aligns with 50% Fibonacci retracement, indicating a potential area where buying interests could pick up to stage a rebound

1st support: 0.8700
Supporting reasons: Identified as an overlap support, indicating a potential level where price could find support once more.

1st resistance: 0.8861
Supporting reasons: Identified as an overlap resistance, indicating a potential area that could halt any further upward movement.

USD/JPY:

Potential Direction: Bearish

Overall momentum of the chart: Bullish

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

Pivot: 155.68
Supporting reasons: Identified as an overlap resistance close to 61.8% Fibonacci retracement, indicating a potential area where selling pressures could intensify.

1st support: 153.54
Supporting reasons: Identified as an overlap support that aligns with the 61.8% Fibonacci retracement, indicating a potential level where price could find support once again.

1st resistance: 156.59
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 is falling towards the pivot and could potentially make a bullish bounce off this level to rise toward the 1st resistance.

Pivot: 1.3953
Supporting reasons: Identified as an overlap support that aligns with a confluence of Fibonacci levels i.e. the 23.6% and 50% retracements, indicating a potential area where buying interests could pick up to resume the uptrend.

1st support: 1.3815
Supporting reasons: Identified as an overlap support that aligns close to a 38.2% Fibonacci retracement, indicating a key level where price could find support once more.

1st resistance: 1.4050
Supporting reasons: Identified as a pullback resistance that aligns with a 61.8% Fibonacci retracement, indicating a potential area that could halt any further upward movement.

AUD/USD:

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: 0.6542
Supporting reasons: Identified as an overlap resistance that aligns close to a 23.6% Fibonacci retracement, indicating a potential area where selling pressures could intensify.

1st support: 0.6448
Supporting reasons: Identified as a swing-low support that aligns close to a 161.8% Fibonacci extension, suggesting a key support area where price could find support once again.

1st resistance: 0.6678
Supporting reasons: Identified as a swing-high resistance that aligns close to a 50% Fibonacci retracement, indicating a potential area that could halt any further upward movement.

NZD/USD

Potential Direction: Bearish
Overall momentum of the chart: Neutral

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

Pivot: 0.5936
Supporting reasons: Identified as an overlap resistance that aligns close to a 38.2% Fibonacci retracement, indicating a potential area where selling pressures could intensify.

1st support: 0.5838
Supporting reasons: Identified as a swing-low support, suggesting a key support area where price could find support once more.

1st resistance: 0.6029
Supporting reasons: Identified as an overlap resistance that aligns close to a 38.2% Fibonacci retracement, indicating a potential area that could halt any further upward movement.

US30 (DJIA):

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: 43,059.45

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

1st support: 42,568.30

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

1st resistance: 43,819.07

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: Neutral
Overall momentum of the chart: Neutral

Price is exhibiting a neutral bias and could potentially fluctuate between the 1st support and the 1st resistance.

1st support: 18,890.40
Supporting reasons: Identified as a multi-swing-low support, indicating a key level where price could find support once more.

1st resistance: 19,284.40
Supporting reasons: Identified as a swing-high resistance, indicating a potential area that could halt any further upward movement.

US500 (S&P 500): 

Potential Direction: Bullish
Overall momentum of the chart: Neutral

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

Pivot: 5,853.30

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

1st support: 5,823.10
Supporting reasons: Identified as an overlap support that aligns close to a 61.8% Fibonacci retracement, indicating a potential level where price could find support again.

1st resistance: 5,931.80
Supporting reasons: Identified as a pullback resistance that aligns close to a 50% Fibonacci retracement, indicating a potential area that could halt any further upward movement.

BTC/USD (Bitcoin):

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: 92,646.72
Supporting reasons: Identified as a pullback support, indicating a potential area  where buying interests could pick up to resume the uptrend.

1st support: 86,719.44
Supporting reasons: Identified as a pullback support that aligns with a 23.6% Fibonacci retracement, indicating a potential level where price could find support once more.

