Global Markets:

•  Asian Stock Markets : Nikkei down 0.64%, Shanghai Composite down 0.18%, Hang Seng up 0.14% ASX up 0.76%
• Commodities : Gold at $2366.35 (0.47%), Silver at $27.81 (-0.45%), Brent Oil at $82.43 (0.07%), WTI Oil at $78.39 (0.08%)
• Rates : US 10-year yield at 4.257, UK 10-year yield at 4.138, Germany 10-year yield at 2.442

News & Data:

• (USD) Advance GDP q/q  2.8% vs 2.0% expected
• (USD) Unemployment Claims  235K vs 237K expected

Markets Update:

Asia-Pacific markets rebounded on Friday after Thursday’s sell-off hit multi-month lows for several indexes. Traders assessed Tokyo’s July inflation data, a key indicator of national trends. Tokyo’s headline inflation dipped to 2.2% in July from 2.3% in May, with core inflation steady at 2.2%. The “core-core” inflation, excluding fresh food and energy, fell to 1.5% from 1.8%. The yen strengthened sharply against the dollar, now trading at 153.79.

Japan’s Nikkei 225 was nearly flat, while the Topix rose 0.25%. Renesas Electronics plunged over 6%, reaching its lowest price since April, following a 29% drop in net profit for the first half of the year. This resulted in a 760 billion yen ($4.9 billion) market cap loss on Thursday. Nissan fell 3.92% after dismal Q1 results, with a 99% drop in operating profit and a 72.9% fall in net profit. Honda, however, rose 0.91% on plans to close a factory in China and increase electric vehicle production.

Taiwan’s market returned post-typhoon, with the Taiwan Weighted Index plunging 3.33%. Heavyweights Hon Hai Precision and Taiwan Semiconductor Manufacturing fell 4.71% and 5.52%, respectively. South Korea’s Kospi rose 0.62%, while Australia’s S&P/ASX 200 increased 0.76%. Hong Kong’s Hang Seng index climbed 0.14%, and mainland China’s CSI 300 traded flat.

Singapore’s monetary authority maintained its policy, keeping exchange rate settings unchanged. In the U.S., tech stocks continued to slide, with the S&P 500 and Nasdaq Composite losing 0.51% and 0.93% respectively, while the Dow Jones rose 0.2%. Adam Sarhan of 50 Park Investments noted this is part of a typical “great mini rotation” in a bull market.

Upcoming Events: 

• 12:30 PM GMT – USD Core PCE Price Index m/m
• 12:30 PM GMT – USD Personal Income m/m
• 12:30 PM GMT – USD Personal Spending m/m

The post Friday 26th July 2024: Asia-Pacific Markets Recover After Sell-Off first appeared on IC Markets | Official Blog.

IC Markets Europe Fundamental Forecast | 26 July 2024

What happened in the Asia session?

Tokyo’s core CPI has now accelerated for the third consecutive month as it jumped from 1.6% in April to 2.2% YoY in July. Inflationary pressures are building and it could pave the way for the Bank of Japan (BoJ) to move ahead with a rate hike at next week’s monetary policy announcement. The yen has gained nearly 4.3% over the past three weeks as USD/JPY fell under 152.50 yesterday. This currency pair has since retraced higher to hover around 153.90 but overhead pressures remain.

What does it mean for the Europe & US sessions?

After easing on a monthly and annualised basis in May, the PCE Price Index – which is the Federal Reserve’s preferred gauge of inflation – is expected to post a slightly stronger monthly gain in prices for the month of June. However, should PCE prices also moderate lower as per the latest CPI results two weeks ago, it will likely trigger a strong sell-off in the greenback later today.

The Dollar Index (DXY)

Key news events today

PCE Price Index (12:30 pm GMT)

What can we expect from DXY today?

After easing on a monthly and annualised basis in May, the PCE Price Index – which is the Federal Reserve’s preferred gauge of inflation – is expected to post a slightly stronger monthly gain in prices for the month of June. However, should PCE prices also moderate lower as per the latest CPI results two weeks ago, it will likely trigger a strong sell-off in the greenback later today.

Central Bank Notes:

• The Federal Funds Rate target range remained unchanged at 5.25% to 5.50% for the seventh meeting in a row.
• 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 have moved toward better balance over the past year.
• The economic outlook is uncertain, and the Committee remains highly attentive to inflation risks. Inflation has eased over the past year but remains elevated and in recent months, there has been modest further progress toward the Committee’s 2% inflation objective.
• Recent indicators suggest that economic activity has continued to expand at a solid pace while job gains have remained strong, and the unemployment rate has remained low.
• 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 and does not expect it will be appropriate to reduce the target range until it has gained greater confidence that inflation is moving sustainably toward 2%.
• 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 will slow the pace of decline of its securities holdings by reducing the monthly redemption cap on Treasury securities from $60 billion to $25 billion.
• The Committee will maintain the monthly redemption cap on agency debt and agency mortgage-backed securities at $35 billion and will reinvest any principal payments in excess of this cap into Treasury securities.
• Next meeting runs from 30 to 31 July 2024.

Next 24 Hours Bias

Weak Bearish

Gold (XAU)

Key news events today

PCE Price Index (12:30 pm GMT)

What can we expect from Gold today?

After easing on a monthly and annualised basis in May, the PCE Price Index – which is the Federal Reserve’s preferred gauge of inflation – is expected to post a slightly stronger monthly gain in prices for the month of June. However, should PCE prices also moderate lower as per the latest CPI results two weeks ago, it will likely trigger a strong sell-off in the greenback later today – a move that should spur this precious metal.

Next 24 Hours Bias

Medium Bearish

The Australian Dollar (AUD)

Key news events today

No major news events.

What can we expect from AUD today?

The Aussie has shed 3.5% over the last couple of weeks as it dived from 0.6783 in mid-July to as low as 0.6514 overnight before retracing higher. This currency pair was trading around 0.6550 as Asian markets came online – these are the support and resistance levels for today.

Support: 0.6465

Resistance: 0.6580

Central Bank Notes:

• The RBA kept the cash rate target unchanged at 4.35%, marking the ninth pause out of the last ten board meetings.
• Over the year to April, the monthly CPI indicator rose by 3.6% in headline terms, and by 4.1% excluding volatile items and holiday travel, which was similar to its pace in December 2023.
• The central forecasts published in May were for inflation to return to the target range of 2–3% in the second half of 2025 and to the midpoint in 2026 while there have been indications that momentum in economic activity is weak, including slow growth in GDP, a rise in the unemployment rate and slower-than-expected wages growth.
• Inflation is easing but has been doing so more slowly than previously expected and it remains high and the Board expects that it will be some time yet before inflation is sustainably in the target range.
• The path of interest rates that will best ensure that inflation returns to target in a reasonable timeframe remains uncertain and the Board is not ruling anything in or out.
• Next meeting is on 6 August 2024.

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?

Significant weakness in the Kiwi has caused it to decline nearly 4.3% over the past three weeks. This currency pair hit a low of 0.5882 overnight before stabilizing around this level. Overhead pressures remain and further downside can be expected for the Kiwi – these are the support and resistance levels for today.

Support: 0.5875

Resistance: 0.5950

Central Bank Notes:

• The Monetary Policy Committee kept the OCR unchanged at 5.50% for the eighth meeting in a row and agreed that restrictive monetary policy is reducing domestic demand and consumer price inflation.
• The Committee is confident that inflation will return to within its 1-3% target range over the second half of 2024.
• The decline in inflation reflects receding domestic pricing pressures, as well as lower inflation for goods and services imported into New Zealand while recent monthly Selected Price Indexes suggest weakening in some of the more volatile inflation components, while survey measures of cost pressures and pricing intentions have continued to decline.
• Non-performing bank loans and corporate insolvencies have increased from low levels in line with declining economic activity while bank credit growth also remains very subdued, in line with weakness in the domestic economy and low business and consumer confidence.
• Next meeting is on 14 August 2024.

Next 24 Hours Bias

Weak Bullish

The Japanese Yen (JPY)

Key news events today

Tokyo Core CPI (11:30 pm GMT 25th July)

What can we expect from JPY today?

Tokyo’s core CPI has now accelerated for the third consecutive month as it jumped from 1.6% in April to 2.2% YoY in July. Inflationary pressures are building and it could pave the way for the Bank of Japan (BoJ) to move ahead with a rate hike at next week’s monetary policy announcement. The yen has gained nearly 4.3% over the past three weeks as USD/JPY fell under 152.50 yesterday. This currency pair has since retraced higher to hover around 153.90 but overhead pressures remain.

Central Bank Notes:

• The Bank considers that the policy framework of Quantitative and Qualitative Monetary Easing (QQE) with Yield Curve Control and the negative interest rate policy to date have fulfilled their roles. With the price stability target of 2%, it will conduct monetary policy as appropriate, guiding the short-term interest rate as a primary policy tool.
• The Bank of Japan decided on the following measures:
  1. The Bank will encourage the uncollateralized overnight call rate to remain at around 0 to 0.1% while continuing its Japanese government bonds (JGB) purchases in accordance with the decisions made at the March 2024 MPM.
  2. The Bank decided, by an 8-1 majority vote, that it would reduce its purchase amount of JGBs thereafter to ensure that long-term interest rates would be formed more freely in financial markets.
• 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.
• In the second half of the projection period of the April 2024 Outlook for Economic Activity and Prices (Outlook Report), it is likely to be at a level that is generally consistent with the price stability target of 2%.
• The year-on-year rate of increase in the CPI (all items less fresh food), has been in the range of 2.0-2.5% recently, as services prices have continued to rise moderately, reflecting factors such as wage increases, although the effects of a pass-through to consumer prices of cost increases led by the past rise in import prices have waned. Inflation expectations have risen moderately.
• Japan’s economy has recovered moderately, although some weakness has been seen in part while is likely to keep growing at a pace above its potential growth rate, with overseas economies continuing to grow moderately and as a virtuous cycle from income to spending gradually intensifies against the background of factors such as accommodative financial conditions.
• Next meeting is on 31 July 2024.

Next 24 Hours Bias

Weak Bearish

The Euro (EUR)

Key news events today

No major news events.

What can we expect from EUR today?

The German ifo Business Climate deteriorated further in July as it fell from 88.9 in the previous month to 87.0 as the German economy remains in the doldrums. Business sentiment for all the major sectors such as services, trade and construction declined – with the manufacturing sector falling significantly more than the others. The Euro pulled back to a low of 1.0825 yesterday before ranging between this lower bound and 1.0865 overnight – these are the support and resistance levels for today.

Support: 1.0810

Resistance: 1.0895

Central Bank Notes:

• The Governing Council today decided to keep the three key ECB interest rates unchanged in July, following a 25 basis points cut in June.
• Accordingly, the interest rate on the main refinancing operations and the interest rates on the marginal lending facility and the deposit facility will remain unchanged at 4.25%, 4.50% and 3.75% respectively.
• Monetary policy is keeping financing conditions restrictive but at the same time, domestic price pressures are still high, services inflation is elevated and headline inflation is likely to remain above the target well into next year.
• While some measures of underlying inflation ticked up in May owing to one-off factors, most measures were either stable or edged down in June.
• The incoming information indicates that the euro area economy grew in the second quarter, but likely at a slower pace than in the first quarter.
• Services continue to lead the recovery, while industrial production and goods exports have been weak – investment indicators point to muted growth in 2024, amid heightened uncertainty.
• The Eurosystem no longer reinvests all of the principal payments from maturing securities purchased under the pandemic emergency purchase programme (PEPP), reducing the PEPP portfolio by €7.5 billion per month on average and the Governing Council intends to discontinue reinvestments under the PEPP at the end of 2024.
• The Council is determined to ensure that inflation returns to its 2% medium-term target in a timely manner and will keep policy rates sufficiently restrictive for as long as necessary to achieve this aim and is not pre-committing to a particular rate path.
• Next meeting is on 12 September 2024.

