IC Markets Europe Fundamental Forecast | 16 April 2024
What happened in the Asia session?
China’s GDP grew more than anticipated in the first quarter of 2024 as the economy expanded 5.3% YoY versus the forecast of 4.8%. This latest reading showed the economy was on track to meet the government’s GDP target of 5%, largely due to sustained stimulus measures and some improvements in consumer spending.
However, industrial production and retail sales figures both failed to beat their respective forecasts as they increased at a much slower pace on an annualised basis. The miss in industrial production output was offset by stronger GDP figures which could continue to prop up prices for crude oil amidst the ongoing geopolitical tensions in the Middle East.
What does it mean for the Europe & US sessions?
The claimant count change increased sharply in February, spiking to 16.8K from just 3.1K in the previous month. The forecast of 17.2K for March points to a second consecutive month of higher claims which could potentially signal a softening of the labour market. The average earnings index – which tracks wage growth – has moderated significantly lower since mid-2023 which potentially reduces the spending power of the UK consumer – an effect that could nudge inflation lower in the coming months. Should the latest data indicate a further slowdown in wage growth and higher-than-expected claims, it could potentially cause the Pound to come under heavy selling pressure once more.
Federal Reserve Bank of Richmond President Thomas Barkin will be speaking on the economic outlook at the Rotary Club of Winston-Salem in North Carolina where audience questions are expected followed by Fed Chair Jerome Powell’s participation in a fireside chat about economic trends at the Wilson Center’s Washington Forum in Washington DC. Following last week’s hotter-than-anticipated CPI and PPI data as well as the overnight robust consumer spending, markets will be keeping a close ear to any remarks from these two Fed officials.
The Dollar Index (DXY)
Key news events today
Industrial Production (1:15 pm GMT)
FOMC Member Barkin Speaks (5:00 pm GMT)
Fed Chair Powell Speaks (5:15 pm GMT)
What can we expect from DXY today?
Industrial production has been mixed over the past six months with February’s data showing a very minor gain of 0.1% MoM following two months of large declines. The estimate of a 0.4%-growth points to an improved reading and should production come in higher than market expectations, it could function as a potential bullish catalyst for the dollar.
Federal Reserve Bank of Richmond President Thomas Barkin will be speaking on the economic outlook at the Rotary Club of Winston-Salem in North Carolina where audience questions are expected followed by Fed Chair Jerome Powell’s participation in a fireside chat about economic trends at the Wilson Center’s Washington Forum in Washington DC. Following last week’s hotter-than-anticipated CPI and PPI data as well as the overnight robust consumer spending, markets will be keeping a close ear to any remarks from these two Fed officials.
Central Bank Notes:
Next 24 Hours Bias
Medium Bullish
Gold (XAU)
Key news events today
Industrial Production (1:15 pm GMT)
FOMC Member Barkin Speaks (5:00 pm GMT)
Fed Chair Powell Speaks (5:15 pm GMT)
What can we expect from Gold today?
Industrial production has been mixed over the past six months with February’s data showing a very minor gain of 0.1% MoM following two months of large declines. The estimate of a 0.4%-growth points to an improved reading and should production come in higher than market expectations, it could function as a potential bullish catalyst for the dollar and limit the recent gains in gold.
Federal Reserve Bank of Richmond President Thomas Barkin will be speaking on the economic outlook at the Rotary Club of Winston-Salem in North Carolina where audience questions are expected followed by Fed Chair Jerome Powell’s participation in a fireside chat about economic trends at the Wilson Center’s Washington Forum in Washington DC. Following last week’s hotter-than-anticipated CPI and PPI data as well as the overnight robust consumer spending, markets will be keeping a close ear to any remarks from these two Fed officials.
Next 24 Hours Bias
Weak Bearish
The Australian Dollar (AUD)
Key news events today
No major news events.
What can we expect from AUD today?