1st resistance: 97,859.16
Supporting reasons: Identified as a resistance that aligns with a 161.8% Fibonacci extension, indicating a potential area that could halt any further upward movement.

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: 3,028.93
Supporting reasons: Identified as a pullback support that aligns with 38.2% Fibonacci retracement, indicating a potential area where buying interests could pick up to stage a rebound.

1st support: 2,782.06
Supporting reasons: Identified as an overlap support that aligns close to 61.8% Fibonacci retracement, indicating a potential level where price could find support once again.

1st resistance: 3,222.73
Supporting reasons: Identified as an overlap resistance that aligns with 50% Fibonacci retracement, indicating a potential area that could halt any further upward movement.

WTI/USD (Oil):

Potential Direction: Bearish
Overall momentum of the chart: Neutral

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

Pivot: 71.12
Supporting reasons: Identified as a pullback resistance that aligns close to a 61.8% Fibonacci retracement, indicating a potential area where selling pressures could intensify.

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

1st resistance: 72.98
Supporting reasons: Identified as an overlap resistance that aligns with a 50% Fibonacci retracement, indicating a potential area that could halt any further upward movement.

XAU/USD (GOLD):

Potential Direction: Bearish

Overall momentum of the chart: Bearish

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

Pivot: 2656.82
Supporting reasons: Identified as a pullback resistance close to 61.8% Fibonacci retracement, indicating a potential area where selling pressures could intensify.

1st support: 2605.34

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

1st resistance: 2712.21
Supporting reasons: Identified as an overlap resistance, indicating a potential area that could halt any further upward movement.

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The post Thursday 21st November 2024: Technical Outlook and Review first appeared on IC Markets | Official Blog.

IC Markets Asia Fundamental Forecast | 21 November 2024

What happened in the U.S. session?

Federal Reserve Governor Michelle Bowman’ speech on policymaking at the Forum Club of the Palm Beaches on Wednesday called for a cautious approach on interest rates while saying rate cuts are concerning. Here are a couple of snippets from her opening remarks:

“I would prefer to proceed cautiously in bringing the policy rate down to better assess how far we are from the end point, while recognizing that we have not yet achieved our inflation goal and closely watching the evolution of the labour market.“

“It’s concerning to me that we’re recalibrating policy, but we haven’t yet achieved our inflation goal.“

Her statements reflect the recent acceleration in headline CPI and both headline and core PPI whilst the labour market remains resilient. Governor Bowman was also the lone official who had cast a dissenting vote on the Fed’s jumbo half-percentage-point rate reduction in September. Despite her mild ‘hawkish’ tone, the dollar index (DXY) hit an overnight high of 106.92 before fizzling out to drift lower towards 106.60 by the end of this session.

What does it mean for the Asia Session?

RBA Governor Michele Bullock will be speaking at the Women in Payments Symposium in Sydney this morning. Although the topic will be focused on payment systems, Governor Bullock could touch on the outlook for future monetary policy action. Meanwhile, Bank of Japan (BoJ) Governor Kazuo Ueda will be speaking at the Paris EUROPLACE Tokyo International Financial Forum in Tokyo although the timing of his speech has yet to be officially confirmed by the central bank. Governor Bullock’s and Governor Ueda’s remarks could inject higher volatility for their respective currencies during this session.

The Dollar Index (DXY)

Key news events today

Unemployment Claims (1:30 pm GMT)

What can we expect from DXY today?

Unemployment claims have moderated lower since the surge in early October, due to impact of strikes at Boeing as well as disruptions caused by various hurricane-related incidents in cities in the Gulf of Mexico, falling from 260K to 217K in the latest reading. The 4-week average has also drifted lower since October and it currently sits at 221K while this week’s forecast of 220K points to another week of ‘anchored’ figures. Should claims continue to edge lower, it will likely provide a near-term tailwind for the greenback.