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?

Demand for the greenback waned overnight as USD/CHF briefly dipped under the threshold of 0.8800 before retracing higher by the end of the U.S. session. This currency pair was trading around 0.8810 at the beginning of the Asia session – these are the support and resistance levels for today.

Support: 0.8780

Resistance: 0.8880

Central Bank Notes:

• The SNB eased monetary policy by lowering its key policy rate by 25 basis points for the second consecutive meeting, going from 1.50% to 1.25% in June.
• The underlying inflationary pressure has decreased again compared to the previous quarter but inflation had risen slightly since the last monetary policy assessment, and stood at 1.4% in May.
• The inflation forecast puts average annual inflation at 1.3% for 2024, 1.1% for 2025 and 1.0% for 2026, based on the assumption that the SNB policy rate is 1.25% over the entire forecast horizon.
• Swiss GDP growth was moderate in the first quarter of 2024 with the services sector continuing to expand, while manufacturing stagnated.
• Growth is likely to remain moderate in Switzerland in the coming quarters as the SNB anticipates GDP growth of around 1% this year while currently expecting growth of around 1.5% for 2025.
• Next meeting is on 26 September 2024.

Next 24 Hours Bias

Weak Bearish

The Pound (GBP)

Key news events today

No major news events.

What can we expect from GBP today?

Cable has drifted lower this week before finally dropping below the threshold of 1.2900 overnight. This currency pair was trading around 1.2860 as Asian markets came online and is expected to edge lower as the day progresses – these are the support and resistance levels for today.

Support: 1.2780

Resistance: 1.2940

Central Bank Notes:

• The Bank of England’s Monetary Policy Committee (MPC) voted by a majority of 7-to-2 to maintain its Official Bank Rate at 5.25% for the seventh consecutive meeting.
• Two members preferred to reduce the Bank Rate by 25 basis points to 5%, an increase of one from the previous meeting.
• Twelve-month CPI inflation fell to 2.0% in May from 3.2% in March, close to the May Monetary Policy Report projection. CPI inflation is expected to rise slightly in the second half of this year, as declines in energy prices last year fall out of the annual comparison.
• Reflecting a margin of slack in the economy, CPI inflation had been projected to be 1.9% in two years’ time and 1.6% in three years.
• UK GDP appears to have grown more strongly than expected during the first half of this year. Business surveys, however, remain consistent with a slower pace of underlying growth, of around 0.25% per quarter.
• UK real GDP had increased by 0.6% in 2024 Q1, 0.2% stronger than had been expected in the May Monetary Policy Report and Bank staff now expect GDP growth of 0.5% in 2024 Q2 as a whole, stronger than the 0.2% rate that had been incorporated in the May Report.
• The MPC remains prepared to adjust monetary policy as warranted by economic data to return inflation to the 2% target sustainably. It will therefore continue to monitor closely indications of persistent inflationary pressures and resilience in the economy as a whole, including a range of measures of the underlying tightness of labour market conditions, wage growth and services price inflation.
• Next meeting is on 1 August 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?

Recent weakness in the Loonie has propelled USD/CAD higher as it rose from 1.3600 to an overnight high of 1.3850. However, this currency pair retreated away from this level and was trading around 1.3810 at the beginning of the Asia session – these are the support and resistance levels for today.

Support: 1.3780

Resistance: 1.3850

Central Bank Notes:

• The Bank of Canada reduced its target for the overnight rate by 25 basis points to 4.50% while continuing its policy of balance sheet normalization.
• Canada’s economic growth likely picked up to about 1.5% through the first half of this year and is forecasted to increase in the second half of 2024 and through 2025.
• Overall, the Bank forecasts GDP growth of 1.2% in 2024, 2.1% in 2025, and 2.4% in 2026, reflecting stronger exports and a recovery in household spending and business investment as borrowing costs ease.
• CPI inflation moderated to 2.7% in June after increasing in May as broad inflationary pressures eased.
• The Bank’s preferred measures of core inflation have been below 3% for several months and the breadth of price increases across components of the CPI is now near its historical norm but shelter price inflation remains high, driven by rent and mortgage interest costs, and is still the biggest contributor to total inflation.
• These preferred measures of core inflation are expected to slow to about 2.5% in the second half of 2024 and ease gradually through 2025 and CPI inflation is expected to come down below core inflation in the second half of this year, largely because of base year effects on gasoline prices.
• There are signs of slack in the labour market with the unemployment rate rising to 6.4%, as employment continues to grow more slowly than the labour force and job seekers taking longer to find work. Wage growth is showing some signs of moderation, but remains elevated.
• The Governing Council’s future monetary policy decisions will be guided by incoming information and assessment of their implications for the inflation outlook.
• Recent data has increased the council’s confidence that inflation will continue to move towards the 2% target. Nonetheless, risks to the inflation outlook remain.
• Next meeting is on 4 September 2024.

Next 24 Hours Bias

Weak Bearish

Oil

Key news events today

No major news events.

What can we expect from Oil today?

Stronger-than-anticipated GDP output in the U.S. for the second quarter of this year triggered a massive demand for crude oil – the advance estimate showed the American economy rebounding strongly from 1.4% in Q1-24 to 2.8% YoY. WTI oil was hovering $77.50 per barrel before spiking as high as $79.70 – strong tailwinds remain in place and this commodity is likely to climb higher as the day progresses. However, crude prices look set to notch a third straight week of decline.

Next 24 Hours Bias

Weak Bullish

The post IC Markets Europe Fundamental Forecast | 26 July 2024 first appeared on IC Markets | Official Blog.

IC Markets Asia Fundamental Forecast | 26 July 2024

What happened in the U.S. session?

The advance estimate for second quarter GDP beat market forecasts of 2.0% with a reading of 2.8% as consumer spending grew due to a rebound in goods consumption along with an increase in wholesale trade and retail trade industries. In addition, non-residential investment accelerated while defence government spending also grew. After slowing quite significantly from 3.4% in Q4-23 to 1.4% in Q1-24, economic growth appears to have bounced back in the second quarter of this year.

Meanwhile, unemployment claims printed slightly lower than its estimate of 237K with a reading of 235K. However, this figure remains elevated and continues to trend in line with its 4-week average of 234.5K, suggesting a potential weakness in the labour market. The dollar index (DXY) was trading around 104.20 prior to the release of these economic data points but it experienced wild swings overnight – surging as high as 104.45 before reversing sharply to drop as low as 104.17. This index finally stabilized around 104.35 by the end of this session.

What does it mean for the Asia Session?

Tokyo’s core CPI has now accelerated for the third consecutive month as it jumped from 1.6% in April to 2.2% YoY in July. Inflationary pressures are building and it could pave the way for the Bank of Japan (BoJ) to move ahead with a rate hike at next week’s monetary policy announcement. The yen has gained nearly 4.3% over the past three weeks as USD/JPY fell under 152.50 yesterday. This currency pair has since retraced higher to hover around 153.90 but overhead pressures remain.

The Dollar Index (DXY)

Key news events today

PCE Price Index (12:30 pm GMT)

What can we expect from DXY today?

After easing on a monthly and annualised basis in May, the PCE Price Index – which is the Federal Reserve’s preferred gauge of inflation – is expected to post a slightly stronger monthly gain in prices for the month of June. However, should PCE prices also moderate lower as per the latest CPI results two weeks ago, it will likely trigger a strong sell-off in the greenback later today.

Central Bank Notes:

• The Federal Funds Rate target range remained unchanged at 5.25% to 5.50% for the seventh meeting in a row.
• 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 have moved toward better balance over the past year.
• The economic outlook is uncertain, and the Committee remains highly attentive to inflation risks. Inflation has eased over the past year but remains elevated and in recent months, there has been modest further progress toward the Committee’s 2% inflation objective.
• Recent indicators suggest that economic activity has continued to expand at a solid pace while job gains have remained strong, and the unemployment rate has remained low.
• 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 and does not expect it will be appropriate to reduce the target range until it has gained greater confidence that inflation is moving sustainably toward 2%.
• 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 will slow the pace of decline of its securities holdings by reducing the monthly redemption cap on Treasury securities from $60 billion to $25 billion.
• The Committee will maintain the monthly redemption cap on agency debt and agency mortgage-backed securities at $35 billion and will reinvest any principal payments in excess of this cap into Treasury securities.
• Next meeting runs from 30 to 31 July 2024.

Next 24 Hours Bias

Weak Bearish

Gold (XAU)

Key news events today

PCE Price Index (12:30 pm GMT)

What can we expect from Gold today?

After easing on a monthly and annualised basis in May, the PCE Price Index – which is the Federal Reserve’s preferred gauge of inflation – is expected to post a slightly stronger monthly gain in prices for the month of June. However, should PCE prices also moderate lower as per the latest CPI results two weeks ago, it will likely trigger a strong sell-off in the greenback later today – a move that should spur this precious metal.

Next 24 Hours Bias

Medium Bearish

The Australian Dollar (AUD)

Key news events today

No major news events.

What can we expect from AUD today?

The Aussie has shed 3.5% over the last couple of weeks as it dived from 0.6783 in mid-July to as low as 0.6514 overnight before retracing higher. This currency pair was trading around 0.6550 as Asian markets came online – these are the support and resistance levels for today.

Support: 0.6465

Resistance: 0.6580

Central Bank Notes:

• The RBA kept the cash rate target unchanged at 4.35%, marking the ninth pause out of the last ten board meetings.
• Over the year to April, the monthly CPI indicator rose by 3.6% in headline terms, and by 4.1% excluding volatile items and holiday travel, which was similar to its pace in December 2023.
• The central forecasts published in May were for inflation to return to the target range of 2–3% in the second half of 2025 and to the midpoint in 2026 while there have been indications that momentum in economic activity is weak, including slow growth in GDP, a rise in the unemployment rate and slower-than-expected wages growth.
• Inflation is easing but has been doing so more slowly than previously expected and it remains high and the Board expects that it will be some time yet before inflation is sustainably in the target range.
• The path of interest rates that will best ensure that inflation returns to target in a reasonable timeframe remains uncertain and the Board is not ruling anything in or out.
• Next meeting is on 6 August 2024.

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?

Significant weakness in the Kiwi has caused it to decline nearly 4.3% over the past three weeks. This currency pair hit a low of 0.5882 overnight before stabilizing around this level. Overhead pressures remain and further downside can be expected for the Kiwi – these are the support and resistance levels for today.

Support: 0.5875

Resistance: 0.5950

Central Bank Notes:

• The Monetary Policy Committee kept the OCR unchanged at 5.50% for the eighth meeting in a row and agreed that restrictive monetary policy is reducing domestic demand and consumer price inflation.
• The Committee is confident that inflation will return to within its 1-3% target range over the second half of 2024.
• The decline in inflation reflects receding domestic pricing pressures, as well as lower inflation for goods and services imported into New Zealand while recent monthly Selected Price Indexes suggest weakening in some of the more volatile inflation components, while survey measures of cost pressures and pricing intentions have continued to decline.
• Non-performing bank loans and corporate insolvencies have increased from low levels in line with declining economic activity while bank credit growth also remains very subdued, in line with weakness in the domestic economy and low business and consumer confidence.
• Next meeting is on 14 August 2024.

Next 24 Hours Bias

Weak Bullish

The Japanese Yen (JPY)

Key news events today

Tokyo Core CPI (11:30 pm GMT 25th July)

What can we expect from JPY today?

Tokyo’s core CPI has now accelerated for the third consecutive month as it jumped from 1.6% in April to 2.2% YoY in July. Inflationary pressures are building and it could pave the way for the Bank of Japan (BoJ) to move ahead with a rate hike at next week’s monetary policy announcement. The yen has gained nearly 4.3% over the past three weeks as USD/JPY fell under 152.50 yesterday. This currency pair has since retraced higher to hover around 153.90 but overhead pressures remain.

