• Prior +2.0%
• Core CPI +2.7% vs +2.7% y/y prelim
• Prior +2.7%

No changes to the core estimate with services inflation also remaining sticky at 3.9%. The latter hasn’t really moved much in the last six months, continuing to hold closer to 4% still – as it was back in July. That shows that while the disinflation process is on track, there is still more progress needed going into next year.

This article was written by Justin Low at www.forexlive.com.

Gold Futures Analysis: Key Levels and Near-Term Outlook 🏆📊

February 2025 Contract | 50 Range Chart Analysis

Current Overview

Gold futures are trading within a tight range, showing mixed momentum as buyers and sellers battle for control. While buyers have stepped in at critical support levels, sell-side activity has reemerged, signaling potential hesitation near resistance. Traders and investors should remain cautious as the market consolidates and watch for decisive moves at key levels.

🔑 Key Levels to Watch

1. Immediate Support:

   • 2654.0: Key pivot and recent support level, marking the bottom of the current range.

2. Critical Resistance Zones:

   • 2659.6: Current VWAP level, acting as the intraday pivot.
   • 2666.4 – 2667.1: Upper resistance near high-volume nodes, representing a significant test for buyers.

3. Directional Breakout Points:

   • A break above 2667.1 would open the door for further upside, signaling buyer strength.
   • A drop below 2654.0 could see increased sell-side pressure and downside continuation.

Market Sentiment and Momentum

Recent price action shows:

• Buyer Absorption: Buyers have repeatedly absorbed sell-side pressure near key support levels, signaling their presence in the market.
• Seller Resistance: Sellers reemerged near resistance, limiting upward momentum and suggesting hesitation.

The current balance of power remains neutral to slightly bullish as buyers defend support, but follow-through is lacking for a convincing breakout. Traders should watch for increasing buyer strength or renewed sell pressure to determine the next directional move.

AI Directional Bias Score: +1 (Slight Bullish Bias) 📈

The AI analysis leans slightly bullish given signs of buyer activity at support, but a decisive move above 2659.6 VWAP or the upper resistance levels at 2666.4 – 2667.1 is required to confirm this outlook.

🔍 Key Takeaways for Gold Traders and Investors

1. Bullish Scenario:

   • A sustained move above 2659.6 and a breakout through 2667.1 would signal buyer control.
   • Targets: Higher resistance areas above 2667.

2. Bearish Scenario:

   • A failure to hold 2654.0 would shift momentum in favor of sellers, with further downside potential.
   • Targets: Lower VWAP deviations and extended support levels. Bulls need to defend 2650 to maintain the bullish bias. Below 2645, bears get the ball.

Gold is still consolidating here 💡

Gold futures are at a critical juncture, consolidating within a narrow range while traders await the next major move. Key levels will act as pivotal zones for traders looking to position for either a breakout or breakdown.

⚠️ Disclaimer: This analysis is for informational purposes only. Trade responsibly and manage your risk effectively. 📊 Visit ForexLive.com for additional views.

This article was written by Itai Levitan at www.forexlive.com.

• Eurostoxx +0.1%
• Germany DAX +0.1%
• France CAC 40 +0.1%
• UK FTSE +0.2%
• Spain IBEX -0.1%
• Italy FTSE MIB +0.1%

The gains are marginal and isn’t reflective of much to start the session. US futures are higher but again, it’s still early in the day with Wall Street yet to have their say and then we also have the Fed coming up later. I would expect European indices to show more caution as such, similar to how the week has played out so far. Despite that, it has been a good month so far for equities. The DAX is up a little over 3% still in December and CAC 40 also up nearly 2% on the month.

This article was written by Justin Low at www.forexlive.com.

Global Markets:

•  Asian Stock Markets : Nikkei down 0.07%, Shanghai Composite down 0.51%, Hang Seng down 0.20% ASX up 0.78%
• Commodities : Gold at $2668.35 (-0.04%), Silver at $30.84 (-0.38%), Brent Oil at $74.09 (-0.16%), WTI Oil at $70.4 (-0.39%)
• Rates : US 10-year yield at 4.401, UK 10-year yield at 4.4400, Germany 10-year yield at 2.2430

News & Data:

• (USD) Core Retail Sales m/mI 0.2% vs 0.4% expected
• (USD) Retail Sales m/m 0.7% vs 0.6% expected
• (CAD) CPI m/m 0.0% vs 0.1% expected
• (CAD) Median CPI y/y 2.6% vs 2.4% expected
• (CAD) Trimmed CPI y/y 2.7% vs 2.6% expected

Markets Update:

Asia-Pacific markets were mixed on Wednesday, following Wall Street losses and ahead of the Federal Reserve’s rate decision. Investors in Asia also reviewed Japan’s latest trade data before the Bank of Japan’s rate decision later this week.