Following yesterday’s stronger-than-expected retail sales from the US, the Aussie tumbled hard as it fell from 0.6485 to as low as 0.6440 by the end of the US session. This currency pair resumed to the downfall to trade around 0.6425 as Asian markets came online.
Central Bank Notes:
Next 24 Hours Bias
Medium Bearish
The Kiwi Dollar (NZD)
Key news events today
CPI (10:45 pm GMT)
What can we expect from NZD today?
Inflation in New Zealand has been trending lower on a quarterly and annualised basis since mid-2023. However, both headline and core CPI readings – at 4.7% and 4.4% respectively – are well above the Reserve Bank of New Zealand’s (RBNZ) target of 2%. Should the latest inflation print come in hot, it could provide some much-needed tailwind for the Kiwi after diving sharply from 0.5950 overnight – this currency pair was trading around 0.5890 at the beginning of the Asia session.
Central Bank Notes:
Next 24 Hours Bias
Medium Bearish
The Japanese Yen (JPY)
Key news events today
No major news events.
What can we expect from JPY today?
Robust consumer spending in the US drove USD/JPY to surge past 154 and hit an overnight high of 154.45. This currency pair pulled back slightly as Asian markets came online but it remained elevated above this 154-level – powerful tailwinds are likely to nudge this pair higher as the day progresses.
Central Bank Notes:
Next 24 Hours Bias
Medium Bullish
The Euro (EUR)
Key news events today
ZEW Economic Sentiment (9:00 am GMT)
What can we expect from EUR today?
The ZEW Economic Sentiment for the Euro Area has increased steadily since November 2023 as overall sentiment for economic growth rebounded over this period. April’s forecast of 37.8 points to another month of higher sentiment – a result that could provide some much-needed lift for the Euro.
Central Bank Notes:
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?
Despite stronger consumer spending in the US, the jump in USD/CHF was short-lived as it hit an overnight high of 0.9152 before reversing quite sharply to touch the threshold of 0.9100 by the end of the US session. This currency pair retraced higher as Asian markets came online to trade around 0.9130 but it could edge lower as the day progresses.
Central Bank Notes:
Next 24 Hours Bias
Weak Bullish
The Pound (GBP)
Key news events today
Claimant Count Change (6:00 am GMT)
Average Earnings Index (6:00 am GMT)
What can we expect from GBP today?
The claimant count change increased sharply in February, spiking to 16.8K from just 3.1K in the previous month. The forecast of 17.2K for March points to a second consecutive month of higher claims which could potentially signal a softening of the labour market. The average earnings index – which tracks wage growth – has moderated significantly lower since mid-2023 which potentially reduces the spending power of the UK consumer – an effect that could nudge inflation lower in the coming months. Should the latest data indicate a further slowdown in wage growth and higher-than-expected claims, it could potentially cause the Pound to come under heavy selling pressure once more.
Central Bank Notes:
Next 24 Hours Bias
Medium Bearish
The Canadian Dollar (CAD)
Key news events today
CPI (12:30 pm GMT)
What can we expect from CAD today?
Inflation in Canada has moderated lower for both headline and core CPI over the past ten months or so. However, the monthly headline CPI is expected to rise 0.7% MoM which would mark the highest increase since April 2023. Should inflation readings in Canada come in hot, it could strengthen the Loonie and potentially reign in the recent gains for USD/CAD.
Central Bank Notes:
Next 24 Hours Bias
Medium Bullish
Oil
Key news events today
API Crude Oil Stock (8:30 pm GMT)
What can we expect from Oil today?
After briefly dipping under $84.50 per barrel overnight, prices for WTI oil rebounded as geopolitical tensions in the Middle East heightened. Tensions rose as Israel weighed a response to the attack by Iran over the weekend. Further escalation in this latest conflict is bound to keep crude prices elevated this week. The API will release its inventory levels for last week and should stockpiles indicate a higher-than-anticipated drawdown, it could function as an additional bullish catalyst for this commodity.
Next 24 Hours Bias
Weak Bullish
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