Central Bank Notes:

• The Bank considers that the policy framework of Quantitative and Qualitative Monetary Easing (QQE) with Yield Curve Control and the negative interest rate policy to date have fulfilled their roles. With the price stability target of 2%, it will conduct monetary policy as appropriate, guiding the short-term interest rate as a primary policy tool.
• The Bank of Japan decided on the following measures:
  1. The Bank will encourage the uncollateralized overnight call rate to remain at around 0 to 0.1% while continuing its Japanese government bonds (JGB) purchases in accordance with the decisions made at the March 2024 MPM.
  2. The Bank decided, by an 8-1 majority vote, that it would reduce its purchase amount of JGBs thereafter to ensure that long-term interest rates would be formed more freely in financial markets.
• 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.
• In the second half of the projection period of the April 2024 Outlook for Economic Activity and Prices (Outlook Report), it is likely to be at a level that is generally consistent with the price stability target of 2%.
• The year-on-year rate of increase in the CPI (all items less fresh food), has been in the range of 2.0-2.5% recently, as services prices have continued to rise moderately, reflecting factors such as wage increases, although the effects of a pass-through to consumer prices of cost increases led by the past rise in import prices have waned. Inflation expectations have risen moderately.
• Japan’s economy has recovered moderately, although some weakness has been seen in part while is likely to keep growing at a pace above its potential growth rate, with overseas economies continuing to grow moderately and as a virtuous cycle from income to spending gradually intensifies against the background of factors such as accommodative financial conditions.
• Next meeting is on 31 July 2024.

Next 24 Hours Bias

Weak Bearish

The Euro (EUR)

Key news events today

No major news events.

What can we expect from EUR today?

The German ifo Business Climate deteriorated further in July as it fell from 88.9 in the previous month to 87.0 as the German economy remains in the doldrums. Business sentiment for all the major sectors such as services, trade and construction declined – with the manufacturing sector falling significantly more than the others. The Euro pulled back to a low of 1.0825 yesterday before ranging between this lower bound and 1.0865 overnight – these are the support and resistance levels for today.

Support: 1.0810

Resistance: 1.0895

Central Bank Notes:

• The Governing Council today decided to keep the three key ECB interest rates unchanged in July, following a 25 basis points cut in June.
• Accordingly, the interest rate on the main refinancing operations and the interest rates on the marginal lending facility and the deposit facility will remain unchanged at 4.25%, 4.50% and 3.75% respectively.
• Monetary policy is keeping financing conditions restrictive but at the same time, domestic price pressures are still high, services inflation is elevated and headline inflation is likely to remain above the target well into next year.
• While some measures of underlying inflation ticked up in May owing to one-off factors, most measures were either stable or edged down in June.
• The incoming information indicates that the euro area economy grew in the second quarter, but likely at a slower pace than in the first quarter.
• Services continue to lead the recovery, while industrial production and goods exports have been weak – investment indicators point to muted growth in 2024, amid heightened uncertainty.
• The Eurosystem no longer reinvests all of the principal payments from maturing securities purchased under the pandemic emergency purchase programme (PEPP), reducing the PEPP portfolio by €7.5 billion per month on average and the Governing Council intends to discontinue reinvestments under the PEPP at the end of 2024.
• The Council is determined to ensure that inflation returns to its 2% medium-term target in a timely manner and will keep policy rates sufficiently restrictive for as long as necessary to achieve this aim and is not pre-committing to a particular rate path.
• Next meeting is on 12 September 2024.

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?

Demand for the greenback waned overnight as USD/CHF briefly dipped under the threshold of 0.8800 before retracing higher by the end of the U.S. session. This currency pair was trading around 0.8810 at the beginning of the Asia session – these are the support and resistance levels for today.

Support: 0.8780

Resistance: 0.8880

Central Bank Notes:

• The SNB eased monetary policy by lowering its key policy rate by 25 basis points for the second consecutive meeting, going from 1.50% to 1.25% in June.
• The underlying inflationary pressure has decreased again compared to the previous quarter but inflation had risen slightly since the last monetary policy assessment, and stood at 1.4% in May.
• The inflation forecast puts average annual inflation at 1.3% for 2024, 1.1% for 2025 and 1.0% for 2026, based on the assumption that the SNB policy rate is 1.25% over the entire forecast horizon.
• Swiss GDP growth was moderate in the first quarter of 2024 with the services sector continuing to expand, while manufacturing stagnated.
• Growth is likely to remain moderate in Switzerland in the coming quarters as the SNB anticipates GDP growth of around 1% this year while currently expecting growth of around 1.5% for 2025.
• Next meeting is on 26 September 2024.

Next 24 Hours Bias

Weak Bearish

The Pound (GBP)

Key news events today

No major news events.

What can we expect from GBP today?

Cable has drifted lower this week before finally dropping below the threshold of 1.2900 overnight. This currency pair was trading around 1.2860 as Asian markets came online and is expected to edge lower as the day progresses – these are the support and resistance levels for today.

Support: 1.2780

Resistance: 1.2940

Central Bank Notes:

• The Bank of England’s Monetary Policy Committee (MPC) voted by a majority of 7-to-2 to maintain its Official Bank Rate at 5.25% for the seventh consecutive meeting.
• Two members preferred to reduce the Bank Rate by 25 basis points to 5%, an increase of one from the previous meeting.
• Twelve-month CPI inflation fell to 2.0% in May from 3.2% in March, close to the May Monetary Policy Report projection. CPI inflation is expected to rise slightly in the second half of this year, as declines in energy prices last year fall out of the annual comparison.
• Reflecting a margin of slack in the economy, CPI inflation had been projected to be 1.9% in two years’ time and 1.6% in three years.
• UK GDP appears to have grown more strongly than expected during the first half of this year. Business surveys, however, remain consistent with a slower pace of underlying growth, of around 0.25% per quarter.
• UK real GDP had increased by 0.6% in 2024 Q1, 0.2% stronger than had been expected in the May Monetary Policy Report and Bank staff now expect GDP growth of 0.5% in 2024 Q2 as a whole, stronger than the 0.2% rate that had been incorporated in the May Report.
• The MPC remains prepared to adjust monetary policy as warranted by economic data to return inflation to the 2% target sustainably. It will therefore continue to monitor closely indications of persistent inflationary pressures and resilience in the economy as a whole, including a range of measures of the underlying tightness of labour market conditions, wage growth and services price inflation.
• Next meeting is on 1 August 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?

Recent weakness in the Loonie has propelled USD/CAD higher as it rose from 1.3600 to an overnight high of 1.3850. However, this currency pair retreated away from this level and was trading around 1.3810 at the beginning of the Asia session – these are the support and resistance levels for today.

Support: 1.3780

Resistance: 1.3850

Central Bank Notes:

• The Bank of Canada reduced its target for the overnight rate by 25 basis points to 4.50% while continuing its policy of balance sheet normalization.
• Canada’s economic growth likely picked up to about 1.5% through the first half of this year and is forecasted to increase in the second half of 2024 and through 2025.
• Overall, the Bank forecasts GDP growth of 1.2% in 2024, 2.1% in 2025, and 2.4% in 2026, reflecting stronger exports and a recovery in household spending and business investment as borrowing costs ease.
• CPI inflation moderated to 2.7% in June after increasing in May as broad inflationary pressures eased.
• The Bank’s preferred measures of core inflation have been below 3% for several months and the breadth of price increases across components of the CPI is now near its historical norm but shelter price inflation remains high, driven by rent and mortgage interest costs, and is still the biggest contributor to total inflation.
• These preferred measures of core inflation are expected to slow to about 2.5% in the second half of 2024 and ease gradually through 2025 and CPI inflation is expected to come down below core inflation in the second half of this year, largely because of base year effects on gasoline prices.
• There are signs of slack in the labour market with the unemployment rate rising to 6.4%, as employment continues to grow more slowly than the labour force and job seekers taking longer to find work. Wage growth is showing some signs of moderation, but remains elevated.
• The Governing Council’s future monetary policy decisions will be guided by incoming information and assessment of their implications for the inflation outlook.
• Recent data has increased the council’s confidence that inflation will continue to move towards the 2% target. Nonetheless, risks to the inflation outlook remain.
• Next meeting is on 4 September 2024.

Next 24 Hours Bias

Weak Bearish

Oil

Key news events today

No major news events.

What can we expect from Oil today?

Stronger-than-anticipated GDP output in the U.S. for the second quarter of this year triggered a massive demand for crude oil – the advance estimate showed the American economy rebounding strongly from 1.4% in Q1-24 to 2.8% YoY. WTI oil was hovering $77.50 per barrel before spiking as high as $79.70 – strong tailwinds remain in place and this commodity is likely to climb higher as the day progresses. However, crude prices look set to notch a third straight week of decline.

Next 24 Hours Bias

Weak Bullish

The post IC Markets Asia Fundamental Forecast | 26 July 2024 first appeared on IC Markets | Official Blog.

The post Ex-Dividend 26/07/2024 first appeared on IC Markets | Official Blog.

DXY (US Dollar Index):

Potential Direction: Bearish
Overall momentum of the chart: Bearish

Price could potentially make a bearish continuation towards 1st support.

Pivot: 104.47
Supporting reasons: Identified as a pullback resistance level, specifically at the 38.20% Fibonacci Retracement, indicating a potential area where sellers could enter the market after a retracement.

1st support: 103.70
Supporting reasons: Identified as a multi-swing low support level, suggesting a significant area where previous declines have found support.

1st resistance: 105.16
Supporting reasons: Identified as an overlap resistance level, indicating a potential area where sellers could enter the market after a retracement.

EUR/USD:

Potential Direction: Bearish
Overall momentum of the chart: Bearish

Factors contributing to the momentum: Price is below the bearish Ichimoku cloud.

Price could potentially make a bearish continuation towards 1st support.

Pivot: 1.0876
Supporting reasons: Identified as a pullback resistance level, specifically at the 38.20% Fibonacci Retracement, indicating a potential area where sellers could enter the market after a retracement.

1st support: 1.0816
Supporting reasons: Identified as an overlap support level, specifically at the 50% Fibonacci Retracement, suggesting a significant area where previous declines have found support.

1st resistance: 1.0921
Supporting reasons: Identified as a pullback resistance level, specifically at the 78.60% Fibonacci Retracement, indicating a historical point where previous rallies have faced selling pressure or reversed.

EUR/JPY:

Potential Direction: Bearish
Overall momentum of the chart: Bearish

Factors contributing to the momentum: Price is below the bearish Ichimoku cloud.

Price could potentially make a bearish continuation towards 1st support.

Pivot: 167.35
Supporting reasons: Identified as an overlap resistance level, specifically at the 23.60% Fibonacci Retracement, indicating a potential area where sellers could enter the market after a retracement.

1st support: 163.99
Supporting reasons: Identified as a swing low support level, suggesting a significant area where previous declines have found support.

1st resistance: 169.96
Supporting reasons: Identified as a pullback resistance level, specifically at the 50% Fibonacci Retracement, indicating a historical point where previous rallies have faced selling pressure or reversed.

EUR/GBP:

Potential Direction: Bullish
Overall momentum of the chart: Bullish

Price could potentially make a bullish bounce off pivot and head towards 1st resistance.

Pivot: 0.8435
Supporting reasons: Identified as a pullback support level, indicating a potential area where buyers could enter the market after a retracement.

1st support: 0.8499
Supporting reasons: Identified as a pullback support level, suggesting a significant area where previous declines have found support.

1st resistance: 0.8476
Supporting reasons: Identified as an overlap resistance level, specifically at the 78.60% Fibonacci Retracement, indicating a historical point where previous rallies have faced selling pressure or reversed.

