• Monday, January 13th

• China: New Loans: 890B (previous: 580B)

• Tuesday, January 14th

• United States: Core PPI m/m: 0.2% (previous: 0.2%)

• United States: PPI m/m: 0.4% (previous: 0.4%)

• Wednesday, January 15th

• UK: CPI y/y: 2.6% (previous: 2.6%)

• United States: Core CPI m/m: 0.2% (previous: 0.3%)

• United States: CPI m/m: 0.3% (previous: 0.3%)

• United States: CPI y/y: 2.9% (previous: 2.7%)

• United States: Empire State Manufacturing Index: -0.3 (previous: 0.2)

• Thursday, January 16th

• Australia Employment Change: 14.5K (previous: 35.6K)

• Australia: Employment Change: 4.0% (previous: 3.9%)

• UK GDP MoM: 0.2% (previous: -0.1%)

• United States: Core Retail Sales m/m: 0.5% (previous: 0.2%)

• United States: Unemployment Claims: 210K (previous: 201K

• United States: Philly Fed Manufacturing Index: -7.0 (previous: -16.4)

• Friday, January 17th

• China: GDP q/y: 5.0% (previous: 4.6%)

• China: Industrial Production y/y: 5.4% (previous: 5.4%)

• China: Retail Sales y/y: 3.5% (previous: 3.0%)

• UK Retail Sales 0.4% (previous 0.2%)

• United States: Building Permits: 1.46M (previous: 1.49M)

In addition to the above, the earnings calendar restarts (they should require all companies announce earnings in the same week)

Wednesday

CitibanKWells FargoBlack RockBank New York

Thursday:

TSMCUnitedHealthGoldman SachsBank of AmericaMorgan StanleyUS BancorpPNC

This article was written by Greg Michalowski at www.forexlive.com.

DXY (US Dollar Index):

Potential Direction: Bearish
Overall momentum of the chart: Bullish

Price could potentially make a bearish reversal off the pivot to fall towards the 1st support.

Pivot: 110.06
Supporting reasons: Identified as a pullback resistance that aligns close to the 127.2% Fibonacci extension and 61.8% Fibonacci projection, indicating a potential area where selling pressures could intensify.

1st support: 108.07
Supporting reasons: Identified as an overlap support, indicating a potential level where price could find support once more.

1st resistance: 111.73
Supporting reasons: Identified as a swing-high resistance, indicating a potential area that could halt any further upward movement.

EUR/USD:

Potential Direction: Bullish

Overall momentum of the chart: Bearish

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

Pivot: 1.0185
Supporting reasons: Identified as a pullback support that aligns close to the 127.2% Fibonacci extension, indicating a potential area where buying interests could pick up to resume the uptrend.

1st support: 1.0092

Supporting reasons: Identified as a support that aligns with the 161.8% Fibonacci extension, indicating a potential level where price could find support once again.

1st resistance: 1.0340
Supporting reasons:  Identified as a pullback resistance, indicating a potential area that could halt any further upward movement.

EUR/JPY:

Potential Direction: Bearish
Overall momentum of the chart: Bearish

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

Pivot: 161.39
Supporting reasons: Identified as a pullback resistance, indicating a potential area where selling pressures could intensify.

1st support: 157.91

Supporting reasons: Identified as a pullback support that aligns with the 78.6% Fibonacci retracement, indicating a potential level where price could find support.

1st resistance: 165.23
Supporting reasons: Identified as an overlap resistance, indicating a potential area that could halt any further upward movement.

EUR/GBP:

Potential Direction: Bullish

Overall momentum of the chart: Bullish

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

Pivot: 0.8361
Supporting reasons: Identified as a pullback support, indicating a potential area where buying interests could pick up to resume the uptrend.

1st support: 0.8263

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

1st resistance: 0.8490
Supporting reasons: Identified as a pullback resistance that aligns close to the 61.8% Fibonacci retracement and 161.8% FIbonacci extension, indicating a potential area that could halt any further upward movement.