Japan’s exports increased 3.8% year-on-year in November, surpassing the expected 2.8% growth, while imports fell 3.8%, much more than the anticipated 1% rise. As a result, Japan posted a trade deficit of ¥117.6 billion ($765.2 million), larger than the expected deficit of ¥688.9 billion. Japan’s Nikkei 225 index dropped 0.4%, and the Topix was down 0.05%.

South Korea’s Kospi rose by 1%, though the Kosdaq was down 0.3%. In Australia, the S&P/ASX 200 dipped 0.06%, closing at 8,309.4. Meanwhile, Hong Kong’s Hang Seng index gained 0.6%, and mainland China’s CSI 300 was up 0.5%.

Markets are also awaiting a rate decision from the People’s Bank of China on Friday, as the country’s loan prime rates (LPR) guide both corporate and household lending.

In the U.S., trading on Tuesday saw the Dow Jones Industrial Average fall for the ninth consecutive day, its longest losing streak since 1978, dropping 267.58 points, or 0.61%. The S&P 500 lost 0.39%, and the Nasdaq Composite dropped 0.32%. This decline follows a shift into technology stocks, as the broader market remains strong with the S&P 500 and Nasdaq hitting recent record highs.

Upcoming Events: 

• 01:30 PM GMT – USD Building Permits
• 01:30 PM GMT – USD Housing Starts
• 01:30 PM GMT – USD Current Acount
• 07:00 PM GMT – USD Federal Funds Rate

The post Wednesday 18th December 2024: Asia-Pacific Markets Mixed as Investors Eye Fed and BOJ Rate Decisions first appeared on IC Markets | Official Blog.

The number of foreign visitors in November was 3.19 million, just slightly down from the monthly record in October last month of 3.31 million. As a whole in the 11 months in 2024, Japan has had 33.4 million visitors and that beats out the previous record set out for the whole of 2019 which was 31.9 million. And there’s still one more month to go.

A weaker yen and with Japan being an amazing holiday destination in itself has definitely contributed to this. Not to mention the power of social media. The only issue is that there are concerns about overtourism but that’s mostly in a handful of main/popular cities.

Japan is a vast and beautiful country to go exploring, especially places off the beaten path. Personally, I was there twice this year to enjoy the good food and views and to also pick up a couple of Pokémon cards. Respect the culture. Respect the people. Respect the language. And everyone can have an enjoyable time. 🌸

This article was written by Justin Low at www.forexlive.com.

IC Markets Asia Fundamental Forecast | 18 December 2024

What happened in the Asia session?

It was a fairly quiet session as markets await the highly anticipated outcome of the final FOMC meeting of this year – the dollar index (DXY) drifted around 106.90 while spot prices for gold floated above $2,640/oz. Meanwhile, WTI oil rose steadily off Tuesday’s lows but failed to climb above the $70-mark. Trading activity is bound to pick up in a meaningful way as the day progresses.

What does it mean for the Europe & US sessions?

Inflationary pressures in the U.K. have dissipated for most parts of 2024 but prices accelerated in October with headline and core CPI increasing at an annual rate of 2.3% and 3.3% respectively. The forecast for November points to a second successive month of acceleration for both headline and core CPI and should prices rise higher than originally anticipated, the pound is likely to see strong tailwinds before the start of the European trading hours.

Price pressures in the Euro Area have dissipated significantly throughout 2024 with headline CPI easing to an annual rate of 1.7% in September while the core moderated to 2.7%. However, headline CPI has accelerated for two consecutive months since September as it jumped to 2.3% in November while the core remained unchanged at 2.7%, based on preliminary estimates. The final inflation reading for November is expected to show unchanged figures and could provide a near-term relief for the Euro which has seen intense selling pressures drive it under 1.0500 once again.

The Dollar Index (DXY)

Key news events today

FOMC Statement (7:00 pm GMT)

FOMC Press Conference (7:30 pm GMT)

What can we expect from DXY today?

The final FOMC meeting of this year concludes on Wednesday where the Federal Reserve is likely to announce a third successive rate cut with analysts expecting a 25-basis point reduction. However, the dollar remains strong as consumer and producer inflation have both accelerated over the last couple of months raising concerns that the battle against inflation is far from over. Traders will be looking to Fed Chairman Jerome Powell’s press conference for further insights on the outlook of future monetary policy action with market participants anticipating a ‘hawkish’ cut by the Fed. The greenback is all but certain to experience intense volatility at the release of the statement and also during the press conference.

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.
• The next meeting runs from 17 to 18 December 2024.

Next 24 Hours Bias

Weak Bearish

Gold (XAU)

Key news events today

FOMC Statement (7:00 pm GMT)

FOMC Press Conference (7:30 pm GMT)

What can we expect from Gold today?