GBP/USD:

Potential Direction: Bullish
Overall momentum of the chart: Bearish

Price could potentially make a bullish bounce off pivot and head towards 1st resistance.

Pivot: 1.2854
Supporting reasons: Identified as a pullback support level, specifically at the 61.80% Fibonacci Projection, indicating a potential area where buyers could enter the market after a retracement.

1st support: 1.2778
Supporting reasons: Identified as an overlap support level, specifically at the 61.80% Fibonacci Retracement, suggesting a significant area where previous declines have found support.

1st resistance: 1.2934
Supporting reasons: Identified as an overlap resistance level, indicating a historical point where previous rallies have faced selling pressure or reversed.

GBP/JPY:

Potential Direction: Bearish
Overall momentum of the chart: Bearish

Factors contributing to the momentum: Price is below the bearish Ichimoku cloud.

Price could potentially make a bearish reaction off pivot and drop to 1st support.

Pivot: 200.66
Supporting reasons: Identified as a pullback resistance level, specifically at the 38.20% Fibonacci Retracement, indicating a potential area where sellers could enter the market after a retracement.

1st support: 196.61
Supporting reasons: Identified as an overlap support level, suggesting a significant area where previous declines have found support.

1st resistance: 202.52
Supporting reasons: Identified as a pullback resistance level, specifically at the 50% Fibonacci Retracement, indicating a historical point where previous rallies have faced selling pressure or reversed.

USD/CHF:

Potential Direction: Bearish
Overall momentum of the chart: Bearish

Price could potentially make a bearish reaction off pivot and drop to 1st support.

Pivot: 0.8836
Supporting reasons: Identified as a pullback resistance level, indicating a potential area where sellers could enter the market after a retracement.

1st support: 0.8755
Supporting reasons: Identified as a pullback support level, suggesting a significant area where previous declines have found support.

1st resistance: 0.8917
Supporting reasons: Identified as an overlap resistance level, indicating a historical point where previous rallies have faced selling pressure or reversed.

USD/JPY:

Potential Direction: Bearish
Overall momentum of the chart: Bearish

Factors contributing to the momentum: Price is below the bearish Ichimoku cloud.

Price could potentially make a bearish reaction off pivot and drop to 1st support.

Pivot: 154.74
Supporting reasons: Identified as a pullback resistance level, indicating a potential area where sellers could enter the market after a retracement.

1st support: 151.92
Supporting reasons: Identified as an overlap support level, suggesting a significant area where previous declines have found support.

1st resistance: 155.80
Supporting reasons: Identified as a pullback resistance level, indicating a historical point where previous rallies have faced selling pressure or reversed.

USD/CAD:

Potential Direction: Bearish
Overall momentum of the chart: Bullish

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

Pivot: 1.3832
Supporting reasons: Identified as a multi-swing-high resistance, indicating a significant area where selling pressures could intensify.

1st support: 1.3779
Supporting reasons: Identified as an overlap support that aligns close to a 23.6% Fibonacci retracement, indicating a potential area where price could find support.

1st resistance: 1.3888
Supporting reasons: Identified as a 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 is rising towards the pivot and could potentially make a bearish reversal off this level to fall towards the 1st support.

Pivot: 0.6562
Supporting reasons: Identified as an overlap resistance, indicating a potential area where selling pressures could intensify. The presence of a bearish Ichimoku cloud adds further significance to the downside momentum.

1st support: 0.6529
Supporting reasons: Identified as a pullback support that aligns with a 161.8% Fibonacci extension level, suggesting a potential area where price could find strong support.

1st resistance: 0.6585
Supporting reasons: Identified as a pullback resistance that aligns close to a 23.6% Fibonacci retracement, indicating a significant area that could halt further upward movement.

NZD/USD

Potential Direction: Bullish
Overall momentum of the chart: Bearish

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

Pivot: 0.5883
Supporting reasons: Identified as a multi-swing-low support, indicating a potential zone where buying interests could pick up to stage a minor rebound.

1st support: 0.5779
Supporting reasons: Identified as a pullback support that aligns with a 127.2% Fibonacci extension, suggesting a significant area that could halt further downward momentum.

1st resistance: 0.5948
Supporting reasons: Identified as a pullback resistance, indicating a significant area that could halt further upward movement. The presence of a bearish Ichimoku cloud adds further significance to the overhead pressures.

US30 (DJIA):

Potential Direction: Bullish

Overall Momentum of the Chart: Bearish

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

Pivot: 39,607.55
Supporting reasons: Identified as an overlap support that aligns with a 78.6% Fibonacci retracement level, indicating a potential area where buying interests could pick up to stage a minor rebound.

1st Support: 38,980.78

Supporting Reasons: Identified as a pullback support, suggesting a significant area where price could find strong support.

1st Resistance: 40,4677.11

Supporting Reasons: Identified as a pullback resistance that aligns close to a 38.2% Fibonacci retracement level, indicating a significant area that could halt further upward movement.

DE40 (DAX):

Potential Direction: Bearish

Overall Momentum of the Chart: Neutral

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

Pivot: 18,353.80
Supporting reasons: Identified as a pullback resistance that aligns close to a 50% Fibonacci retracement level, indicating an area where selling pressures could intensify to resume the downtrend. The presence of a bearish Ichimoku cloud adds further significance to the overhead pressures.

1st Support: 18,149.30

Supporting Reasons: Identified as a multi-swing-low support, indicating a significant area where price could find strong support.

1st Resistance: 18,505.94

Supporting Reasons: Identified as an overlap resistance that aligns close to a 78.6% Fibonacci projection level, indicating a significant area that could halt further upward movement.

US500 (S&P 500): 

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: 5,408.81
Supporting reasons: Identified as a pullback support, indicating a potential area where buying interests could pick up to stage a minor rebound.

1st support: 5,339.76

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

1st resistance: 5,503.91

Supporting reasons: Identified as an overlap resistance that aligns with a 38.2% Fibonacci retracement level, suggesting a critical area that could halt further upward movement. The presence of a bearish Ichimoku cloud adds further significance to the overhead pressures.

BTC/USD (Bitcoin):

Potential Direction: Bearish

Overall momentum of the chart: Neutral

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

Pivot: 68,388.29

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

1st support: 63,507.86

Supporting reasons: Identified as a pullback support that aligns close to a 38.2% Fibonacci retracement level, indicating a significant area that could halt further downward movement.

1st resistance: 70,168.65

Supporting reasons: Identified as a pullback resistance that aligns with a 161.8% Fibonacci extension level, indicating a potential barrier that could halt further upward movement.

ETH/USD (Ethereum):

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: 3,276.36

Supporting reasons: Identified as a pullback resistance that aligns with a 38.2% Fibonacci retracement level, indicating a potential area where selling pressures could intensify.

1st Support: 3,052.53

Supporting Reasons: Identified as an overlap support that aligns close to a 61.8% Fibonacci retracement level, indicating a significant area that could halt further downward movement.

1st Resistance: 3,377.15

Supporting Reasons: Identified as a pullback resistance that aligns with a 61.8% Fibonacci retracement level, indicating a historical barrier where selling pressures could intensify.

WTI/USD (Oil):

Potential Direction: Bearish

Overall Momentum of the Chart: Neutral

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

Pivot: 80.95

Supporting Reasons: Identified as an overlap resistance that aligns close to a 50% Fibonacci retracement level, indicating a potential area where selling pressures could intensify. The presence of a bearish Ichimoku cloud adds further significance to the overhead pressures.

1st Support: 77.53

Supporting Reasons: Identified as a pullback support that aligns with a 61.8% Fibonacci retracement level, indicating a significant area where price could find strong support.

1st Resistance: 83.78

Supporting Reasons: Identified as a multi-swing-high resistance, indicating a potential barrier that could halt further upward movement.

XAU/USD (GOLD):

Potential Direction: Bearish
Overall momentum of the chart: Bearish

Price could potentially make a bearish reaction off pivot and drop to 1st support.

Pivot: 2391.29
Supporting reasons: Identified as a pullback resistance level, indicating a potential area where sellers could enter the market after a retracement.

1st support: 2361.72
Supporting reasons: Identified as an overlap support level, specifically at the 161.80% Fibonacci Extension and 78.60% Fibonacci Retracement, indicating Fibonacci confluence and suggesting a significant area where previous declines have found support.

1st resistance: 2423.81
Supporting reasons: Identified as an overlap resistance level, indicating a historical point where previous rallies have faced selling pressure or reversed.

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The post Friday 26th July 2024: Technical Outlook and Review first appeared on IC Markets | Official Blog.

Volatility Rises Again in Markets – Nasdaq Down 0.9%

It was another volatile day in financial markets yesterday as risk sentiment continued to take a hit before a higher US GDP print came through with a bit of stability. US tech stocks were again hit with both the Nasdaq and S&P losing ground on the day, down 0.93% and 0.51% respectively, whilst the Dow pushed 0.22% higher. US treasury yields again saw a disparity between the long and short dated bonds, but widening the gap again this time, the 2-year gaining 2.5 basis points up to 4.441% and the 10-year dropping 2.8 basis points to 4.258%. Oil prices pushed higher again, Brent adding 0.81% to trade up to $82.37 a barrel and WTI gaining 0.89% to move back to $78.28 a barrel. Gold again saw big profit taking flows and lost 1.8% on the day to close at $2,355.

Aussie in Free Fall as Risk Sentiment is Hit

All the talk this week in the FX world has been about the Yen, but those trading the Aussie dollar have had a rough time of it as well. The Aussie has dropped over 4% against the big dollar since it hit multi-month highs on July 11, and it has taken an even bigger hit against the Yen losing over 9% from the same data. There has been little in the way of respite on the way down and any brief rallies have been hit hard with the usual exporter flow doing little to stem the tide. The move has coincided with a drop across commodities and until we see a change in commodity’s outlook or indeed the global risk story, the traders are anticipating more downside the currency. Support now comes in on the overnight low around 0.6510 with longer term support all the way down at 0.6420 and resistance now sits with the 200-day moving average at 0.6660.

Another Busy Day is Set to Close the Trading Week

It was another rollercoaster trading day yesterday with volatility hitting all markets and it doesn’t look like stopping in the last three sessions of the week. Inflation data is set to dominate market focus today with key updates due out of Tokyo and the US. We are due to have the latest Tokyo CPI numbers out early in the Asian session but the real focus for the day will come once New York opens and we have the latest update on the Fed’s favoured inflation metric, the Core PCE Price Index. Expectation is for a 0.2% increase and anything significantly off this print will see more moves in the market. The revised University of Michigan Consumer Sentiment and Inflation Expectations are also due out and traders will keep a wary eye on any updates from the latest G20 meeting that kicks off in Rio de Janeiro.

The post General Market Analysis 26/07/2024 first appeared on IC Markets | Official Blog.

Global Markets:

•  Asian Stock Markets : Nikkei down 3.14%, Shanghai Composite down 0.58%, Hang Seng down 1.71% ASX down 1.29%
• Commodities : Gold at $2374.35 (-1.47%), Silver at $28.11 (-3.64%), Brent Oil at $81.13 (-0.73%), WTI Oil at $76.79 (-0.81%)
• Rates : US 10-year yield at 4.257, UK 10-year yield at 4.158, Germany 10-year yield at 2.445

News & Data:

• (CAD) Overnight Rate  4.5% vs 4.5% expected
• (USD) Flash Manufacturing PMI  49.5 vs 51.7 expected
• (USD) Flash Services PMI  56.0 vs 54.7 expected
• (USD) New Home Sales  617K vs 639K expected

Markets Update:

Japan’s Nikkei 225 extended its losing streak to seven days, plunging 3% and leading losses among Asian markets after Wall Street’s tumble. SoftBank Group plummeted 9%, while Renesas Electronics dropped over 14%. The broader Topix fell 2.24%. The yen strengthened for the fourth consecutive day against the U.S. dollar, reaching an 11-week high of 152.28. Reuters reported that the Bank of Japan might discuss a rate hike and a plan to reduce bond-buying at its upcoming meeting.