Central Bank Notes:

• The Board of Governors of the Federal Reserve System voted unanimously to lower the Federal Funds Rate target range by 25 basis points to 4.50% to 4.75% on 7th November.
• 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.
• 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.
• Next meeting runs from 17 to 18 December 2024.

Next 24 Hours Bias

Strong Bullish

Gold (XAU)

Key news events today

Unemployment Claims (1:30 pm GMT)

What can we expect from Gold today?

Unemployment claims have moderated lower since the surge in early October, due to impact of strikes at Boeing as well as disruptions caused by various hurricane-related incidents in cities in the Gulf of Mexico, falling from 260K to 217K in the latest reading. The 4-week average has also drifted lower since October and it currently sits at 221K while this week’s forecast of 220K points to another week of ‘anchored’ figures. Should claims continue to edge lower, it will likely provide a near-term tailwind for the greenback and potentially weigh on gold prices.

Next 24 Hours Bias

Medium Bullish

The Australian Dollar (AUD)

Key news events today

RBA Gov Bullock Speaks (8:00 am GMT)

What can we expect from AUD today?

RBA Governor Michele Bullock will be speaking at the Women in Payments Symposium in Sydney this morning. Although the topic will be focused on payment systems, Governor Bullock could touch on the outlook for future monetary policy action – her remarks could inject higher volatility for the Aussie during the Asian trading hours.

Central Bank Notes:

• The RBA kept the cash rate target unchanged at 4.35% on 5th November, marking the eighth 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 but the forecasts published in today’s Statement on Monetary Policy (SMP) do not see inflation returning sustainably to the midpoint of the target until 2026.
• Headline inflation was 2.8% over the year to the September quarter, down from 3.8% over the year to the June quarter; this was as expected due to declines in fuel and electricity prices in the September quarter.
• However, this decline reflects a temporary cost of living relief; abstracting from these effects, underlying inflation (as represented by the trimmed mean) was 3.5% over the year to the September quarter and is still some way from the 2.5% midpoint of the inflation target.
• Growth in output has been weak as past declines in real disposable incomes and the ongoing effect of restrictive financial conditions continue to weigh on household consumption, particularly discretionary consumption.
• However, growth in aggregate consumer demand, which includes spending by temporary residents such as students and tourists, has remained more resilient.
• A range of indicators suggest that labour market conditions remain tight, and while conditions have been easing gradually, some indicators have recently stabilised.
• Employment grew strongly over the three months to September, by an average of 0.4% per month but the unemployment rate was 4.1% in September, up from the trough of 3.5% in late 2022.
• While headline inflation has declined substantially and will remain lower for a time, underlying inflation is more indicative of inflation momentum, and it remains too high while the November SMP forecasts suggest that it will be some time yet before inflation is sustainably in the target range and approaching the midpoint.
• This reinforces the need to remain vigilant to upside risks to inflation and the Board is not ruling anything in or out.
• Policy will need to be sufficiently restrictive until the Board is confident that inflation is moving sustainably towards the target range and it will continue to rely upon the data and the evolving assessment of risks to guide its decisions.
• Next meeting is on 10 December 2024.

Next 24 Hours Bias

Medium Bearish

The Kiwi Dollar (NZD)

Key news events today

No major news events.

What can we expect from NZD today?

Elevated demand for the dollar caused the Kiwi to hit an overnight low of 0.5863 before finding its footing around this zone. This currency pair was edging higher towards 0.5900 at the beginning of the Asia session but it could resume the downtrend in the latter part of the day – the support and resistance levels for today.

Support: 0.5840

Resistance: 0.5940

Central Bank Notes:

• The Monetary Policy Committee agreed to reduce the OCR by 50 basis points, bringing it down to 4.75% in October as inflation converges to target.
• The Committee assesses that annual consumer price inflation is within its 1 to 3% inflation target range and converging on the 2% midpoint.
• Economic activity in New Zealand is subdued, in part due to restrictive monetary policy while business investment and consumer spending have been weak, and employment conditions continue to soften.
• The economy is now in a position of excess capacity, encouraging price- and wage-setting to adjust to a low-inflation economy; lower import prices have assisted the disinflation.
• High-frequency indicators point to continued subdued growth in the near term, mostly due to weak consumer spending and business investment while labour market conditions are expected to ease further, with filled jobs and advertised vacancy rates continuing to decline.
• The Committee confirmed that future changes to the OCR would depend on its evolving assessment of the economy.
• Next meeting is on 27 November 2024.