The final FOMC meeting of this year concludes on Wednesday where the Federal Reserve is likely to announce a third successive rate cut with analysts expecting a 25-basis point reduction. However, the dollar remains strong as consumer and producer inflation have both accelerated over the last couple of months raising concerns that the battle against inflation is far from over. Traders will be looking to Fed Chairman Jerome Powell’s press conference for further insights on the outlook of future monetary policy action with market participants anticipating a ‘hawkish’ cut by the Fed. This precious metal will no doubt face extreme volatility at the release of the statement and also during the press conference.

Next 24 Hours Bias

Weak Bullish

The Australian Dollar (AUD)

Key news events today

No major news events.

What can we expect from AUD today?

The Aussie extended its downward slide as it fell 0.5% on Tuesday. This currency pair remains under pressure and was drifting towards 0.6320 as Asian markets came online – these are the support and resistance levels for today.

Support: 0.6300

Resistance: 0.6380

Central Bank Notes:

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

Next 24 Hours Bias

Weak Bullish

The Kiwi Dollar (NZD)

Key news events today

No major news events.

What can we expect from NZD today?

Just like its Pacific neighbour, the Kiwi continued to its free-fall as it declined nearly 0.55% overnight. This currency pair stabilized around 0.5740 at the beginning of the Asia session but overhead pressures remain firmly in place – these are the support and resistance levels for today.

Support: 0.5740

Resistance: 0.5810

Central Bank Notes:

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

Next 24 Hours Bias

Weak Bullish

The Japanese Yen (JPY)

Key news events today

No major news events.

What can we expect from JPY today?

After rising for six straight trading days, USD/JPY suffered its first down day as it eased nearly 0.6%, shedding almost 60 pips in the process. This currency pair found its footing around 153.50 as Asian markets came online with continued yen weakness keeping this pair elevated – these are the support and resistance levels for today.

Support: 152.00

Resistance: 154.60

Central Bank Notes:

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

Next 24 Hours Bias

Medium Bullish

The Euro (EUR)

Key news events today

CPI (10:00 am GMT)

What can we expect from EUR today?

Inflationary pressures in the Euro Area have dissipated significantly throughout 2024 with headline CPI easing to an annual rate of 1.7% in September while the core moderated to 2.7%. However, headline CPI has accelerated for two consecutive months since September as it jumped to 2.3% in November while the core remained unchanged at 2.7%, based on preliminary estimates. The final inflation reading for November is expected to show unchanged figures and could provide a near-term relief for the Euro which has seen intense selling pressures drive it under 1.0500 once again.

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?

Ongoing weakness in the franc caused USD/CHF to initially surge towards 0.8974 before pulling back towards 0.8920 on Tuesday. This currency pair was hovering around 0.8930 at the beginning of the Asia session but it should remain elevated as the day progresses – these are the support and resistance levels for today.

Support: 0.8880

Resistance: 0.8975

Central Bank Notes:

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

Next 24 Hours Bias

Weak Bearish

The Pound (GBP)

Key news events today

CPI (7:00 am GMT)

What can we expect from GBP today?

Inflationary pressures in the U.K. have dissipated for most parts of 2024 but prices accelerated in October with headline and core CPI increasing at an annual rate of 2.3% and 3.3% respectively. The forecast for November points to a second successive month of acceleration for both headline and core CPI and should prices rise higher than originally anticipated, the pound is likely to see strong tailwinds 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 8 to 1 to reduce the Bank Rate by 25 basis points, to 4.75% on 7 November 2024 – one member preferred to maintain the Bank rate at 5.0%.
• The MPC also voted unanimously to reduce the stock of UK government bond purchases held for monetary policy purposes, and financed by the issuance of central bank reserves, by £100B over the next 12 months to a total of £558B, starting in October 2024.
• Twelve-month CPI inflation fell to 1.7% in September but is expected to increase to around 2.5% by the end of the year as weakness in energy prices falls out of the annual comparison; services consumer price inflation has declined to 4.9%.
• CPI inflation is expected to increase to around 2.75% by the second half of 2025 as weakness in energy prices falls out of the annual comparison, revealing more clearly the continuing persistence of domestic inflationary pressures.
• The MPC’s latest projections for activity and inflation are also set out in the accompanying November Report; this forecast is based on the second case where CPI inflation is projected to fall back to around the 2% target in the medium term as a margin of slack emerges later in the forecast period that acts against second-round effects in domestic prices and wages.
• GDP had grown by 0.5% in 2024 Q2, 0.2% weaker than had been expected in the August Report, and 0.1% weaker than the earlier outturn had indicated at the time of the MPC’s previous meeting. Through the second half of 2024, GDP was projected to grow at a somewhat slower rate than in Q2 – headline GDP growth is expected to fall back to its recent underlying pace of around 0.25% per quarter over the second half of this year.
• The combined effects of the measures announced in Autumn Budget 2024 are provisionally expected to boost the level of GDP by around 0.75% at their peak in a year’s time, relative to the August projections, while the Budget is provisionally expected to boost CPI inflation by just under 0.5% at the peak.
• Annual private sector regular average weekly earnings growth has continued to fall but remained elevated at 4.8% in the three months to August; the MPC judges that the labour market continues to loosen, although it appears relatively tight by historical standards.
• Based on the evolving evidence, a gradual approach to removing policy restraint remains appropriate but monetary policy will need to continue to remain restrictive for sufficiently long until the risks to inflation returning sustainably to the 2% target in the medium term have dissipated further.
• The Committee continues to monitor closely the risks of inflation persistence and will decide the appropriate degree of monetary policy restrictiveness at each meeting.
• The next meeting is on 19 December 2024.