GBP/USD:

Potential Direction: Bullish

Overall momentum of the chart: Bearish

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

Pivot: 0.8361
Supporting reasons: Identified as a swing low support that aligns with the 78.6% Fibonacci projection, indicating a potential area where buying interests could pick up to resume the uptrend.

1st support: 1.1867

Supporting reasons: Identified as a support that aligns with the 100% Fibonacci projection, indicating a potential level where price could stabilize once more.

1st resistance: 1.2321
Supporting reasons: Identified as a pullback resistance, indicating a potential area that could halt any further upward movement.

GBP/JPY:

Potential Direction: Bearish
Overall momentum of the chart: Bearish

Price could potentially make a bearish reversal off the pivot to fall towards the 1st support.

Pivot: 194.49
Supporting reasons: Identified as a pullback resistance, indicating a potential area where selling pressures could intensify.

1st support: 188.23
Supporting reasons: Identified as an overlap support that aligns close to the 78.6% Fibonacci retracement, indicating a potential level where price could find support.

1st resistance: 199.50
Supporting reasons: Identified as a multi-swing-high resistance, indicating a potential area that could halt any further upward movement.

USD/CHF:

Potential Direction: Bearish

Overall momentum of the chart: Bullish

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

Pivot: 0.9197
Supporting reasons: Identified as a swing high resistance that aligns with the 161.8% Fibonacci extension, indicating a potential area where selling pressures could intensify.

1st support: 0.9039
Supporting reasons: Identified as an overlap support, indicating a potential level where price could find support once again.

1st resistance: 0.9366
Supporting reasons: Identified as a swing-high resistance, indicating a potential area that could halt any further upward movement.

USD/JPY:

Potential Direction: Bullish

Overall momentum of the chart: Bullish

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

Pivot: 156.29
Supporting reasons: Identified as an overlap support, indicating a potential area where buying interests could pick up to resume the uptrend.

1st support: 153.44
Supporting reasons: Identified as an overlap support, indicating a potential level where price could find support once more.

1st resistance: 160.25
Supporting reasons: Identified as a pullback resistance, indicating a potential area that could halt any further upward movement.

USD/CAD:

Potential Direction: Bearish

Overall momentum of the chart: Bullish

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

Pivot: 1.4447

Supporting reasons: Identified as a multi-swing-high resistance, indicating a potential level where selling pressures could intensify.

1st support: 1.4335
Supporting reasons: Identified as a multi-swing-low support, indicating a key level where price could stabilize once more.

1st resistance: 1.4577
Supporting reasons: Identified as a resistance that aligns with a 161.8% Fibonacci extension, indicating a potential area that could halt any further upward movement.

AUD/USD:

Potential Direction: Bearish
Overall momentum of the chart: Bearish

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

Pivot: 0.6250

Supporting reasons: Identified as a pullback resistance, indicating a potential level where selling pressures could intensify. The presence of the red Ichimoku Cloud and the downward channel add further significance to the strength of the bearish momentum.

1st support: 0.6139
Supporting reasons: Identified as a swing-low support, suggesting a potential area where price could stabilize once again.

1st resistance: 0.6349
Supporting reasons: Identified as a pullback resistance that aligns close to a 23.6% Fibonacci retracement, indicating a potential area that could halt any further upward movement.

NZD/USD

Potential Direction: Bearish
Overall momentum of the chart: Bearish

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

Pivot: 0.5653

Supporting reasons: Identified as a pullback resistance, indicating a potential level where selling pressures could intensify. The presence of the red Ichimoku Cloud and the downward channel add further significance to the strength of the bearish momentum.

1st support: 0.5542
Supporting reasons: Identified as a swing-low support, suggesting a potential area where price could stabilize once more.

1st resistance: 0.5758
Supporting reasons: Identified as an overlap resistance that aligns close to a 23.6% Fibonacci retracement, indicating a potential area that could halt any further upward movement.

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: 41,604.84

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

1st support: 40,023.54

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

1st resistance: 43,330.76

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

DE40 (DAX):

Potential Direction: Bullish
Overall momentum of the chart: Neutral

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

Pivot: 19,681.50
Supporting reasons: Identified as an overlap support that aligns close to a confluence of Fibonacci levels i.e. the 23.6% and 38.2% retracements, indicating a potential area where buying interests could pick up to stage a rebound.