South Korea’s Kospi fell 1.8% and the Kosdaq dropped 2.32%, dragged down by SK Hynix, which fell 6%. This followed SK Hynix reporting record quarterly revenue of 16.42 trillion won ($11.85 billion), up 125% from a year ago. Operating profit hit 5.47 trillion won, the highest in six years, and net profit stood at 4.12 billion won, reversing losses from last year. Meanwhile, South Korea’s advance second-quarter GDP grew 2.3% year-on-year, slightly below expectations, and contracted 0.2% quarter-on-quarter.

Hong Kong’s Hang Seng index slipped 1.7%, while mainland China’s CSI 300 fell 0.98%. China’s central bank cut the medium-term lending rate to 2.3% from 2.5% to stimulate the economy, following Monday’s loan prime rate reduction. Australia’s S&P/ASX 200 was down 0.94%. Taiwan’s market remained closed for the second day as the island braced for Typhoon Gaemi.

In the U.S., the S&P 500 and Nasdaq Composite had their worst days since 2022, with the S&P 500 dropping 2.31% to 5,427.13 and the Nasdaq falling 3.64% to 17,342.41. The Dow Jones Industrial Average fell 504.22 points, or 1.25%, to 39,853.87. Tech stocks, including Nvidia and Meta Platforms, lost 6.8% and 5.6%, respectively. Alphabet shares fell 5%, marking their biggest one-day drop since January, while Tesla shares declined 12.3% on weaker-than-expected results and a 7% year-over-year drop in auto revenue.

Upcoming Events: 

• 12:30 PM GMT – USD Advance GDP q/q
• 12:30 PM GMT – USD Unemployment Claims

The post Thursday 25th July 2024: Asian Markets Plunge Amid Global Sell-Off, Led by Nikkei’s 3% Drop first appeared on IC Markets | Official Blog.

IC Markets Europe Fundamental Forecast | 25 July 2024

What happened in the Asia session?

It was an uneventful morning as the dollar index (DXY) hovered around 104.20 while spot prices for gold remained capped under $2,380/oz but trading activity is likely to pick up at the onset of the European trading hours. Traders should watch out for the release of the German ifo Business Climate as well as macroeconomic data points from the U.S. later on.

What does it mean for the Europe & US sessions?

The German ifo Business Climate deteriorated in June, led by the manufacturing and trade sectors as pessimistic expectations increased. July’s estimate of 88.9 points to a relatively unchanged business sentiment which could add some downward pressure on the Euro before the start of the European trading hours.

Meanwhile, unemployment claims remain elevated with the 4-week average now standing at 234K. Last week’s reading came in at 243K while the latest estimate of 237K points to another elevated reading. Should claims come in higher than expected once more, it could cause the dollar to come under pressure as this labour metric shows some signs of softness in the U.S. labour market.

The Dollar Index (DXY)

Key news events today

GDP (12:30 pm GMT)

Employment Claims (12:30 pm GMT)

What can we expect from DXY today?

The advance estimate for second quarter GDP is now expected to show economic activity growing 2.0%, higher than the previous estimate of 1.4%. GDP estimates for the second quarter have been mixed thus far but as more data becomes available, growth appears to be converging around 2% for this period. Meanwhile, unemployment claims remain elevated with the 4-week average now standing at 234K. Last week’s reading came in at 243K while the latest estimate of 237K points to another elevated reading. Should claims come in higher than expected once more, it could cause the dollar to come under pressure as this labour metric shows some signs of softness in the U.S. labour market.

Central Bank Notes:

• The Federal Funds Rate target range remained unchanged at 5.25% to 5.50% for the seventh meeting in a row.
• 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 have moved toward better balance over the past year.
• The economic outlook is uncertain, and the Committee remains highly attentive to inflation risks. Inflation has eased over the past year but remains elevated and in recent months, there has been modest further progress toward the Committee’s 2% inflation objective.
• Recent indicators suggest that economic activity has continued to expand at a solid pace while job gains have remained strong, and the unemployment rate has remained low.
• 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 and does not expect it will be appropriate to reduce the target range until it has gained greater confidence that inflation is moving sustainably toward 2%.
• 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 will slow the pace of decline of its securities holdings by reducing the monthly redemption cap on Treasury securities from $60 billion to $25 billion.
• The Committee will maintain the monthly redemption cap on agency debt and agency mortgage-backed securities at $35 billion and will reinvest any principal payments in excess of this cap into Treasury securities.
• Next meeting runs from 30 to 31 July 2024.

Next 24 Hours Bias

Weak Bearish

Gold (XAU)

Key news events today

GDP (12:30 pm GMT)

Employment Claims (12:30 pm GMT)

What can we expect from Gold today?

The advance estimate for second quarter GDP is now expected to show economic activity growing 2.0%, higher than the previous estimate of 1.4%. GDP estimates for the second quarter have been mixed thus far but as more data becomes available, growth appears to be converging around 2% for this period. Meanwhile, unemployment claims remain elevated with the 4-week average now standing at 234K. Last week’s reading came in at 243K while the latest estimate of 237K points to another elevated reading. Should claims come in higher than expected once more, it could cause the dollar to come under pressure as this labour metric shows some signs of softness in the U.S. labour market.

Next 24 Hours Bias

Medium Bearish

The Australian Dollar (AUD)

Key news events today

No major news events.

What can we expect from AUD today?

The Aussie remained in freefall as it tumbled under the threshold of 0.6600. This currency pair continued to slide lower towards 0.6550 as Asian markets came online – these are the support and resistance levels for today.

Support: 0.6530

Resistance: 0.6600

Central Bank Notes:

• The RBA kept the cash rate target unchanged at 4.35%, marking the ninth pause out of the last ten board meetings.
• Over the year to April, the monthly CPI indicator rose by 3.6% in headline terms, and by 4.1% excluding volatile items and holiday travel, which was similar to its pace in December 2023.
• The central forecasts published in May were for inflation to return to the target range of 2–3% in the second half of 2025 and to the midpoint in 2026 while there have been indications that momentum in economic activity is weak, including slow growth in GDP, a rise in the unemployment rate and slower-than-expected wages growth.
• Inflation is easing but has been doing so more slowly than previously expected and it remains high and the Board expects that it will be some time yet before inflation is sustainably in the target range.
• The path of interest rates that will best ensure that inflation returns to target in a reasonable timeframe remains uncertain and the Board is not ruling anything in or out.
• Next meeting is on 6 August 2024.

Next 24 Hours Bias

Strong Bearish

The Kiwi Dollar (NZD)

Key news events today

No major news events.

What can we expect from NZD today?

Stronger demand for the dollar drove the Kiwi under 0.5950 overnight. This currency pair continued to slide lower towards 0.5900 at the beginning of the Asia session – these are the support and resistance levels for today.

Support: 0.5880

Resistance: 0.5950

Central Bank Notes:

• The Monetary Policy Committee kept the OCR unchanged at 5.50% for the eighth meeting in a row and agreed that restrictive monetary policy is reducing domestic demand and consumer price inflation.
• The Committee is confident that inflation will return to within its 1-3% target range over the second half of 2024.
• The decline in inflation reflects receding domestic pricing pressures, as well as lower inflation for goods and services imported into New Zealand while recent monthly Selected Price Indexes suggest weakening in some of the more volatile inflation components, while survey measures of cost pressures and pricing intentions have continued to decline.
• Non-performing bank loans and corporate insolvencies have increased from low levels in line with declining economic activity while bank credit growth also remains very subdued, in line with weakness in the domestic economy and low business and consumer confidence.
• Next meeting is on 14 August 2024.

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?

The yen continues to strengthen steadily with USD/JPY now falling under the 153-level. This currency pair continued to slide lower towards 152.50 as Asian markets came online – these are the support and resistance levels for today.

Support: 152.00

Resistance: 154.00

Central Bank Notes:

• The Bank considers that the policy framework of Quantitative and Qualitative Monetary Easing (QQE) with Yield Curve Control and the negative interest rate policy to date have fulfilled their roles. With the price stability target of 2%, it will conduct monetary policy as appropriate, guiding the short-term interest rate as a primary policy tool.
• The Bank of Japan decided on the following measures:
  1. The Bank will encourage the uncollateralized overnight call rate to remain at around 0 to 0.1% while continuing its Japanese government bonds (JGB) purchases in accordance with the decisions made at the March 2024 MPM.
  2. The Bank decided, by an 8-1 majority vote, that it would reduce its purchase amount of JGBs thereafter to ensure that long-term interest rates would be formed more freely in financial markets.
• 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.
• In the second half of the projection period of the April 2024 Outlook for Economic Activity and Prices (Outlook Report), it is likely to be at a level that is generally consistent with the price stability target of 2%.
• The year-on-year rate of increase in the CPI (all items less fresh food), has been in the range of 2.0-2.5% recently, as services prices have continued to rise moderately, reflecting factors such as wage increases, although the effects of a pass-through to consumer prices of cost increases led by the past rise in import prices have waned. Inflation expectations have risen moderately.
• Japan’s economy has recovered moderately, although some weakness has been seen in part while is likely to keep growing at a pace above its potential growth rate, with overseas economies continuing to grow moderately and as a virtuous cycle from income to spending gradually intensifies against the background of factors such as accommodative financial conditions.
• Next meeting is on 31 July 2024.

Next 24 Hours Bias

Medium Bearish

The Euro (EUR)

Key news events today

German ifo Business Climate (8:00 am GMT)

What can we expect from EUR today?

The German ifo Business Climate deteriorated in June, led by the manufacturing and trade sectors as pessimistic expectations increased. July’s estimate of 88.9 points to a relatively unchanged business sentiment which could add some downward pressure on the Euro before the start of the European trading hours.

Central Bank Notes:

• The Governing Council today decided to keep the three key ECB interest rates unchanged in July, following a 25 basis points cut in June.
• Accordingly, the interest rate on the main refinancing operations and the interest rates on the marginal lending facility and the deposit facility will remain unchanged at 4.25%, 4.50% and 3.75% respectively.
• Monetary policy is keeping financing conditions restrictive but at the same time, domestic price pressures are still high, services inflation is elevated and headline inflation is likely to remain above the target well into next year.
• While some measures of underlying inflation ticked up in May owing to one-off factors, most measures were either stable or edged down in June.
• The incoming information indicates that the euro area economy grew in the second quarter, but likely at a slower pace than in the first quarter.
• Services continue to lead the recovery, while industrial production and goods exports have been weak – investment indicators point to muted growth in 2024, amid heightened uncertainty.
• The Eurosystem no longer reinvests all of the principal payments from maturing securities purchased under the pandemic emergency purchase programme (PEPP), reducing the PEPP portfolio by €7.5 billion per month on average and the Governing Council intends to discontinue reinvestments under the PEPP at the end of 2024.
• The Council is determined to ensure that inflation returns to its 2% medium-term target in a timely manner and will keep policy rates sufficiently restrictive for as long as necessary to achieve this aim and is not pre-committing to a particular rate path.
• Next meeting is on 12 September 2024.

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?

Demand for the greenback waned overnight as USD/CHF fell under 0.8850. This currency pair was trading around 0.8830 at the beginning of the Asia session – these are the support and resistance levels for today.