Next 24 Hours Bias

Medium Bearish

The Japanese Yen (JPY)

Key news events today

BoJ Governor Kazuo Ueda (Tentative)

What can we expect from JPY today?

Bank of Japan (BoJ) Governor Kazuo Ueda will be speaking at the Paris EUROPLACE Tokyo International Financial Forum in Tokyo although the timing of his speech has yet to be officially confirmed by the central bank. His remarks are likely to have a huge impact on the yen during the Asia session.

Central Bank Notes:

• The Policy Board of the Bank of Japan decided on 31st October, by a unanimous vote, to set the following guideline for money market operations for the intermeeting period:
  1. The Bank will encourage the uncollateralized overnight call rate to remain at around 0.25%.
  2. The Bank will embark on a plan to reduce the amount of its monthly outright purchases of JGBs so that it will be about 3 trillion yen in January-March 2026; the amount will be cut down by about 400 billion yen each calendar quarter in principle.
• The year-on-year rate of increase in the consumer price index (CPI, all items less fresh food) is likely to be at around 2.5% for fiscal 2024 and then be at around 2% for fiscal 2025 and 2026.
• While the effects of a pass-through to consumer prices of cost increases led by the past rise in import prices are expected to wane, underlying CPI inflation is expected to increase gradually, since it is projected that the output gap will improve and that medium- to long-term inflation expectations will rise with a virtuous cycle between wages and prices continuing to intensify.
• Comparing the projections with those presented in the previous Outlook for Economic Activity and Prices (Outlook Report), the projected real GDP growth rates are more or less unchanged. The projected year-on-year rate of increase in the CPI (all items less fresh food) for fiscal 2025 is somewhat lower due to factors such as the recent decline in crude oil and other resource prices.
• Japan’s economy is likely to keep growing at a pace above its potential growth rate, with overseas economies continuing to grow moderately and as a virtuous cycle from income to spending gradually intensifies against the background of factors such as accommodative financial conditions.
• Next meeting is on 19 December 2024.

Next 24 Hours Bias

Weak Bullish

The Euro (EUR)

Key news events today

No major news events.

What can we expect from EUR today?

Robust demand for the dollar drove the Euro to hit a low of 1.0506 on Wednesday before stabilizing around 1.0520. This currency pair was climbing steadily towards 1.0550 as Asian markets came online but overhead pressures remain – these are the support and resistance levels for today.

Support: 1.0500

Resistance: 1.0600

Central Bank Notes:

• The Governing Council reduced the three key ECB interest rates by 25 basis points on 17th October to mark the second 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 3.40%, 3.65% and 3.25% respectively.
• The incoming information on inflation shows that the disinflationary process is well on track while the inflation outlook is also affected by recent downside surprises in indicators of economic activity.
• Inflation is expected to rise in the coming months, before declining to target in the course of next year. Domestic inflation remains high, as wages are still rising at an elevated pace. At the same time, labour cost pressures are set to continue easing gradually, with profits partially buffering their impact on inflation.
• 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 Council is determined to ensure that inflation returns to its 2% medium-term target in a timely manner and will keep policy rates sufficiently restrictive for as long as necessary to achieve this aim and is not pre-committing to a particular rate path.
• Next meeting is on 12 December 2024.

Next 24 Hours Bias

Medium Bearish

The Swiss Franc (CHF)

Key news events today

No major news events.

What can we expect from CHF today?