1st support: 18,971.60

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

1st resistance: 20,476.10
Supporting reasons: Identified as a multi-swing-high resistance that aligns close to the all-time high, indicating a potential area that could halt any further upward movement.

US500 (S&P 500): 

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: 5,673.33
Supporting reasons: Identified as an overlap support that aligns close to a confluence of Fibonacci levels i.e. the 38.2% and 61.8% retracements, indicating a potential area where buying interests could pick up to stage a rebound.

1st support: 5,385.30

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

1st resistance: 6,041.80

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

BTC/USD (Bitcoin):

Potential Direction: Bullish
Overall momentum of the chart: Neutral

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

Pivot: 91,742.32

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

1st support: 73,176.19
Supporting reasons: Identified as a pullback support that aligns close to a 61.8% Fibonacci retracement, indicating a potential level where price could stabilize once more.

1st resistance: 101,637.89
Supporting reasons: Identified as a swing-high resistance, indicating a potential area that could halt any further upward movement.

ETH/USD (Ethereum):

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: 3,085.31

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

1st support: 2,805.94
Supporting reasons: Identified as a pullback support that aligns close to a 61.8% Fibonacci retracement, indicating a potential level where price could stabilize once again.

1st resistance: 3,540.71
Supporting reasons: Identified as an overlap resistance, indicating a potential area that could halt any further upward movement.

WTI/USD (Oil):

Potential Direction: Bearish
Overall momentum of the chart: Bullish

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

Pivot: 78.08
Supporting reasons: Identified as a multi-swing-high resistance, indicating a potential area where selling pressures could intensify.

1st support: 75.96
Supporting reasons: Identified as a pullback support, indicating a key level where price could stabilize.

1st resistance: 80.66
Supporting reasons: Identified as an overlap resistance that aligns with a 78.6% Fibonacci retracement, indicating a potential area that could halt any further upward movement.

XAU/USD (GOLD):

Potential Direction: Neutral 

Overall momentum of the chart: Bullish

Price could potentially make a fluctuation between the 1st resistance and 1st support level

1st support: 2,586.95

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

1st resistance: 2,716.82

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

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The post Monday 13th January 2025: Technical Outlook and Review first appeared on IC Markets | Official Blog.

Prior to the strong US jobs report at the end of last week, traders had priced in the first rate cut for June this year. In total, market players were looking for ~42 bps going into Friday at the time. Fast forward to today and the landscape has shifted quite dramatically.

As things stand, Fed funds futures are showing just ~26 bps of rate cuts in total for the year. And that is only fully priced in by December (one can argue for September or October as it shows ~88% or ~96% odds respectively by then). But we’re only in January, so I wouldn’t be too hard pressed to attach much confidence in the exact pricing for that.

However, what stands out is that traders are now no longer confident that the Fed will cut rates in the first half of the year. And that is the key takeaway after the labour market data last week. So, what’s next?

I would argue that what the Friday data did was that it served to reaffirm the Fed communique from December. And that means pausing on rate cuts for the time being. But this is perhaps the limit as to where we’re at in terms of identifying stronger data in holding back the Fed.

The other key risk factor in play is Trump’s policies, in particular that on trade. The fear now is that with strong US data, a war on tariffs will risk stoking the inflation flames in the year(s) ahead.

Given the market pricing, I would say traders are already taking into consideration a hefty chunk of said risk. So, it’ll be over to Trump to follow through on that.

And as mentioned, we might be close to reaching a limit on that. But it is best to remember that the US economy is still the cleanest shirt among the dirty laundry. And that also counts for something that could keep fueling the dollar rally to start the year.

The tail risk to that will be Trump tariffs not living up to the hype. And we got an early taste of that last week, where the pullback can be rather sharp and squeezy. It came after this report here, which was swiftly denied by Trump after.

