IC Markets Europe Fundamental Forecast | 18 April 2024
What happened in the Asia session?
Australia released its labour force report for the month of March which showed some weakness for this segment of the economy. Employment change contracted for the second time in four months, shedding 6.6K jobs versus the estimate of a gain of 7.2K while the unemployment rate edged higher from 3.7% to 3.8%. Surprisingly, the Aussie actually climbed higher following the release of this data point to hit a high of 0.6456 but this currency pair then stalled around this level before pulling back towards 0.6440 by Asia midday.
What does it mean for the Europe & US sessions?
Unemployment claims have been relatively stable over the last seven weeks with readings averaging around 213K claims on a weekly basis. The latest forecast of 215K points to a slight increase from the previous week’s reading of 211K – should claims print higher than market expectations, it could add downward pressure on the dollar.
Federal Reserve Governor Michelle Bowman is due to participate in a virtual fireside chat at the Securities Industry and Financial Markets Association Basel 3 Endgame Roundtable where audience questions are expected. Although the topic is not focused on monetary policy, her recent comments have shown her to be leaning more on the hawkish side of policy action. Any rhetoric on “higher for longer” could potentially lift the dollar later today.
The Dollar Index (DXY)
Key news events today
Unemployment Claims (12:30 pm GMT)
FOMC Member Bowman Speaks (1:15 pm GMT)
What can we expect from DXY today?
Unemployment claims have been relatively stable over the last seven weeks with readings averaging around 213K claims on a weekly basis. The latest forecast of 215K points to a slight increase from the previous week’s reading of 211K – should claims print higher than market expectations, it could add downward pressure on the dollar.
Federal Reserve Governor Michelle Bowman is due to participate in a virtual fireside chat at the Securities Industry and Financial Markets Association Basel 3 Endgame Roundtable where audience questions are expected. Although the topic is not focused on monetary policy, her recent comments have shown her to be leaning more on the hawkish side of policy action. Any rhetoric on “higher for longer” could potentially lift the dollar later today.
Central Bank Notes:
Next 24 Hours Bias
Weak Bearish
Gold (XAU)
Key news events today
Unemployment Claims (12:30 pm GMT)
FOMC Member Bowman Speaks (1:15 pm GMT)
What can we expect from Gold today?
Unemployment claims have been relatively stable over the last seven weeks with readings averaging around 213K claims on a weekly basis. The latest forecast of 215K points to a slight increase from the previous week’s reading of 211K – should claims print higher than market expectations, it could add downward pressure on the dollar and boost gold prices.
Federal Reserve Governor Michelle Bowman is due to participate in a virtual fireside chat at the Securities Industry and Financial Markets Association Basel 3 Endgame Roundtable where audience questions are expected. Although the topic is not focused on monetary policy, her recent comments have shown her to be leaning more on the hawkish side of policy action. Any rhetoric on “higher for longer” could potentially lift the dollar later today and temper any gains in this precious metal.
Next 24 Hours Bias
Weak Bullish
The Australian Dollar (AUD)
Key news events today
Labour Force Report (1:30 am GMT)
What can we expect from AUD today?
Australia released its labour force report for the month of March which showed some weakness for this segment of the economy. Employment change contracted for the second time in four months, shedding 6.6K jobs versus the estimate of a gain of 7.2K while the unemployment rate edged higher from 3.7% to 3.8%. Surprisingly, the Aussie actually climbed higher following the release of this data point to hit a high of 0.6456 but this currency pair then stalled around this level before pulling back towards 0.6440 by Asia midday.
Central Bank Notes:
Next 24 Hours Bias
Medium Bullish
The Kiwi Dollar (NZD)
Key news events today
No major news events.
What can we expect from NZD today?
Following yesterday’s inflation print in New Zealand which showed CPI edging higher from 0.5% in the previous quarter to 0.6% in the first quarter of 2024, the Kiwi has halted its downward slide since the second week of April and retraced above the 0.5900-level. This currency pair was currently trading around 0.5920 as Asian markets came online but it could come under pressure should its Pacific neighbour disappoint with a weak labour force report.
