IC Markets Europe Fundamental Forecast | 28 June 2022
What happened across the Asia session?
The DXY sat at the 103.80 price level as markets remained in consolidation through the Asia session.
What does it mean for Europe and US Sessions?
Without key news events scheduled for today for the major currency pairs, and the G7 meetings ongoing, the DXY could test lower briefly, but could eventually find the current price level as a support level for a potential rebound.
The Dollar Index (DXY) Update
Key news events today
US Consumer Confidence
What can we expect from DXY today?
Overnight, the US posted a couple of better than expected data, in durable goods orders (Actual 0.7% Forecasted 0.1%) and pending home sales (Actual 0.7% Forecasted -3.5%). This strengthened the DXY briefly before retracing lower again.
Look for the DXY to continue trading below 103.80 with a possible recovery later into the US session with the release of the US Consumer Confidence data.
Central Bank Notes:
- Next meeting on 26 July 2022
- The committee hiked rates by 75bps, targeting inflation risk.
- Balance Sheet reduction plan to continue at $60b (treasuries) and $35b (MBS) over a three-month timeframe
Next 24 Hours Bias
Weak Bullish
Gold (XAU)
Key news events today
No major news events.
What can we expect from Gold today?
Gold rejected the 1840 price level, trading lower to 1825 as the news about the US joining the G7, imposing a ban on new Russian gold imports had a limited impact on prices. As gold fails to stage a stronger recovery, it is viewed that the market is now turning to the Federal Reserve and hints of their path for further policy adjustments, to provide a clearer direction for Gold price direction.
Anticipate a slight recovery back towards the 1830 price level amid more significant choppy price movements.
Next 24 Hours Bias
Weak Bullish
The Euro (EUR)
Key news events today
ECB President Lagarde Speaks
What can we expect from EUR today?
Overnight, the Euro climbed towards the 1.06 resistance level before rejecting the level and retracing down. During the Asia session, the Euro sat in consolidation before briefly testing higher again. As ECB President Lagarde is due to speak at the ECB Forum, anticipate higher volatility in the Euro. However, with no other major news events scheduled and with the Euro sitting at the 1.0590 level, look for the Euro to consolidate further before a possible break lower.
Central Bank Notes:
- Plans to phase out the APP into Q3 remained intact by reducing purchases from 40bln to 30bln in May and then down to 20bln in June.
- Highlighted risks for the economic outlook are tilted to the downside and have recently intensified with geopolitical and virus-related challenges.
- Expected to raise rates by 25bps after APP ends in July and 50bps in September
- Next meeting on 21 July 2022
Next 24 Hours Bias
Mixed-to-Weak Bearish
The Swiss Franc (CHF)
Key news events today
No major news events.
What can we expect from CHF today?
Overnight, the USDCHF retested the 0.96 level before testing the 0.9550 level at the end of the trading session. No significant movements expected on the CHF, with directional bias to be derived from the volatility in the DXY. Look for the current consolidation in the USDCHF.
Central Bank Notes:
- Surprise rate hike by 50bps to -0.25%
- Next meeting on 22 September 2022
Next 24 Hours Bias
Weak Bullish
The Pound (GBP)
Key news events today
No major news events.
What can we expect from GBP today?
Anticipate higher volatility in the GBP as it tests and attempts to reject the 1.23 resistance area. With recent news of the UK planning to rewrite Brexit trade rules, and a possible trade war retaliation from the European Union, further volatility and possible significant weakness in the GBP could be likely.
Look for the GBP to break below the 1.2250 level (the lower range of the consolidation) for further downside.
Central Bank Notes:
- Rate hike by 25bps to 1.25%
- Peak inflation revised to more than 10%, adding to the stagflation fears; possible GDP contraction in 2023.
- Quantitative tightening plans to be updated at the August meeting
- Next meeting on 4 August 2022
Next 24 Hours Bias
Weak-to-Medium Bearish
The Canadian Dollar (CAD)
Key news events today
No major news events.
What can we expect from CAD today?
The CAD is expected to continue to strengthen against the USD as the price of Brent and WTI continues to climb higher. Pay attention to the possible data release of crude oil inventories which could further strengthen oil prices. With the USDCAD currently at the 1.2850 level, look for a brief retrace before further downside could be likely.
Central Bank Notes:
- Increasing likelihood of 75bps rate hike from BoC
- Next meeting on 13 July 2022
Next 24 Hours Bias
Medium Bullish
Oil
Key news events today
Tentative Crude Oil Inventories.
What can we expect from Oil today?
During the G7 summit, a price cap on Russian oil was proposed. This was meant to apply a fixed price on Russian gas exports, with the intention for the Eurozone to control further energy price increases. However, as a result of this news, oil price climbed significantly, with Brent reaching 116.60 and WTI at 111.00.
Currently retracing, look for oil price to continue climbing, especially if the oil inventories data release today indicates an imbalance between the supply and demand within the market.
Next 24 Hours Bias
Medium Bullish