Next 24 Hours Bias

Weak Bullish

The Canadian Dollar (CAD)

Key news events today

No major news events.

What can we expect from CAD today?

After easing steadily throughout most parts of this year, consumer inflation in Canada remained sticky in November as median- and trimmed-CPI printed higher than their respective forecasts on Tuesday. The Loonie strengthened briefly as USD/CAD pulled back towards 1.4250 but the move was short-lived. This currency pair rebounded strongly as it surged past 1.4300 to hit an overnight high of 1.4323 – these are the support and resistance levels for today.

Support: 1.4180

Resistance: 1.4340

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

EIA Crude Oil Inventories (3:30 pm GMT)

What can we expect from Oil today?

Crude oil prices extended its downward slide as WTI oil initially plunged nearly 2% on Tuesday. However, this benchmark reversed sharply to climb towards $70 after falling as low as $68.80 per barrel. Following which, the API stockpiles reported a larger-than-expected decline in weekly inventories as 4.7M barrels of crude were drawn from storage, notably higher than the forecast of a 1.9M-drawdown. Should the EIA inventories also register a higher-than-anticipated draw, these latest inventory data points could provide a near-term floor for crude prices.

Next 24 Hours Bias

Weak Bearish

The post IC Markets Europe Fundamental Forecast | 18 December 2024 first appeared on IC Markets | Official Blog.

• Prior +2.3%
• Core CPI +3.5% vs +3.6% y/y expected
• Prior +3.3%

The figures are consistent with a rise in prices on an annual basis for November, that after Ofgem removed the energy price cap back in October. In any case, this just reaffirms the case for the BOE to stay on hold for this week. Looking at the details, services inflation remain unchanged at 5.0% on a core basis. And that will remain a key sticking point for the BOE going into next year.

Besides that, there is still some uncertainty on how the latest budget will impact price pressures. But economists are expecting it to be slightly more inflationary. And coupled with an increase in employers’ National Insurance i.e. social security, it could materially feed into the inflation numbers at the start of next year.

If so, that might be an impediment for the BOE to make a strong case for cutting rates in the first half of the year. But as things stand, policymakers and economists are all expecting inflation to settle lower later on in 2025. So, there’s still that argument to be had.

This article was written by Justin Low at www.forexlive.com.

Major currencies are mostly little changed with exception of the aussie and kiwi today. Both the antipodes are being pulled lower, breaking to fresh lows for the year. AUD/USD is down 0.4% to 0.6311 now upon a break of key technical support from the August low highlighted here. Meanwhile, NZD/USD is down 0.3% to 0.5735 to its lowest since November 2022 as it sticks to the firm break under 0.5800 since last week.

That is at least making for some interesting moves before we get to the FOMC meeting later. In broader markets, equities are keeping more tentative while the selling in bonds is also taking a light breather. All eyes are on the Fed now and that’s the main event that traders will be looking to respond to next.

Coming up in European trading, there will be inflation data on the cards. The UK one will be the more heavily watched as it will come before the BOE policy decision tomorrow. But with headline and core annual inflation both expected to come in higher than the month prior, it should just reaffirm the BOE decision to pause this week.

The OIS market is already pricing in ~93% odds of the BOE leaving the bank rate unchanged. So, any upside for the pound may be more limited. That being said, the odds of a February rate cut are closer to 50-50 right now. So, higher price pressures here could still lift the quid as traders tone that down.

Headline annual inflation is estimated to come in at 2.6%, up from 2.3% previously. Meanwhile, core annual inflation is estimated to come in at 3.6%, up from 3.3% previously.

As for the Eurozone inflation data, these are final figures for November. As such, the impact is likely to be more muted.

0700 GMT – UK November CPI figures1000 GMT – Eurozone November final CPI figures1100 GMT – UK December CBI trends total orders1200 GMT – US MBA mortgage applications w.e. 13 December

That’s all for the session ahead. I wish you all the best of days to come and good luck with your trading! Stay safe out there.

This article was written by Justin Low at www.forexlive.com.