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

Global Markets:

•  Asian Stock Markets : Nikkei down 1.04%, Shanghai Composite down 0.44%, Hang Seng down 1.17% ASX down 1.24%
• Commodities : Gold at $2712.35 (-0.16%), Silver at $31.14 (-0.48%), Brent Oil at $81.29 (1.89%), WTI Oil at $77.36 (1.71%)
• Rates : US 10-year yield at 4.763, UK 10-year yield at 4.835, Germany 10-year yield at 2.5675

News & Data:

• (CAD) Employment Change  90.9K vs 24.9K expected
• (CAD) Unemployment Rate  6.7% vs 6.9% expected
• (USD) Non-Farm Employment Change  256K vs 164K expected
• (USD) Unemployment Rate  4.1% vs 4.2% expected

Markets Update:

Asia-Pacific markets traded lower Monday as a strong U.S. jobs report dampened hopes for early Federal Reserve rate cuts. Meanwhile, China’s December trade data surpassed expectations, with exports growing 10.7% year-on-year versus a forecasted 7.3%, and imports rising 1% against an anticipated 1.5% decline. However, China’s CSI 300 index fell 0.5%, hitting its lowest point since September 2024, as investors monitored the central bank’s suspension of government bond purchases.

China’s 10-year bond yield hit a record low, while the onshore yuan dropped to a 16-month low. Hong Kong’s Hang Seng Index slid 1.18%, falling below 19,000, its lowest since last September.

India’s markets also declined, with the Nifty 50 and BSE Sensex down 0.53% and 0.4%, respectively, ahead of the day’s inflation data. South Korea’s Kospi dropped 1.04%, and the Kosdaq fell 1.26%, while Australia’s S&P/ASX 200 lost 1.23%. Japan’s markets were closed for a holiday.

This week, key updates include the Bank of Korea’s meeting and Australia’s unemployment data on Thursday, followed by China’s Q4 GDP, retail sales, and industrial output on Friday.

In the U.S., stocks tumbled Friday after December payrolls increased by 256,000, beating expectations of 155,000. The Dow dropped 696.75 points, or 1.63%, while the S&P 500 and Nasdaq Composite fell 1.54% and 1.63%, respectively. The unemployment rate unexpectedly dropped to 4.1%, pushing 10-year Treasury yields to their highest since 2023 and placing major indices in the red for 2025.

Upcoming Events: 

• 07:00 PM GMT – USD Federal Budget Balance

The post Monday 13th January 2025: Asia-Pacific Markets Slip Amid Fed Concerns and China’s Economic Updates first appeared on IC Markets | Official Blog.

IC Markets Europe Fundamental Forecast | 13 January 2025

What happened in the Asia session?

With Japanese banks closed in observance of Coming-of-Age Day, it was a relatively quiet session as USD/JPY edged lower towards 157.50. Meanwhile, crude oil prices – buoyed by U.S. sanctions on Russian exports – rallied strongly as WTI oil hit a high of $78.39 per barrel.

What does it mean for the Europe & US sessions?

With no major news releases during the European and U.S. trading hours, there will be void of fundamental catalysts for financial markets on Monday. However, demand for the dollar and crude oil is expected to remain firmly intact, buoyed by their respective catalysts from Friday.

The Dollar Index (DXY)

Key news events today

No major news events.

What can we expect from DXY today?

Following the stronger-than-expected NFP result on Friday, demand for the greenback is likely to remain elevated on Monday. The DXY hit a session high of 109.96 on Friday – a level last seen in November 2022 – and this index should remain buoyed as the day progresses.