With no real pull in either direction this week, USD/CHF has ranged between the bounds between 0.8800 and 0.8900 thus far. This currency pair was floating around 0.8830 at the beginning of the Asia session and it could edge lower as the day progresses – these are the support and resistance levels for today.

Support: 0.8800

Resistance: 0.8900

Central Bank Notes:

• The SNB eased monetary policy by lowering its key policy rate by 25 basis points for the third consecutive meeting, going from 1.25% to 1.00% in September.
• Inflationary pressure has again decreased significantly compared to the previous quarter, reflecting the appreciation of the Swiss franc over the last three months.
• Inflation in the period since the last monetary policy assessment was lower than expected, standing at 1.1% in August compared to 1.4% in May.
• The new conditional inflation forecast is significantly lower than that of June: 1.2% for 2024, 0.6% for 2025 and 0.7% for 2026, based on the assumption that the SNB policy rate is 1.0% over the entire forecast horizon.
• Swiss GDP growth was solid in the second quarter of 2024 as momentum in the chemicals/pharmaceuticals industry was particularly strong.
• However, growth is likely to remain rather modest in the coming quarters due to the recent appreciation of the Swiss franc and the moderate development of the global economy.
• The SNB anticipates GDP growth of around 1% this year while currently expecting growth of around 1.5% for 2025.
• Further cuts in the SNB policy rate may become necessary in the coming quarters to ensure price stability over the medium term.
• Next meeting is on 12 December 2024.

Next 24 Hours Bias

Weak Bullish

The Pound (GBP)

Key news events today

No major news events.

What can we expect from GBP today?

Following Wednesday’s hot inflation print, demand for the pound initially spiked causing Cable to briefly surge past 1.2700 to touch 1.2715 before reversing sharply. This currency pair fell under 1.2700 overnight and continued to slide lower as Asian markets came online – these are the support and resistance levels for today.

Support: 1.2615

Resistance: 1.2730

Central Bank Notes:

• The Bank of England’s Monetary Policy Committee (MPC) voted by a majority of 8 to 1 to reduce the Bank Rate by 25 basis points, to 4.75% on 7th November 2024 – one member preferred to maintain the Bank rate at 5.0%.
• The MPC also voted unanimously to reduce the stock of UK government bond purchases held for monetary policy purposes, and financed by the issuance of central bank reserves, by £100B over the next 12 months to a total of £558B, starting in October 2024.
• Twelve-month CPI inflation fell to 1.7% in September but is expected to increase to around 2.5% by the end of the year as weakness in energy prices falls out of the annual comparison; services consumer price inflation has declined to 4.9%.
• CPI inflation is expected to increase to around 2.75% by the second half of 2025 as weakness in energy prices falls out of the annual comparison, revealing more clearly the continuing persistence of domestic inflationary pressures.
• The MPC’s latest projections for activity and inflation are also set out in the accompanying November Report; this forecast is based on the second case where CPI inflation is projected to fall back to around the 2% target in the medium term as a margin of slack emerges later in the forecast period that acts against second-round effects in domestic prices and wages.
• GDP had grown by 0.5% in 2024 Q2, 0.2% weaker than had been expected in the August Report, and 0.1% weaker than the earlier outturn had indicated at the time of the MPC’s previous meeting. Through the second half of 2024, GDP was projected to grow at a somewhat slower rate than in Q2 – headline GDP growth is expected to fall back to its recent underlying pace of around 0.25% per quarter over the second half of this year.
• The combined effects of the measures announced in Autumn Budget 2024 are provisionally expected to boost the level of GDP by around 0.75% at their peak in a year’s time, relative to the August projections, while the Budget is provisionally expected to boost CPI inflation by just under 0.5% at the peak.
• Annual private sector regular average weekly earnings growth has continued to fall but remained elevated at 4.8% in the three months to August; the MPC judges that the labour market continues to loosen, although it appears relatively tight by historical standards.
• Based on the evolving evidence, a gradual approach to removing policy restraint remains appropriate but monetary policy will need to continue to remain restrictive for sufficiently long until the risks to inflation returning sustainably to the 2% target in the medium term have dissipated further.
• The Committee continues to monitor closely the risks of inflation persistence and will decide the appropriate degree of monetary policy restrictiveness at each meeting.
• Next meeting is on 19 December 2024.