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• Australia regulator pursuing Binance Australia Derivatives re consumer protection failures
• BOJ is expected to hold its policy rate at 0.25% in its December 18-19 meeting – preview
• ICYMI – Switzerland has slashed economic growth forecasts
• Bank of America’s latest global fund manager survey – super bullish sentiment
• South Korea Finance Minister Choi – will manage the economy as stably as possible
• UBS sees gold extending gains into 2025, forecasts $2,900/oz price target
• PBOC sets USD/ CNY mid-point today at 7.1880 (vs. estimate at 7.2838)
• UK pay growth steady at 4% but expected to slow in 2025
• National Australia Bank predicts an RBA interest rate cut in May 2025 (February questions)
• Japan November exports +3.8% y/y (expected +2.8%) imports -3.8% y/y (expected +1.0%)
• Australia Leading Index: Three quarters of components now giving positive growth signals
• Australian government forecasts ballooning debt
• Nissan and Honda are said to be in talks to set up a holding company
• ‘Spy drones’ from China likely wreaking havoc over US, House foreign affairs chair claims
• ICYMI – China promised massive stimulus yesterday (will it work this time?)
• BoA bullish US stocks despite “boiling geopolitical instability”, waning US fiscal health
• Fed insider says FOMC cut today, but then “a much more cautious tone about further cuts”
• Oil – private survey of inventory shows headline crude oil draw much greater than expected
• New Zealand data: Q3 Current Account 10.6bn NZD (expected -10.5bn)
• Is Milei rewriting economic theory?
• US stocks close lower. Dow down for the 9th consecutive day
• Forexlive Americas FX news wrap: US retail sales boosted by autos
• Trade ideas thread – Wednesday, 18 December, insightful charts, technical analysis, ideas

AUD,
NZD and CAD were further losers here during the session, remaining
under pressure from weak China demand and a strong US dollar. AUD/USD
hit its lowest since October 2023 while the kiwi $ traded down to its
lowest since October 2022. The only fresh news of note was from
Australia, where the government has forecast widening deficits ahead,
and surging debt.

USD/JPY
ticked back up, to highs just short of 153.80. The Bank of Japan
Statement is due on Thursday (expected in the 0230 – 0330 GMT time
window, which is 2130 – 2230 US Eastern time). The Bank is expected
to leave rates unchanged. Bank of Japan Governor Ueda is expected to
convey hawkish signals in his following press conference (0630 GMT /
0130 US Eastern time).

Ahead
of the BoJ tomorrow is, of course, the Federal Reserve later on
Wednesday. The Fed’s Federal Open Market Committee (FOMC) is
expected to cut Fed Funds by 25bp and to indicate a slower pace of
rate cuts ahead. There is more in the previews in the points above.

***

Elsewhere:

• Nissan’s stock surged the most in at least fifty years on talk of a merger with Honda
• Bitcoin pulled back further

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

A Wall Street Journal opinion piece. Which seems to be well-founded.

• China’s Bond Yields Scream the ‘D’ Word
  

The Journal is gated, but in very brief from the article:

• China’s bond market reflects deep economic stress, with 10-year sovereign yields falling to 1.7% and 30-year yields below 2%.
• businesses are struggling, unemployment is severe, and local governments are overwhelmed by debt
• Efforts by Beijing to boost growth, including incremental stimulus measures and infrastructure investments, have failed to restore confidence, with bond markets signaling skepticism.
• State-owned institutions are prioritizing bond purchases over investing in the broader economy, underscoring weak demand and limited policy effectiveness.

I posted a yield chart earlier, here it is again (China on top, US below):

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

DXY (US Dollar Index):

Potential Direction: Bearish
Overall momentum of the chart: Bullish

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

Pivot: 107.06

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

1st support: 106.12
Supporting reasons: Identified as a pullback support close to the 61.8% Fibonacci retracement, indicating a potential level where price could find support once more.

1st resistance: 108.07
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 reaction off the pivot and drop toward the 1st support 

Pivot: 1.0536
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: 1.0432

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

1st resistance: 1.0614
Supporting reasons:  Identified as an overlap resistance close to the 50% Fibonacci retracement, indicating a potential area that could halt any further upward movement.

EUR/JPY:

Potential Direction: Bearish
Overall momentum of the chart: Bullish

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

Pivot: 162.38
Supporting reasons: Identified as an overlap resistance close to the 78.6% Fibonacci projection, indicating a potential area where selling pressures could intensify.

1st support: 160.35

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

1st resistance: 164.88
Supporting reasons: Identified as an overlap resistance, indicating a potential area that could halt any further upward movement.

EUR/GBP:

Potential Direction: Bullish

Overall momentum of the chart: Bearish

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

Pivot: 0.8268
Supporting reasons: Identified as a potential breakout point, indicating a potential area where buying momentum pressures could intensify.

1st support: 0.8224

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

1st resistance: 0.8336
Supporting reasons: Identified as an overlap resistance that aligns with the 78.6% Fibonacci retracement, indicating a potential area that could halt any further upward movement.