Support: 0.8820

Resistance: 0.8880

Central Bank Notes:

• The SNB eased monetary policy by lowering its key policy rate by 25 basis points for the second consecutive meeting, going from 1.50% to 1.25% in June.
• The underlying inflationary pressure has decreased again compared to the previous quarter but inflation had risen slightly since the last monetary policy assessment, and stood at 1.4% in May.
• The inflation forecast puts average annual inflation at 1.3% for 2024, 1.1% for 2025 and 1.0% for 2026, based on the assumption that the SNB policy rate is 1.25% over the entire forecast horizon.
• Swiss GDP growth was moderate in the first quarter of 2024 with the services sector continuing to expand, while manufacturing stagnated.
• Growth is likely to remain moderate in Switzerland in the coming quarters as the SNB anticipates GDP growth of around 1% this year while currently expecting growth of around 1.5% for 2025.
• Next meeting is on 26 September 2024.

Next 24 Hours Bias

Weak Bearish

The Pound (GBP)

Key news events today

No major news events.

What can we expect from GBP today?

Cable hit an overnight high of 1.2937 before retreating away from this level. This currency pair was trading around 1.2890 as Asian markets came online and is expected to edge lower as the day progresses – these are the support and resistance levels for today.

Support: 1.2855

Resistance: 1.2940

Central Bank Notes:

• The Bank of England’s Monetary Policy Committee (MPC) voted by a majority of 7-to-2 to maintain its Official Bank Rate at 5.25% for the seventh consecutive meeting.
• Two members preferred to reduce the Bank Rate by 25 basis points to 5%, an increase of one from the previous meeting.
• Twelve-month CPI inflation fell to 2.0% in May from 3.2% in March, close to the May Monetary Policy Report projection. CPI inflation is expected to rise slightly in the second half of this year, as declines in energy prices last year fall out of the annual comparison.
• Reflecting a margin of slack in the economy, CPI inflation had been projected to be 1.9% in two years’ time and 1.6% in three years.
• UK GDP appears to have grown more strongly than expected during the first half of this year. Business surveys, however, remain consistent with a slower pace of underlying growth, of around 0.25% per quarter.
• UK real GDP had increased by 0.6% in 2024 Q1, 0.2% stronger than had been expected in the May Monetary Policy Report and Bank staff now expect GDP growth of 0.5% in 2024 Q2 as a whole, stronger than the 0.2% rate that had been incorporated in the May Report.
• The MPC remains prepared to adjust monetary policy as warranted by economic data to return inflation to the 2% target sustainably. It will therefore continue to monitor closely indications of persistent inflationary pressures and resilience in the economy as a whole, including a range of measures of the underlying tightness of labour market conditions, wage growth and services price inflation.
• Next meeting is on 1 August 2024.

Next 24 Hours Bias

Medium Bearish

The Canadian Dollar (CAD)

Key news events today

No major news events.

What can we expect from CAD today?

As widely expected, the Bank of Canada (BoC) cut its overnight rate for the second consecutive meeting by 25 basis points (bps) to bring it down to 4.50% while continuing to normalize its balance sheet. The Governing Council noted that excess supply in the Canadian economy has aided in cooling inflation in recent months, thus warranting looser monetary policy as the Canadian labour market has shown signs of moderation. In addition, the council also anticipates CPI inflation to decrease in the second half of the year due to base effects for gasoline prices, before steadying at the 2% level in 2025.

During the press conference, BoC Governor Tiff Macklem stated that policymakers are not on a predetermined rate path and will make decisions on a meeting-by-meeting basis based on incoming data. He also added that there was a clear consensus to cut by 25 bps at this recent meeting and that balance sheet normalization has still ways to go. The Loonie has lost nearly 1.4% over the last couple of weeks as USD/CAD gained almost 200 pips thus far.

Central Bank Notes:

• The Bank of Canada reduced its target for the overnight rate by 25 basis points to 4.50% while continuing its policy of balance sheet normalization.
• Canada’s economic growth likely picked up to about 1.5% through the first half of this year and is forecasted to increase in the second half of 2024 and through 2025.
• Overall, the Bank forecasts GDP growth of 1.2% in 2024, 2.1% in 2025, and 2.4% in 2026, reflecting stronger exports and a recovery in household spending and business investment as borrowing costs ease.
• CPI inflation moderated to 2.7% in June after increasing in May as broad inflationary pressures eased.
• The Bank’s preferred measures of core inflation have been below 3% for several months and the breadth of price increases across components of the CPI is now near its historical norm but shelter price inflation remains high, driven by rent and mortgage interest costs, and is still the biggest contributor to total inflation.
• These preferred measures of core inflation are expected to slow to about 2.5% in the second half of 2024 and ease gradually through 2025 and CPI inflation is expected to come down below core inflation in the second half of this year, largely because of base year effects on gasoline prices.
• There are signs of slack in the labour market with the unemployment rate rising to 6.4%, as employment continues to grow more slowly than the labour force and job seekers taking longer to find work. Wage growth is showing some signs of moderation, but remains elevated.
• The Governing Council’s future monetary policy decisions will be guided by incoming information and assessment of their implications for the inflation outlook.
• Recent data has increased the council’s confidence that inflation will continue to move towards the 2% target. Nonetheless, risks to the inflation outlook remain.
• Next meeting is on 4 September 2024.

Next 24 Hours Bias

Strong Bullish

Oil

Key news events today

No major news events.

What can we expect from Oil today?

The EIA crude oil inventories experienced a much higher-than-anticipated drawdown for the fourth week in a row as 3.74M barrels of crude were removed from storage to highlight the improved U.S. demand for oil. However, prices remain under pressure due to concerns over weak demand from China and potential ceasefire talks in the Middle East. WTI oil tumbled under $78.50 per barrel overnight and looks set to drift lower as the day progresses.

Next 24 Hours Bias

Medium Bearish

The post IC Markets Europe Fundamental Forecast | 25 July 2024 first appeared on IC Markets | Official Blog.

DXY (US Dollar Index):

Potential Direction: Bearish
Overall momentum of the chart: Bearish

Price could potentially make a bearish reaction off pivot and drop to 1st support.

Pivot: 104.47
Supporting reasons: Identified as a pullback resistance level, specifically at the 38.20% Fibonacci Retracement, indicating a potential area where sellers could enter the market after a retracement.

1st support: 103.70
Supporting reasons: Identified as a multi-swing low support level, suggesting a significant area where previous declines have found support.

1st resistance: 105.16
Supporting reasons: Identified as an overlap resistance level, indicating a potential area where sellers could enter the market after a retracement.

EUR/USD:

Potential Direction: Bearish
Overall momentum of the chart: Bearish

Factors contributing to the momentum: Price is below the bearish Ichimoku cloud

Price could potentially make a bearish continuation towards 1st support.

Pivot: 1.0856
Supporting reasons: Identified as an overlap resistance level, indicating a potential area where sellers could enter the market after a retracement.

1st support: 1.0768
Supporting reasons: Identified as a pullback support level, specifically at the 61.80% Fibonacci Retracement, suggesting a significant area where previous declines have found support.

1st resistance: 1.0913
Supporting reasons: Identified as a pullback resistance level, indicating a historical point where previous rallies have faced selling pressure or reversed.

EUR/JPY:

Potential Direction: Bearish
Overall momentum of the chart: Bearish

Factors contributing to the momentum: Price is below the bearish Ichimoku cloud

Price could potentially make a bearish continuation towards 1st support.

Pivot: 167.35
Supporting reasons: Identified as a pullback resistance level, indicating a potential area where sellers could enter the market after a retracement.

1st support: 163.99
Supporting reasons: Identified as a swing low support level, suggesting a significant area where previous declines have found support.

1st resistance: 169.96
Supporting reasons: Identified as a pullback resistance level, indicating a historical point where previous rallies have faced selling pressure or reversed.

EUR/GBP:

Potential Direction: Bearish
Overall momentum of the chart: Bearish

Price could potentially make a bearish reaction off pivot and drop to 1st support.

Pivot: 0.8435
Supporting reasons: Identified as an overlap resistance level, specifically at the 50% Fibonacci Retracement, indicating a potential area where sellers could enter the market after a retracement.

1st support: 0.8387
Supporting reasons: Identified as a multi-swing low support level, suggesting a significant area where previous declines have found support.

1st resistance: 0.8476
Supporting reasons: Identified as an overlap resistance level, specifically at the 78.60% Fibonacci Retracement, indicating a historical point where previous rallies have faced selling pressure or reversed.

GBP/USD:

Potential Direction: Bullish
Overall momentum of the chart: Bearish

Price could potentially make a bullish bounce off pivot and head towards 1st resistance.

Pivot: 1.2854
Supporting reasons: Identified as a pullback support level, specifically at the 61.80% Fibonacci Projection, indicating a potential area where buyers could enter the market after a retracement.

1st support: 1.2778
Supporting reasons: Identified as an overlap support level, specifically at the 61.80% Fibonacci Retracement, suggesting a significant area where previous declines have found support.

1st resistance: 1.2934
Supporting reasons: Identified as an overlap resistance level, indicating a historical point where previous rallies have faced selling pressure or reversed.

GBP/JPY:

Potential Direction: Bullish
Overall momentum of the chart: Bearish

Price could potentially make a bullish bounce off pivot and head towards 1st resistance.

Pivot: 197.16
Supporting reasons: Identified as an overlap support level, indicating a potential area where buyers could enter the market after a retracement.

1st support: 193.40
Supporting reasons: Identified as an overlap support level, suggesting a significant area where previous declines have found support.

1st resistance: 201.29
Supporting reasons: Identified as a pullback resistance level, indicating a historical point where previous rallies have faced selling pressure or reversed.

USD/CHF:

Potential Direction: Bullish
Overall momentum of the chart: Bearish

Price could potentially make a bullish bounce off pivot and head towards 1st resistance.

Pivot: 0.8837
Supporting reasons: Identified as a multi-swing high resistance level, indicating a potential area where buyers could enter the market after a retracement.

1st support: 0.8779
Supporting reasons: Identified as a pullback support level, suggesting a significant area where previous declines have found support.

1st resistance: 0.8899
Supporting reasons: Identified as a pullback resistance level, specifically at the 78.60% Fibonacci Retracement, indicating a historical point where previous rallies have faced selling pressure or reversed.

USD/JPY:

Potential Direction: Bearish
Overall momentum of the chart: Bearish

Price could potentially make a bearish reaction off pivot and drop to 1st support.

Pivot: 153.63
Supporting reasons: Identified as a pullback resistance level, indicating a potential area where sellers could enter the market after a retracement.

1st support: 151.92
Supporting reasons: Identified as a swing low support level, suggesting a significant area where previous declines have found support.

1st resistance: 155.31
Supporting reasons: Identified as a pullback resistance level, indicating a historical point where previous rallies have faced selling pressure or reversed.

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: 1.3832
Supporting reasons: Identified as a multi-swing-high resistance, indicating a significant area where selling pressures could intensify.

1st support: 1.3779
Supporting reasons: Identified as an overlap support, indicating a potential area where price could find support.

1st resistance: 1.3888
Supporting reasons: Identified as a 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 break through the pivot and could potentially fall towards the 1st support.

Pivot: 0.6562
Supporting reasons: Previously identified as a swing-low support which now has been broken due to the strong bearish momentum. The presence of a bearish Ichimoku cloud adds further significance to the downside momentum.

1st support: 0.6529
Supporting reasons: Identified as a pullback support that aligns with a 161.8% Fibonacci extension level, suggesting a potential area where price could find strong support.

1st resistance: 0.6585
Supporting reasons: Identified as a pullback resistance, indicating a significant area that could halt further upward movement.

NZD/USD

Potential Direction: Bullish
Overall momentum of the chart: Bearish

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

Pivot: 0.5883
Supporting reasons: Identified as a swing-low support, indicating a potential zone where buying interests could pick up to stage a minor rebound.

1st support: 0.5779
Supporting reasons: Identified as a pullback support, suggesting a significant area that could halt further downward momentum.