Central Bank Notes:

• The Board of Governors of the Federal Reserve System voted by a majority to lower the Federal Funds Rate target range by 25 basis points to 4.25 to 4.50% on 18 December. Voting against the action was Beth M. Hammack, who preferred to maintain the target range at 4.5 to 4.75%.
• The Committee seeks to achieve maximum employment and inflation at the rate of 2% over the longer run and judges that the risks to achieving its employment and inflation goals are roughly in balance.
• The economic outlook is uncertain, and the Committee is attentive to the risks to both sides of its dual mandate.
• Recent indicators suggest that economic activity has continued to expand at a solid pace while labour market conditions have generally eased, and the unemployment rate has moved up but remains low.
• Inflation has made further progress toward the Committee’s 2% objective but remains somewhat elevated.
• The Summary of Economic Projections (SEP) now indicates just two rate cuts in 2025 totalling 50 bps, compared to the full percentage point of reductions projected in the previous quarter.
• GDP growth forecasts were revised upward for 2024 (2.5% vs to 2% in the September projection) and 2025 (2.1% vs 2%), while remaining steady at 2% for 2026. Similarly, PCE inflation projections have been adjusted higher for 2024 (2.4% vs 2.3%), 2025 (2.5% vs 2.1%), and 2026 (2.1% vs 2%).
• In considering any adjustments to the target range for the federal funds rate, the Committee will carefully assess incoming data, the evolving outlook, and the balance of risks.
• In assessing the appropriate stance of monetary policy, the Committee will continue to monitor the implications of incoming information for the economic outlook and would be prepared to adjust the stance of monetary policy as appropriate if risks emerge that could impede the attainment of the Committee’s goals.
• In addition, the Committee will continue reducing its holdings of Treasury securities and agency debt and agency mortgage-backed securities. Beginning in June, the Committee slowed the pace of decline of its securities holdings by reducing the monthly redemption cap on Treasury securities from $60 billion to $25 billion.
• The Committee will maintain the monthly redemption cap on agency debt and agency mortgage-backed securities at $35 billion and will reinvest any principal payments in excess of this cap into Treasury securities.
• The next meeting runs from 28 to 29 January 2025.

Next 24 Hours Bias

Medium Bullish

Gold (XAU)

Key news events today

No major news events.

What can we expect from Gold today?

Gold prices rallied following stronger-than-expected employment data on Friday as it hit a session high of $2,697.88/oz on Friday. However, this precious metal was selling off hard on Monday with prices tumbling towards $2,680/oz at the beginning of the Asia session.

Next 24 Hours Bias

Medium Bullish

The Australian Dollar (AUD)

Key news events today

No major news events.

What can we expect from AUD today?

The Aussie remained under 0.6200 and with no signs of overhead pressures dissipating on Friday. This currency pair was edging higher towards 0.6170 as Asian markets came online on Monday but any retracement to the upside could be limited.

Central Bank Notes:

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

Next 24 Hours Bias

Weak Bearish

The Kiwi Dollar (NZD)

Key news events today

No major news events.

What can we expect from NZD today?

Just like its Pacific neighbour, the Kiwi continues to remain depressed as it tumbled as low as 0.5542 on Friday. This currency pair was retracing higher toward 0.5580 at the beginning of Monday’s Asia session but overhead pressures remain.

Central Bank Notes:

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

Next 24 Hours Bias

Weak Bearish

The Japanese Yen (JPY)

Key news events today

Coming-of-Age Day (All Day)

What can we expect from JPY today?

Japanese banks will be closed in observance of Coming-of-Age Day so traders should expect low liquidity and irregular volatility for the yen during the Asia session – USD/JPY edged lower towards 157.50 as demand for the dollar waned slightly as markets re-opened.

Central Bank Notes:

• The Policy Board of the Bank of Japan decided on 19 December, by a 8-1 majority vote, to set the following guideline for money market operations for the intermeeting period:
  1. The Bank will encourage the uncollateralized overnight call rate to remain at around 0.25%.
  2. The Bank will embark on a plan to reduce the amount of its monthly outright purchases of JGBs so that it will be about 3 trillion yen in January-March 2026; the amount will be cut down by about 400 billion yen each calendar quarter in principle.
• Japan’s economy has recovered moderately, although some weakness has been seen in part. Exports and industrial production have been more or less flat while corporate profits have been on an improving trend and business sentiment has stayed at a favourable level.
• The employment and income situation has improved moderately while private consumption has been on a moderate increasing trend despite the impact of price rises and other factors.
• On the price front, the year-on-year rate of increase in the consumer price index (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 passthrough to consumer prices of cost increases led by the past rise in import prices have waned; inflation expectations have risen moderately.
• With regard to the CPI (all items less fresh food), while the effects of the pass-through to consumer prices of cost increases led by the past rise in import prices are expected to wane, underlying CPI inflation is expected to increase gradually, since it is projected that the output gap will improve and that medium- to long-term inflation expectations will rise with a virtuous cycle between wages and prices continuing to intensify.
• Japan’s economy is likely to keep growing at a pace above its potential growth rate, with overseas economies continuing to grow moderately and as a virtuous cycle from income to spending gradually intensifies against the background of factors such as accommodative financial conditions.
• The next meeting is on 24 January 2025.