GBP/USD:

Potential Direction: Bullish

Overall momentum of the chart: Bearish

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

Pivot: 1.2604

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

1st support: 1.2502

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

1st resistance: 1.2798
Supporting reasons: Identified as an overlap resistance close to the 61.8 Fibonacci retracement, indicating a potential area that could halt any further upward movement.

GBP/JPY:

Potential Direction: Bearish

Overall momentum of the chart: Bullish

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

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

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

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

USD/CHF:

Potential Direction: Bullish

Overall momentum of the chart: Bullish

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

Pivot: 0.8879
Supporting reasons: Identified as a pullback support close to the 38.2% Fibonacci retracement, indicating a potential area where buying pressures could intensify.

1st support: 0.8803

Supporting reasons: Identified as a pullback support close to the 61.8% Fibonacci retracement, indicating a potential level where price could find support once more.

1st resistance: 0.8974
Supporting reasons: Identified a swing high resistance, indicating a potential area that could halt any further upward movement.

USD/JPY:

Potential Direction: Bearish

Overall momentum of the chart: Bullish

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

Pivot: 154.45
Supporting reasons: Identified as a pullback resistance close to the 78.6% Fibonacci retracement, indicating a potential area where selling pressures could intensify.

1st support: 152.43
Supporting reasons: Identified as a pullback support close to the 38.2% Fibonacci retracement, indicating a potential level where price could find support once again.

1st resistance: 156.57
Supporting reasons: Identified as a swing high resistance, indicating a potential area that could halt any further upward movement.

USD/CAD:

Potential Direction: Bearish

Overall momentum of the chart: Bullish

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

Pivot: 1.4336

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

1st support: 1.4178
Supporting reasons: Identified as an overlap support that aligns close to a 23.6% Fibonacci retracement, indicating a key level where price could find support.

1st resistance: 1.4507
Supporting reasons: Identified as a multi-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: 0.6346

Supporting reasons: Identified as an overlap resistance, suggesting a key area where selling pressures have intensified.

1st support: 0.6285
Supporting reasons: Identified as a multi-swing-low support, suggesting a potential area where price could find support once more.

1st resistance: 0.6381
Supporting reasons: Identified as an overlap resistance close to a 23.6% Fibonacci retracement, indicating a potential area that could halt any further upward movement.

NZD/USD

Potential Direction: Bearish
Overall momentum of the chart: Bearish

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

Pivot: 0.5756

Supporting reasons: Identified as a pullback resistance, indicating a key area where selling pressures have intensified.

1st support: 0.5727
Supporting reasons: Identified as a support that aligns with a 161.8% Fibonacci extension, suggesting a key support area where price could find support.

1st resistance: 0.5781
Supporting reasons: Identified as a swing-high resistance that aligns with a 23.6% Fibonacci retracement, indicating a potential area that could halt any further upward movement.

US30 (DJIA):

Potential Direction: Bullish
Overall momentum of the chart: Bearish

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

Pivot: 43,493.60

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

1st support: 43,059.45

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

1st resistance: 43,828.07

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

DE40 (DAX):

Potential Direction: Bearish
Overall momentum of the chart: Bearish

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

Pivot: 20,202.28
Supporting reasons: Identified as a potential breakout level where selling pressures could intensify.

1st support: 19,902.14

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

1st resistance: 20,400.90
Supporting reasons: Identified as an overlap resistance, 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 could rise towards the pivot and potentially make a bearish reversal off this level to pull back towards the 1st support.

Pivot: 6,099.30

Supporting reasons: Identified as a swing-high resistance that aligns with the all-time high, indicating a potential area where selling pressures could intensify.

1st support: 6,026.60

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

1st resistance: 6,147.73
Supporting reasons: Identified as a resistance that aligns with a 161.8% Fibonacci extension, indicating a potential area that could halt any further upward movement.

BTC/USD (Bitcoin):

Potential Direction: Bullish
Overall momentum of the chart: Bullish

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

Pivot: 102,886.76

Supporting reasons: Identified as an overlap support that aligns with a 38.2% Fibonacci retracement, indicating a potential area where buying interests could pick up to resume the uptrend.

1st support: 99,345.84
Supporting reasons: Identified as an overlap support that aligns with a 61.8% Fibonacci retracement, indicating a potential level where price could find support once again.

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

ETH/USD (Ethereum):

Potential Direction: Bullish
Overall momentum of the chart: Bullish

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

Pivot: 3,760.69

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

1st support: 3,501.55
Supporting reasons: Identified as an overlap support, indicating a potential level where price could find support once more.

1st resistance: 4,046.02
Supporting reasons:  Identified as a multi-swing-high resistance, indicating a potential area that could halt any further upward movement.

WTI/USD (Oil):

Potential Direction: Bearish
Overall momentum of the chart: Bearish

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

Pivot: 70.46
Supporting reasons: Identified as an overlap resistance that aligns close to a 61.8% Fibonacci retracement, indicating a potential area where selling pressures could intensify.