1st resistance: 0.5948
Supporting reasons: Identified as a pullback resistance, indicating a significant area that could halt further upward movement. The presence of a bearish Ichimoku clouds adds further significance to the overhead pressures.

US30 (DJIA):

Potential Direction: Bullish

Overall Momentum of the Chart: Bearish

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

Pivot: 39,607.55
Supporting reasons: Identified as an overlap support that aligns with a 78.6% Fibonacci retracement level, indicating a potential area where buying interests could pick up to stage a minor rebound.

1st Support: 38,980.78

Supporting Reasons: Identified as a pullback support, suggesting a significant area where price could find strong support.

1st Resistance: 40,4677.11

Supporting Reasons: Identified as a pullback resistance that aligns close to a 50% Fibonacci retracement level, indicating a significant area that could halt further upward movement.

DE40 (DAX):

Potential Direction: Bearish

Overall Momentum of the Chart: Bearish

Price could fall towards the pivot and potentially make a bearish break below this level to fall towards the 1st support.

Pivot: 18,323.60
Supporting reasons: Identified as a potential breakout level, indicating an area where the strong bearish momentum could drive the price lower from here.

1st Support: 18,168.28

Supporting Reasons: Identified as a swing-low support, indicating a significant area where price could find strong support.

1st Resistance: 18,505.94

Supporting Reasons: Identified as an overlap resistance, indicating a significant area that could halt further upward movement.

US500 (S&P 500): 

Potential Direction: Bullish

Overall momentum of the chart: Bearish

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

Pivot: 5,408.81
Supporting reasons: Identified as a pullback support that aligns with a confluence of Fibonacci levels i.e. the 50% retracement and the 100% projection levels, indicating a potential area where buying interests could pick up to stage a minor rebound.

1st support: 5,339.76

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

1st resistance: 5,503.91

Supporting reasons: Identified as an overlap resistance that aligns close to a 38.2% Fibonacci retracement level, suggesting a critical area that could halt further upward movement.

BTC/USD (Bitcoin):

Potential Direction: Bullish

Overall momentum of the chart: Neutral

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

Pivot: 63,507.86

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

1st support: 59,546.99

Supporting reasons: Identified as an overlap support that aligns close to a 61.8% Fibonacci retracement level, indicating a significant area that could halt further downward movement.

1st resistance: 66,374.96

Supporting reasons: Identified as a pullback resistance, indicating a potential barrier that could halt further upward movement.

ETH/USD (Ethereum):

Potential Direction: Bearish

Overall momentum of the chart: Bearish

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

Pivot: 3,276.36

Supporting reasons: Previously identified as a pullback support which now has been broken due to the strong bearish momentum.

1st Support: 3,052.53

Supporting Reasons: Identified as an overlap support that aligns close to a 61.8% Fibonacci retracement level, indicating a significant area that could halt further downward movement.

1st Resistance: 3,377.15

Supporting Reasons: Identified as a pullback resistance, indicating a historical barrier where selling pressures could intensify.

WTI/USD (Oil):

Potential Direction: Bullish

Overall Momentum of the Chart: Bearish

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

Pivot: 77.53

Supporting Reasons: Identified as a pullback support that aligns close to a 61.8% Fibonacci retracement level, indicating a potential area where buying interests could pick up to stage a minor rebound.

1st Support: 75.45

Supporting Reasons: Identified as a pullback support that aligns with a 78.6% Fibonacci retracement level, indicating a significant area where price could find strong support.

1st Resistance: 79.24

Supporting Reasons: Identified as an overlap resistance that aligns with a 23.6% Fibonacci retracement level, indicating a potential barrier that could halt further upward movement. The presence of a bearish Ichimoku cloud adds further significance to the bearish momentum.

XAU/USD (GOLD):

Potential Direction: Bearish
Overall momentum of the chart: Bearish

Price could potentially make a bearish reaction off pivot and drop to 1st support.

Pivot: 2391.29
Supporting reasons: Identified as a pullback resistance level, indicating a potential area where sellers could enter the market after a retracement.

1st support: 2361.72
Supporting reasons: Identified as an overlap support level, specifically at the 161.80% Fibonacci Extension and 78.60% Fibonacci Retracement, indicating Fibonacci confluence and suggesting a significant area where previous declines have found support.

1st resistance: 2423.81
Supporting reasons: Identified as an overlap resistance level, indicating a historical point where previous rallies have faced selling pressure or reversed.

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The post Thursday 25th July 2024: Technical Outlook and Review first appeared on IC Markets | Official Blog.

IC Markets Asia Fundamental Forecast | 25 July 2024

What happened in the U.S. session?

As widely expected, the Bank of Canada (BoC) cut its overnight rate for the second consecutive meeting by 25 basis points (bps) to bring it down to 4.50% while continuing to normalize its balance sheet. The Governing Council noted that excess supply in the Canadian economy has aided in cooling inflation in recent months, thus warranting looser monetary policy as the Canadian labour market has shown signs of moderation. In addition, the council also anticipates CPI inflation to decrease in the second half of the year due to base effects for gasoline prices, before steadying at the 2% level in 2025.

During the press conference, BoC Governor Tiff Macklem stated that policymakers are not on a predetermined rate path and will make decisions on a meeting-by-meeting basis based on incoming data. He also added that there was a clear consensus to cut by 25 bps at this recent meeting and that balance sheet normalization has still ways to go. The Loonie has lost nearly 1.4% over the last couple of weeks as USD/CAD gained almost 200 pips thus far.

What does it mean for the Asia Session?

As Asian traders digest the latest moves by the BoC, the Loonie remains under intense selling pressures causing USD/CAD to surge past the 1.3800-level – this currency pair was trading around 1.3820 this morning.

The Dollar Index (DXY)

Key news events today

GDP (12:30 pm GMT)

Employment Claims (12:30 pm GMT)

What can we expect from DXY today?

The advance estimate for second quarter GDP is now expected to show economic activity growing 2.0%, higher than the previous estimate of 1.4%. GDP estimates for the second quarter have been mixed thus far but as more data becomes available, growth appears to be converging around 2% for this period. Meanwhile, unemployment claims remain elevated with the 4-week average now standing at 234K. Last week’s reading came in at 243K while the latest estimate of 237K points to another elevated reading. Should claims come in higher than expected once more, it could cause the dollar to come under pressure as this labour metric shows some signs of softness in the U.S. labour market.

Central Bank Notes:

• The Federal Funds Rate target range remained unchanged at 5.25% to 5.50% for the seventh meeting in a row.
• 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 have moved toward better balance over the past year.
• The economic outlook is uncertain, and the Committee remains highly attentive to inflation risks. Inflation has eased over the past year but remains elevated and in recent months, there has been modest further progress toward the Committee’s 2% inflation objective.
• Recent indicators suggest that economic activity has continued to expand at a solid pace while job gains have remained strong, and the unemployment rate has remained low.
• 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 and does not expect it will be appropriate to reduce the target range until it has gained greater confidence that inflation is moving sustainably toward 2%.
• 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 will slow the pace of decline of its securities holdings by reducing the monthly redemption cap on Treasury securities from $60 billion to $25 billion.
• The Committee will maintain the monthly redemption cap on agency debt and agency mortgage-backed securities at $35 billion and will reinvest any principal payments in excess of this cap into Treasury securities.
• Next meeting runs from 30 to 31 July 2024.

Next 24 Hours Bias

Weak Bearish

Gold (XAU)

Key news events today

GDP (12:30 pm GMT)

Employment Claims (12:30 pm GMT)

What can we expect from Gold today?

The advance estimate for second quarter GDP is now expected to show economic activity growing 2.0%, higher than the previous estimate of 1.4%. GDP estimates for the second quarter have been mixed thus far but as more data becomes available, growth appears to be converging around 2% for this period. Meanwhile, unemployment claims remain elevated with the 4-week average now standing at 234K. Last week’s reading came in at 243K while the latest estimate of 237K points to another elevated reading. Should claims come in higher than expected once more, it could cause the dollar to come under pressure as this labour metric shows some signs of softness in the U.S. labour market.

Next 24 Hours Bias

Medium Bearish

The Australian Dollar (AUD)

Key news events today

No major news events.

What can we expect from AUD today?

The Aussie remained in freefall as it tumbled under the threshold of 0.6600. This currency pair continued to slide lower towards 0.6550 as Asian markets came online – these are the support and resistance levels for today.

Support: 0.6530

Resistance: 0.6600

Central Bank Notes:

• The RBA kept the cash rate target unchanged at 4.35%, marking the ninth pause out of the last ten board meetings.
• Over the year to April, the monthly CPI indicator rose by 3.6% in headline terms, and by 4.1% excluding volatile items and holiday travel, which was similar to its pace in December 2023.
• The central forecasts published in May were for inflation to return to the target range of 2–3% in the second half of 2025 and to the midpoint in 2026 while there have been indications that momentum in economic activity is weak, including slow growth in GDP, a rise in the unemployment rate and slower-than-expected wages growth.
• Inflation is easing but has been doing so more slowly than previously expected and it remains high and the Board expects that it will be some time yet before inflation is sustainably in the target range.
• The path of interest rates that will best ensure that inflation returns to target in a reasonable timeframe remains uncertain and the Board is not ruling anything in or out.
• Next meeting is on 6 August 2024.

Next 24 Hours Bias

Strong Bearish

The Kiwi Dollar (NZD)

Key news events today

No major news events.

What can we expect from NZD today?

Stronger demand for the dollar drove the Kiwi under 0.5950 overnight. This currency pair continued to slide lower towards 0.5900 at the beginning of the Asia session – these are the support and resistance levels for today.

Support: 0.5880

Resistance: 0.5950

Central Bank Notes:

• The Monetary Policy Committee kept the OCR unchanged at 5.50% for the eighth meeting in a row and agreed that restrictive monetary policy is reducing domestic demand and consumer price inflation.
• The Committee is confident that inflation will return to within its 1-3% target range over the second half of 2024.
• The decline in inflation reflects receding domestic pricing pressures, as well as lower inflation for goods and services imported into New Zealand while recent monthly Selected Price Indexes suggest weakening in some of the more volatile inflation components, while survey measures of cost pressures and pricing intentions have continued to decline.
• Non-performing bank loans and corporate insolvencies have increased from low levels in line with declining economic activity while bank credit growth also remains very subdued, in line with weakness in the domestic economy and low business and consumer confidence.
• Next meeting is on 14 August 2024.

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?

The yen continues to strengthen steadily with USD/JPY now falling under the 153-level. This currency pair continued to slide lower towards 152.50 as Asian markets came online – these are the support and resistance levels for today.

Support: 152.00

Resistance: 154.00

Central Bank Notes:

• The Bank considers that the policy framework of Quantitative and Qualitative Monetary Easing (QQE) with Yield Curve Control and the negative interest rate policy to date have fulfilled their roles. With the price stability target of 2%, it will conduct monetary policy as appropriate, guiding the short-term interest rate as a primary policy tool.
• The Bank of Japan decided on the following measures:
  1. The Bank will encourage the uncollateralized overnight call rate to remain at around 0 to 0.1% while continuing its Japanese government bonds (JGB) purchases in accordance with the decisions made at the March 2024 MPM.
  2. The Bank decided, by an 8-1 majority vote, that it would reduce its purchase amount of JGBs thereafter to ensure that long-term interest rates would be formed more freely in financial markets.
• 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.
• In the second half of the projection period of the April 2024 Outlook for Economic Activity and Prices (Outlook Report), it is likely to be at a level that is generally consistent with the price stability target of 2%.
• The year-on-year rate of increase in the CPI (all items less fresh food), has been in the range of 2.0-2.5% recently, as services prices have continued to rise moderately, reflecting factors such as wage increases, although the effects of a pass-through to consumer prices of cost increases led by the past rise in import prices have waned. Inflation expectations have risen moderately.
• Japan’s economy has recovered moderately, although some weakness has been seen in part while is likely to keep growing at a pace above its potential growth rate, with overseas economies continuing to grow moderately and as a virtuous cycle from income to spending gradually intensifies against the background of factors such as accommodative financial conditions.
• Next meeting is on 31 July 2024.