Next 24 Hours Bias

Medium Bearish

The Canadian Dollar (CAD)

Key news events today

No major news events.

What can we expect from CAD today?

Hotter-than-expected consumer inflation data on Tuesday continued to bolster the Loonie on Wednesday as USD/CAD fell under the threshold of 1.4000 once again. This currency pair was sliding lower towards 1.3940 at the beginning of the Asia session – these are the support and resistance levels for today.

Support: 1.3940

Resistance: 1.4050

Central Bank Notes:

• The Bank of Canada reduced its target for the overnight rate by 50 basis points bringing it down to 3.75% while continuing its policy of balance sheet normalization on 23rd October; this marked the fourth consecutive meeting where rates were reduced.
• Canada’s economy grew at around 2% in the first half of the year and growth of 1.75% is expected in the second half; consumption has continued to grow but is declining on a per person basis while exports have been boosted by the opening of the Trans Mountain Expansion pipeline.
• Overall, the Bank forecasts GDP growth of 1.2% in 2024, 2.1% in 2025, and 2.3% in 2026 – as the economy strengthens, excess supply is gradually absorbed.
• The labour market remains soft with unemployment at 6.5% in September while wage growth remains elevated relative to productivity growth. Overall, the economy continues to be in excess supply.
• 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%.
• Excess supply elsewhere in the economy has reduced inflation in the prices of many goods and services while the drop in global oil prices has led to lower gasoline prices – these factors have all combined to bring inflation down.
• The Bank expects inflation to remain close to the target over the projection horizon, with the upward and downward pressures on inflation roughly balancing out; the upward pressure from shelter and other services gradually diminishes, and the downward pressure on inflation recedes as excess supply in the economy is absorbed.
• With inflation now back around the 2% target, the Governing Council decided to reduce the policy rate by 50 basis points to support economic growth and keep inflation close to the middle of the 1% to 3% range.
• If the economy evolves broadly in line with the latest forecast, further reduction of the policy rate can be expected but the timing and pace of additional reductions in the policy rate will be guided by incoming information and assessment of its implications for the inflation outlook.
• The Bank is committed to maintaining price stability for Canadians by keeping inflation close to the 2% target.
• Next meeting is on 11 December 2024.

Next 24 Hours Bias

Weak Bearish

Oil

Key news events today

No major news events.

What can we expect from Oil today?

A third successive week of higher-than-anticipated builds in the EIA inventories capped oil prices on Wednesday as 0.55M barrels of crude were added to storage. However crude prices remain supported on concerns about the intensifying conflict between Russia and Ukraine as WTI oil remained above $68.50 per barrel. This benchmark has failed to climb above the $70-mark this week but should geopolitical tensions escalate further, oil prices are likely to close out the week with strong gains.

Next 24 Hours Bias

Weak Bearish

The post IC Markets Asia Fundamental Forecast | 21 November 2024 first appeared on IC Markets | Official Blog.

The Wall Street Journal (gated) with the report. Probably most interesting, for China, are moves to diversify supply chains away from the country:

American businesses are dusting off a playbook they used during Trump’s first term:

• stocking up on imported goods before tariffs are enacted
• also considering how to cope with the levies if and when enacted—whether they will be able to raise prices
• whether they will need to find alternatives to their Chinese manufacturers

The piece quotes an electronics manufacturer in Guangdong province:

• company has observed an increase in inquiries and “noticeable unease” from its U.S. clients
• tariffs so far haven’t affected sales significantly
• but that buyers end up absorbing the levies and sometimes raising prices for their end customers

Interesting times!

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

U.S. authorities allege Chairman Gautam Adani and seven others paid $265 million in bribes to Indian government officials. Adani Group has not commented on the allegations as yet.