1st support: 69.13
Supporting reasons: Identified as an overlap support that aligns close to a 50% Fibonacci retracement, indicating a key level where price could find support once again.

1st resistance: 71.48
Supporting reasons: Identified as a multi-swing-high resistance that aligns close to a 127.2% Fibonacci extension, 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 continuation toward the 1st support

Pivot: 2666.19
Supporting reasons: Identified as a pullback resistance, indicating a potential area where selling pressures could intensify.

1st support: 2613.44

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

1st resistance: 2720.46

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

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The post Wednesday 18th December 2024: Technical Outlook and Review first appeared on IC Markets | Official Blog.

IC Markets Asia Fundamental Forecast | 18 December 2024

What happened in the U.S. session?

Consumer spending in the U.S. increased for the third consecutive month as sales jumped 0.7% MoM in November, edging past the estimate of 0.6%. In addition, October’s sales figures were revised higher from 0.4% to 0.5%. The latest data points to robust consumer spending during the holiday shopping season with the largest gains recorded in categories such as motor vehicles and part dealers; non-store retailers; and sporting goods, hobby, musical instrument, and bookstores. Despite stronger-than-anticipated retail sales, the dollar index (DXY) edged lower from 106.95 to a session low of 106.75 before reversing to recover all the initial losses as it hit the 107-level.

What does it mean for the Asia Session?

As Asian markets digest the U.S. sales figures, the DXY was hovering around 107 while spot prices for gold were drifting lower towards $2,630/oz extending the downward slide from last Thursday. Crude oil prices briefly dipped under $69 per barrel overnight before recovering to climb steadily towards the $70-mark. This commodity has faced strong headwinds since the beginning of the week as it shed more than 3.5% at its lowest point so far.

The Dollar Index (DXY)

Key news events today

FOMC Statement (7:00 pm GMT)

FOMC Press Conference (7:30 pm GMT)

What can we expect from DXY today?

The final FOMC meeting of this year concludes on Wednesday where the Federal Reserve is likely to announce a third successive rate cut with analysts expecting a 25-basis point reduction. However, the dollar remains strong as consumer and producer inflation have both accelerated over the last couple of months raising concerns that the battle against inflation is far from over. Traders will be looking to Fed Chairman Jerome Powell’s press conference for further insights on the outlook of future monetary policy action with market participants anticipating a ‘hawkish’ cut by the Fed. The greenback is all but certain to experience intense volatility at the release of the statement and also during the press conference.

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.
• The next meeting runs from 17 to 18 December 2024.

Next 24 Hours Bias

Weak Bearish

Gold (XAU)

Key news events today

FOMC Statement (7:00 pm GMT)

FOMC Press Conference (7:30 pm GMT)

What can we expect from Gold today?

The final FOMC meeting of this year concludes on Wednesday where the Federal Reserve is likely to announce a third successive rate cut with analysts expecting a 25-basis point reduction. However, the dollar remains strong as consumer and producer inflation have both accelerated over the last couple of months raising concerns that the battle against inflation is far from over. Traders will be looking to Fed Chairman Jerome Powell’s press conference for further insights on the outlook of future monetary policy action with market participants anticipating a ‘hawkish’ cut by the Fed. This precious metal will no doubt face extreme volatility at the release of the statement and also during the press conference.

Next 24 Hours Bias

Weak Bullish

The Australian Dollar (AUD)

Key news events today

No major news events.

What can we expect from AUD today?

The Aussie extended its downward slide as it fell 0.5% on Tuesday. This currency pair remains under pressure and was drifting towards 0.6320 as Asian markets came online – these are the support and resistance levels for today.

Support: 0.6300

Resistance: 0.6380

Central Bank Notes:

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

Next 24 Hours Bias

Weak Bullish

The Kiwi Dollar (NZD)

Key news events today

No major news events.

What can we expect from NZD today?

Just like its Pacific neighbour, the Kiwi continued to its free-fall as it declined nearly 0.55% overnight. This currency pair stabilized around 0.5740 at the beginning of the Asia session but overhead pressures remain firmly in place – these are the support and resistance levels for today.

Support: 0.5740

Resistance: 0.5810

Central Bank Notes:

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

Next 24 Hours Bias

Weak Bullish

The Japanese Yen (JPY)

Key news events today

No major news events.

What can we expect from JPY today?

After rising for six straight trading days, USD/JPY suffered its first down day as it eased nearly 0.6%, shedding almost 60 pips in the process. This currency pair found its footing around 153.50 as Asian markets came online with continued yen weakness keeping this pair elevated – these are the support and resistance levels for today.

Support: 152.00

Resistance: 154.60

Central Bank Notes:

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

Next 24 Hours Bias

Medium Bullish

The Euro (EUR)

Key news events today

CPI (10:00 am GMT)

What can we expect from EUR today?