Next 24 Hours Bias

Medium Bearish

The Euro (EUR)

Key news events today

German ifo Business Climate (8:00 am GMT)

What can we expect from EUR today?

The German ifo Business Climate deteriorated in June, led by the manufacturing and trade sectors as pessimistic expectations increased. July’s estimate of 88.9 points to a relatively unchanged business sentiment which could add some downward pressure on the Euro before the start of the European trading hours.

Central Bank Notes:

• The Governing Council today decided to keep the three key ECB interest rates unchanged in July, following a 25 basis points cut in June.
• Accordingly, the interest rate on the main refinancing operations and the interest rates on the marginal lending facility and the deposit facility will remain unchanged at 4.25%, 4.50% and 3.75% respectively.
• Monetary policy is keeping financing conditions restrictive but at the same time, domestic price pressures are still high, services inflation is elevated and headline inflation is likely to remain above the target well into next year.
• While some measures of underlying inflation ticked up in May owing to one-off factors, most measures were either stable or edged down in June.
• The incoming information indicates that the euro area economy grew in the second quarter, but likely at a slower pace than in the first quarter.
• Services continue to lead the recovery, while industrial production and goods exports have been weak – investment indicators point to muted growth in 2024, amid heightened uncertainty.
• The Eurosystem no longer reinvests all of the principal payments from maturing securities purchased under the pandemic emergency purchase programme (PEPP), reducing the PEPP portfolio by €7.5 billion per month on average and the Governing Council intends to discontinue reinvestments under the PEPP at the end of 2024.
• The Council is determined to ensure that inflation returns to its 2% medium-term target in a timely manner and will keep policy rates sufficiently restrictive for as long as necessary to achieve this aim and is not pre-committing to a particular rate path.
• Next meeting is on 12 September 2024.

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?

Demand for the greenback waned overnight as USD/CHF fell under 0.8850. This currency pair was trading around 0.8830 at the beginning of the Asia session – these are the support and resistance levels for today.

Support: 0.8820

Resistance: 0.8880

Central Bank Notes:

• The SNB eased monetary policy by lowering its key policy rate by 25 basis points for the second consecutive meeting, going from 1.50% to 1.25% in June.
• The underlying inflationary pressure has decreased again compared to the previous quarter but inflation had risen slightly since the last monetary policy assessment, and stood at 1.4% in May.
• The inflation forecast puts average annual inflation at 1.3% for 2024, 1.1% for 2025 and 1.0% for 2026, based on the assumption that the SNB policy rate is 1.25% over the entire forecast horizon.
• Swiss GDP growth was moderate in the first quarter of 2024 with the services sector continuing to expand, while manufacturing stagnated.
• Growth is likely to remain moderate in Switzerland in the coming quarters as the SNB anticipates GDP growth of around 1% this year while currently expecting growth of around 1.5% for 2025.
• Next meeting is on 26 September 2024.

Next 24 Hours Bias

Weak Bearish

The Pound (GBP)

Key news events today

No major news events.

What can we expect from GBP today?

Cable hit an overnight high of 1.2937 before retreating away from this level. This currency pair was trading around 1.2890 as Asian markets came online and is expected to edge lower as the day progresses – these are the support and resistance levels for today.

Support: 1.2855

Resistance: 1.2940

Central Bank Notes:

• The Bank of England’s Monetary Policy Committee (MPC) voted by a majority of 7-to-2 to maintain its Official Bank Rate at 5.25% for the seventh consecutive meeting.
• Two members preferred to reduce the Bank Rate by 25 basis points to 5%, an increase of one from the previous meeting.
• Twelve-month CPI inflation fell to 2.0% in May from 3.2% in March, close to the May Monetary Policy Report projection. CPI inflation is expected to rise slightly in the second half of this year, as declines in energy prices last year fall out of the annual comparison.
• Reflecting a margin of slack in the economy, CPI inflation had been projected to be 1.9% in two years’ time and 1.6% in three years.
• UK GDP appears to have grown more strongly than expected during the first half of this year. Business surveys, however, remain consistent with a slower pace of underlying growth, of around 0.25% per quarter.
• UK real GDP had increased by 0.6% in 2024 Q1, 0.2% stronger than had been expected in the May Monetary Policy Report and Bank staff now expect GDP growth of 0.5% in 2024 Q2 as a whole, stronger than the 0.2% rate that had been incorporated in the May Report.
• The MPC remains prepared to adjust monetary policy as warranted by economic data to return inflation to the 2% target sustainably. It will therefore continue to monitor closely indications of persistent inflationary pressures and resilience in the economy as a whole, including a range of measures of the underlying tightness of labour market conditions, wage growth and services price inflation.
• Next meeting is on 1 August 2024.

Next 24 Hours Bias

Medium Bearish

The Canadian Dollar (CAD)

Key news events today

No major news events.

What can we expect from CAD today?

As widely expected, the Bank of Canada (BoC) cut its overnight rate for the second consecutive meeting by 25 basis points (bps) to bring it down to 4.50% while continuing to normalize its balance sheet. The Governing Council noted that excess supply in the Canadian economy has aided in cooling inflation in recent months, thus warranting looser monetary policy as the Canadian labour market has shown signs of moderation. In addition, the council also anticipates CPI inflation to decrease in the second half of the year due to base effects for gasoline prices, before steadying at the 2% level in 2025.

During the press conference, BoC Governor Tiff Macklem stated that policymakers are not on a predetermined rate path and will make decisions on a meeting-by-meeting basis based on incoming data. He also added that there was a clear consensus to cut by 25 bps at this recent meeting and that balance sheet normalization has still ways to go. The Loonie has lost nearly 1.4% over the last couple of weeks as USD/CAD gained almost 200 pips thus far.

Central Bank Notes:

• The Bank of Canada reduced its target for the overnight rate by 25 basis points to 4.50% while continuing its policy of balance sheet normalization.
• Canada’s economic growth likely picked up to about 1.5% through the first half of this year and is forecasted to increase in the second half of 2024 and through 2025.
• Overall, the Bank forecasts GDP growth of 1.2% in 2024, 2.1% in 2025, and 2.4% in 2026, reflecting stronger exports and a recovery in household spending and business investment as borrowing costs ease.
• CPI inflation moderated to 2.7% in June after increasing in May as broad inflationary pressures eased.
• The Bank’s preferred measures of core inflation have been below 3% for several months and the breadth of price increases across components of the CPI is now near its historical norm but shelter price inflation remains high, driven by rent and mortgage interest costs, and is still the biggest contributor to total inflation.
• These preferred measures of core inflation are expected to slow to about 2.5% in the second half of 2024 and ease gradually through 2025 and CPI inflation is expected to come down below core inflation in the second half of this year, largely because of base year effects on gasoline prices.
• There are signs of slack in the labour market with the unemployment rate rising to 6.4%, as employment continues to grow more slowly than the labour force and job seekers taking longer to find work. Wage growth is showing some signs of moderation, but remains elevated.
• The Governing Council’s future monetary policy decisions will be guided by incoming information and assessment of their implications for the inflation outlook.
• Recent data has increased the council’s confidence that inflation will continue to move towards the 2% target. Nonetheless, risks to the inflation outlook remain.
• Next meeting is on 4 September 2024.

Next 24 Hours Bias

Strong Bullish

Oil

Key news events today

No major news events.

What can we expect from Oil today?

The EIA crude oil inventories experienced a much higher-than-anticipated drawdown for the fourth week in a row as 3.74M barrels of crude were removed from storage to highlight the improved U.S. demand for oil. However, prices remain under pressure due to concerns over weak demand from China and potential ceasefire talks in the Middle East. WTI oil tumbled under $78.50 per barrel overnight and looks set to drift lower as the day progresses.

Next 24 Hours Bias

Medium Bearish

The post IC Markets Asia Fundamental Forecast | 25 July 2024 first appeared on IC Markets | Official Blog.

Wall Street Smashed – Nasdaq Down Over 3.5%

US stock indices were smashed in trading yesterday as investors pulled out of the tech and AI stocks that have sustained them over the past year. Disappointing earnings numbers from Telsa and Alphabet started the rout yesterday but momentum took over and the Nasdaq lost over $1 trillion in market capitalization, closing down 3.64% on the day, followed by the S&P which lost 2.31% and the Dow which closed, off 1.24%. US treasuries had an interesting day as the 2-year/10-year gap came into levels not seen since October 2023, the 2-year dropping 3.5 basis points to 4.410% whilst the 10-year gained 3.9 basis points to trade up to 4.278%. Oil prices had a bit of a reprieve as US stocks again dipped, Brent up 0.9% to $81.71 and WTI up 0.8% to $77.59 a barrel and Gold ultimately closed close to flat at $2,411 after earlier rallying to as high as $2,431 an ounce.

Yen Flying Again – Targeting 150 against the Dollar

The Yen had another stellar day in trading yesterday as it pushed higher again across the board. Traders are abandoning carry trades at an alarming rate which could signify that there are some people in the market that have a deeper insight into next week’s Bank of Japan meeting. Risk sentiment has taken a significant dent overnight as well and this tends to favour Yen buying. There is no doubt that large stop loss orders are being triggered on the way down against the dollar and other currencies, UsdJpy is now trading just above 153 and has already broken through a number of significant support levels. The next key support if the 200 Day Moving Average on the Daily chart which comes in around 151.50 and a break there opens the way to the key psychological level at 150 which is also close to a long term trendline support. Once again traders will be looking to sell into any rallies in the next few sessions until we get a change in the underlying sentiment.

Volatility High for Traders Today

Traders are bracing for yet more volatility in the sessions ahead as risk sentiment continues to decline at an alarming rate after a very poor day on Wall Street. Asian markets have little on the economic event calendar to interrupt that momentum and the same can be said for the European session with just the German IFO Business Climate data due out once London opens. There is a raft of data due out in the US today, which should grab investors’ attention, at least over the releases, with the usual weekly unemployment claims data being released alongside the quarterly Advance GDP and Durable Goods numbers. We are also due to hear from ECB President Christine LaGarde later in the day.

The post General Market Analysis 25/07/2024 first appeared on IC Markets | Official Blog.

Canadian dollar traders are preparing for a busy final session to the trading day today as the Bank of Canada is due to release its latest rate call with the market fully expecting to see a second consecutive 25 basis point cut from the central bank. Data has been pulling back hard in Canada and last week’s CPI number probably locked in today’s rate cut as it came in nicely below expectations on both the month-on-month and year-on-year print. Retail Sales numbers on Friday confirmed the slowing economy with the Core number coming it at -1.3% against an expect 0.5% decrease.

The Cad has depreciated hard against the greenback over the last couple of weeks with the dollar gaining around 1.3% against its northern neighbour and it is now sitting near significant resistance levels on both the Hourly and Daily charts which should provide good trading opportunities on the announcement, statement, and subsequent press conference. Resistance is now sitting just under 1.3820 with further resistance at the yearly high just 25 pips higher.  Support comes in initially around 1.3700, however unless there is a much more hawkish than expected turn from the bank then expect the current trend to provide good buying opportunities on any dip.

Resistance 2 : 1.3846 – 2024 High

Resistance 1 : 1.3817 – Long-term Trendline Resistance

Support 1 : 1.3698 – 200-Day Moving Average

Support 2 : 1.3615 – Long-term Trendline Support

The post Trade the Cad on the Bank of Canada Rate Decision first appeared on IC Markets | Official Blog.