The price of Adani dollar bonds fell in early Asia trade.

Reuters reports

• Adani Ports and Special Economic Zone: Bonds maturing in August 2027 fell over five cents on the dollar.
• Adani Electricity Mumbai: Bonds maturing in February 2030 dropped nearly eight cents.
• Adani Transmission: Bonds fell more than five cents, trading slightly above 80 cents.

The price drops are the most significant since February 2023, when Hindenburg Research released a critical report on Adani Group’s debt and tax practices.

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

Taiwan’s economy minister says that TSMC is expected to construct one new fabrication facility annually in Taiwan over the next decade.

• added that Taiwan needed to ensure adequate power and water resources to support these facilities,

Also, said that TSMC’s fabs in Kaohsiung, southern Taiwan, are “ready to go” likely indicating that the necessary power and water infrastructure is already in place.

**

The background to this is that TSMC is preparing to begin 2nm mass production at its Kaohsiung P1 and P2 fabs next year, with plans to establish a total of four fabs at the site.

Taiwan Semiconductor Manufacturing Company

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

South Korean trade data for the first 20 days of the month is encouraging for exports:

• +5.8% y/y vs. a -0.2% for October (full month)

Not so much for imports:

• -1.0% y/y

Morgan Stanely noted risks for SK from the new incoming US admin:

• “Supply chains would face significant rewiring pressures, and the disruption faced by the corporate sector would meaningfully slow the capex cycle,”
• “Asia’s growth could decelerate meaningfully, with the more trade-oriented economies like Korea and Taiwan facing more downward pressure.”

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

Markets Steady Ahead of Nvidia – Dow up 0.3%

US markets remained steady ahead of the key Nvidia earnings report today, with major indices trading close to flat. The S&P finished the day unchanged at 5,917, while the Dow added 0.32%, and the Nasdaq declined by 0.11%. Tech indices are expected to face pressure in the coming sessions as Nvidia shares dropped nearly 5% in after-hours trading following their update. Treasury yields moved higher once again, with the 2-year yield up 3.6 basis points to 4.308% and the 10-year yield increasing by 3.3 basis points to 4.412%. The dollar advanced, challenging recent annual highs, as the DXY rose 0.5% to 106.65. Oil prices dipped after stronger-than-expected US inventory data, with Brent down 0.68% to $72.81 and WTI off 0.75% to $68.87. Gold, meanwhile, gained 0.6%, closing at $2,647.23, as geopolitical concerns continued to provide support.

Dollar Back in Favour for Traders

The dollar saw another strong rise in trading yesterday, following a brief period of relief rallies for other currencies after weeks of sustained pressure. Both the dollar and US yields are now challenging recent high levels, with traders expecting potential breakthroughs into new topside ranges in the next few sessions. Despite a lack of significant US data and central bank updates this week, indicators point towards continued dollar strength. Geopolitical risks have increased in recent days, typically bolstering the greenback, while recent developments have done little to alter this trajectory. Federal Reserve members are scheduled to speak tonight, and any reinforcement of Fed Chair Jerome Powell’s comments last week—indicating no urgency to cut rates—could lead to further break trades in the near term.

Central Bankers in Focus Today

Thursday brings a strong focus on central banks for Asian markets, with Bank of Japan Governor Kazuo Ueda set to speak again, keeping Yen traders on alert. Later in the day, Reserve Bank of Australia Governor Michele Bullock is scheduled to speak. The European session is relatively light on the agenda, but the US session will feature some data releases once New York opens, including the weekly unemployment claims numbers (expected at 220,000), the Philly Fed Manufacturing Index (expected at 7.4), and the Existing Home Sales update (expected at 3.95 million). A series of speeches from Federal Reserve officials, including Goolsbee, Hammack, and Barr, will follow later in the session.

The post General Market Analysis – 21/11/24 first appeared on IC Markets | Official Blog.