Inflationary pressures in the Euro Area have dissipated significantly throughout 2024 with headline CPI easing to an annual rate of 1.7% in September while the core moderated to 2.7%. However, headline CPI has accelerated for two consecutive months since September as it jumped to 2.3% in November while the core remained unchanged at 2.7%, based on preliminary estimates. The final inflation reading for November is expected to show unchanged figures and could provide a near-term relief for the Euro which has seen intense selling pressures drive it under 1.0500 once again.

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?

Ongoing weakness in the franc caused USD/CHF to initially surge towards 0.8974 before pulling back towards 0.8920 on Tuesday. This currency pair was hovering around 0.8930 at the beginning of the Asia session but it should remain elevated as the day progresses – these are the support and resistance levels for today.

Support: 0.8880

Resistance: 0.8975

Central Bank Notes:

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

Next 24 Hours Bias

Weak Bearish

The Pound (GBP)

Key news events today

CPI (7:00 am GMT)

What can we expect from GBP today?

Inflationary pressures in the U.K. have dissipated for most parts of 2024 but prices accelerated in October with headline and core CPI increasing at an annual rate of 2.3% and 3.3% respectively. The forecast for November points to a second successive month of acceleration for both headline and core CPI and should prices rise higher than originally anticipated, the pound is likely to see strong tailwinds 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 8 to 1 to reduce the Bank Rate by 25 basis points, to 4.75% on 7 November 2024 – one member preferred to maintain the Bank rate at 5.0%.
• The MPC also voted unanimously to reduce the stock of UK government bond purchases held for monetary policy purposes, and financed by the issuance of central bank reserves, by £100B over the next 12 months to a total of £558B, starting in October 2024.
• Twelve-month CPI inflation fell to 1.7% in September but is expected to increase to around 2.5% by the end of the year as weakness in energy prices falls out of the annual comparison; services consumer price inflation has declined to 4.9%.
• CPI inflation is expected to increase to around 2.75% by the second half of 2025 as weakness in energy prices falls out of the annual comparison, revealing more clearly the continuing persistence of domestic inflationary pressures.
• The MPC’s latest projections for activity and inflation are also set out in the accompanying November Report; this forecast is based on the second case where CPI inflation is projected to fall back to around the 2% target in the medium term as a margin of slack emerges later in the forecast period that acts against second-round effects in domestic prices and wages.
• GDP had grown by 0.5% in 2024 Q2, 0.2% weaker than had been expected in the August Report, and 0.1% weaker than the earlier outturn had indicated at the time of the MPC’s previous meeting. Through the second half of 2024, GDP was projected to grow at a somewhat slower rate than in Q2 – headline GDP growth is expected to fall back to its recent underlying pace of around 0.25% per quarter over the second half of this year.
• The combined effects of the measures announced in Autumn Budget 2024 are provisionally expected to boost the level of GDP by around 0.75% at their peak in a year’s time, relative to the August projections, while the Budget is provisionally expected to boost CPI inflation by just under 0.5% at the peak.
• Annual private sector regular average weekly earnings growth has continued to fall but remained elevated at 4.8% in the three months to August; the MPC judges that the labour market continues to loosen, although it appears relatively tight by historical standards.
• Based on the evolving evidence, a gradual approach to removing policy restraint remains appropriate but monetary policy will need to continue to remain restrictive for sufficiently long until the risks to inflation returning sustainably to the 2% target in the medium term have dissipated further.
• The Committee continues to monitor closely the risks of inflation persistence and will decide the appropriate degree of monetary policy restrictiveness at each meeting.
• The next meeting is on 19 December 2024.

Next 24 Hours Bias

Weak Bullish

The Canadian Dollar (CAD)

Key news events today

No major news events.

What can we expect from CAD today?

After easing steadily throughout most parts of this year, consumer inflation in Canada remained sticky in November as median- and trimmed-CPI printed higher than their respective forecasts on Tuesday. The Loonie strengthened briefly as USD/CAD pulled back towards 1.4250 but the move was short-lived. This currency pair rebounded strongly as it surged past 1.4300 to hit an overnight high of 1.4323 – these are the support and resistance levels for today.

Support: 1.4180

Resistance: 1.4340

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

EIA Crude Oil Inventories (3:30 pm GMT)

What can we expect from Oil today?

Crude oil prices extended its downward slide as WTI oil initially plunged nearly 2% on Tuesday. However, this benchmark reversed sharply to climb towards $70 after falling as low as $68.80 per barrel. Following which, the API stockpiles reported a larger-than-expected decline in weekly inventories as 4.7M barrels of crude were drawn from storage, notably higher than the forecast of a 1.9M-drawdown. Should the EIA inventories also register a higher-than-anticipated draw, these latest inventory data points could provide a near-term floor for crude prices.

Next 24 Hours Bias

Weak Bearish

The post IC Markets Asia Fundamental Forecast | 18 December 2024 first appeared on IC Markets | Official Blog.