Central Bank Notes:
Next 24 Hours Bias
Medium Bullish
The Japanese Yen (JPY)
Key news events today
National Core CPI (11:30 pm GMT)
What can we expect from JPY today?
After accelerating sharply from 2% to 2.8% YoY in February, Japan’s core CPI reading is expected to remain elevated at 2.7% in March. Inflationary pressures appear to be taking a foothold in the land of the rising sun and should we see prices continue to rise higher, the Bank of Japan is likely to raise its key policy rate once more – a move that is likely to strengthen the Japanese yen and potentially cause USD/JPY to pull back from its 34-year highs. This currency pair was hovering around 154.40 at the beginning of the Asia session and could drift lower in the initial part of the day.
Central Bank Notes:
Next 24 Hours Bias
Weak Bearish
The Euro (EUR)
Key news events today
No major news events.
What can we expect from EUR today?
There was no surprise to the final consumer inflation readings for the month of the March in the Euro Area as both headline and core CPI continue to moderate further – the former edging lower from 2.6% to 2.4% while the latter eased from 3.1% to 2.9% on an annualised basis.
Meanwhile, during her speech at the International Monetary Fund/World Bank Spring meetings, ECB President Christine Lagarde hinted that it was too early for the ECB to review its inflation target of 2% because the battle against inflation has yet to conclude. Lagarde stated that “the game is not over and recalled her previous comment that one should not change the rules of the game halfway through”.
The Euro rose to an overnight high of 1.0680 but it pulled back to dip under 1.0670 as Asian markets came online – this currency pair is likely to drift higher as the day progresses.
Central Bank Notes:
Next 24 Hours Bias
Weak Bullish
The Swiss Franc (CHF)
Key news events today
No major news events.
What can we expect from CHF today?
The Swiss franc remains one of the weakest currencies in 2024 causing USD/CHF to climb above the threshold of 0.9100 in early April. However, with no additional catalysts, this currency pair has remained bounded between 0.9100 and 0.9150 since the second week of April and it is a range that is likely to extend further today.
Central Bank Notes:
Next 24 Hours Bias
Weak Bullish
The Pound (GBP)
Key news events today
No major news events.
What can we expect from GBP today?
Consumer inflation in the UK eased further in March as headline CPI edged lower from 3.4% to 3.2% while the core reading fell from 4.5% to 4.2%, both on an annualised basis. However, both readings printed higher than their respective estimates pointing to a certain level of stickiness. The Pound initially spiked following this news release as GBP/USD went from 1.2420 to as high as 1.2480 during yesterday’s European trading hours. However, this currency pair almost gave up all of its prior gains to dip under 1.2430 during the US session and was trading around 1.2455 at the beginning of the Asia session.
Central Bank Notes:
Next 24 Hours Bias
Weak Bullish
The Canadian Dollar (CAD)
Key news events today
No major news events.
What can we expect from CAD today?
The Loonie has weakened significantly since the beginning of April, driving USD/CAD past the threshold of 1.3800 but it looks to have run into resistance around the region of 1.3850 at the beginning of this week. This currency pair fell under 1.3800 overnight and could continue to slide lower today.
Central Bank Notes:
Next 24 Hours Bias
Weak Bearish
Oil
Key news events today
No major news events.
What can we expect from Oil today?
Following Tuesday’s higher-than-anticipated increase in API stockpiles, the EIA inventories also followed suit by adding 2.7M barrels of crude versus the estimate of just 1.6M. This marked the fourth consecutive week where EIA inventories levels increased and came in higher than the respective forecasts. Despite the ongoing conflicts in the Middle East, demand concerns – as seen in the recent API and EIA stock levels – outweigh any geopolitical risks for now.
Prices for crude oil tumbled hard yesterday with WTI oil shedding nearly 3.1% to dive under $83 per barrel and mark the second largest daily decline of this year. This commodity was trading around $82.70 as Asian markets came online and is likely to resume its downward slide as the day progresses.
Next 24 Hours Bias
Medium Bearish
The post IC Markets Europe Fundamental Forecast | 18 April 2024 first appeared on IC Markets | Official Blog.