Next 24 Hours Bias

Weak Bullish

The Euro (EUR)

Key news events today

No major news events.

What can we expect from EUR today?

The Euro dived as low as 1.0216 on Friday as stronger-than-expected NFPs hit the news wires – this currency pair was hovering around 1.0250 as Asian markets came online.

Central Bank Notes:

• The Governing Council reduced the three key ECB interest rates by 25 basis points on 12 December to mark the third successive rate cut.
• Accordingly, the interest rate on the main refinancing operations and the interest rates on the marginal lending facility and the deposit facility will be decreased to 3.15%, 3.40% and 3.00% respectively.
• The disinflation process is well on track and most measures of underlying inflation suggest that inflation will settle at around the Governing Council’s 2% medium-term target on a sustained basis.
• Staff see headline inflation averaging 2.4% in 2024, 2.1% in 2025, 1.9% in 2026 and 2.1% in 2027 when the expanded EU Emissions Trading System becomes operational. For inflation excluding energy and food, staff project an average of 2.9% in 2024, 2.3% in 2025 and 1.9% in both 2026 and 2027.
• Staff now expect a slower economic recovery than in the September projections. Although growth picked up in the third quarter of this year, survey indicators suggest it has slowed in the current quarter – the economy is expected to grow by 0.7% in 2024, 1.1% in 2025, 1.4% in 2026 and 1.3% in 2027
• The Eurosystem no longer reinvests all of the principal payments from maturing securities purchased under the pandemic emergency purchase programme (PEPP), reducing the PEPP portfolio by €7.5 billion per month on average and the Governing Council intends to discontinue reinvestments under the PEPP at the end of 2024.
• The Governing Council stands ready to adjust all of its instruments within its mandate to ensure that inflation stabilises sustainably at its 2% target over the medium term and to preserve the smooth functioning of monetary policy transmission.
• The next meeting is on 30 January 2025.

Next 24 Hours Bias

Weak Bearish

The Swiss Franc (CHF)

Key news events today

No major news events.

What can we expect from CHF today?

Stronger-than-anticipated NFPs drove USD/CHF towards 0.9200, hitting a session high of 0.9188 before easing towards 0.9160 on Friday. This currency pair remained buoyed as markets re-opened on Monday and should make another attempt to break above 0.9200 this week.

Central Bank Notes:

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

Next 24 Hours Bias

Medium Bullish

The Pound (GBP)

Key news events today

No major news events.

What can we expect from GBP today?

The pound has been the worst-performing major currency last week as Cable dived under 1.2200 following the robust employment figures out of the U.S. on Friday. Intense overhead pressures remain for this currency pair and it is likely to extend its downward fall again.

Central Bank Notes:

• The Bank of England’s Monetary Policy Committee (MPC) voted by a majority of 6 to 3 to maintain the Bank Rate at 4.75% on 19 December 2024 – three members preferred to reduce the Bank rate by 25 basis points, bringing it down to 4.50%.
• The MPC also voted unanimously to reduce the stock of UK government bond purchases held for monetary policy purposes, and financed by the issuance of central bank reserves, by £100B over the next 12 months to a total of £558B, starting in October 2024. On 18 December 2024, the stock of UK government bonds held for monetary policy purposes was £655B.
• Twelve-month CPI inflation had increased to 2.6% in November from 1.7% in September, slightly higher than previous expectations while services consumer price inflation had remained elevated, at 5.0%, while core goods price inflation had risen to 1.1%.
• Headline CPI inflation was slightly higher than previous expectations, owing in large part to stronger inflation in core goods and food, and is expected to continue to rise slightly in the near term.
• Most indicators of UK near-term activity have declined with Bank staff expecting GDP growth to be weaker at the end of the year than originally projected in the November Monetary Policy Report.
• Bank staff now expected zero GDP growth in 2024 Q4, weaker than the 0.3% that had been incorporated in the November Report, broadly consistent with the latest combined steer from business surveys and the available official data.
• The Committee now judges that the labour market is broadly in balance as annual private sector regular average weekly earnings growth picked up quite sharply in the three months to October but there remains significant uncertainty around developments in the labour market.
• Monetary policy has been guided by the need to squeeze remaining inflationary pressures out of the economy to achieve the 2% target both in a timely manner and on a lasting basis. Over recent quarters there has been progress in disinflation, particularly as previous external shocks have abated, although remaining domestic inflationary pressures are resolving more slowly.
• The Committee continues to monitor closely the risks of inflation persistence and will assess the extent to which the evolving evidence is consistent with more constrained supply, which could sustain inflationary pressures, or with weaker demand, which could lead to the emergence of spare capacity in the economy and push down inflation; a gradual approach to removing monetary policy restraint remains appropriate.
• Monetary policy will need to continue to remain restrictive for sufficiently long until the risks to inflation returning sustainably to the 2% target in the medium term have dissipated further and the Committee will decide the appropriate degree of monetary policy restrictiveness at each meeting.
• The next meeting is on 6 February 2025.

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?

The Loonie continues to depreciate as weakness in the Canadian economy persists. Combined with robust NFPs out of the U.S. last Friday, USD/CAD rallied strongly towards 1.4450. Strong  tailwinds remain firmly in place for this currency pair.

Central Bank Notes:

• The Bank of Canada reduced its target for the overnight rate by 50 basis points bringing it down to 3.25% while continuing its policy of balance sheet normalization on 11 December; this marked the fifth consecutive meeting where rates were reduced.
• Canada’s economy grew by 1% in the third quarter, somewhat below the Bank’s October projection, and the fourth quarter also looks weaker than projected. Third-quarter GDP growth was pulled down by business investment, inventories and exports.
• The unemployment rate rose to 6.8% in November as employment continued to grow more slowly than the labour force while wage growth showed some signs of easing, but remains elevated relative to productivity.
• Headline CPI has declined significantly from 2.7% in June to 1.6% in September while shelter costs inflation remains elevated but has begun to ease; the preferred measures of core inflation are now below 2.5%.
• CPI inflation has been about 2% since the summer, and is expected to average close to the 2% target over the next couple of years. Since October, the upward pressure on inflation from shelter and the downward pressure from goods prices have both moderated as expected.
• Looking ahead, the GST holiday will temporarily lower inflation but that will be unwound once the GST break ends. In addition, the possibility the incoming US administration will impose new tariffs on Canadian exports to the United States has increased uncertainty and clouded the economic outlook.
• With inflation around 2%, the economy in excess supply, and recent indicators tilted towards softer growth than projected, the Governing Council decided to reduce the policy rate by a further 50 basis points to support growth and keep inflation close to the middle of the 1-3% target range.
• The Governing Council has reduced the policy rate substantially since June and going forward, they will be evaluating the need for further reductions in the policy rate one decision at a time.
• The Bank is committed to maintaining price stability for Canadians by keeping inflation close to the 2% target.
• The next meeting is on 29 January 2025.

Next 24 Hours Bias

Medium Bullish

Oil

Key news events today

No major news events.

What can we expect from Oil today?

Crude oil notched its third successive week of higher gains to close at $76.57 per barrel last Friday, gaining almost 10% over this period. WTI oil rallied more than 3.5% on Friday alone as the U.S. imposed tougher sanctions on Russia’s crude oil exports. President Joe Biden’s administration imposed fresh sanctions targeting Russian oil producers, tankers, intermediaries, traders and ports, aiming to hit every stage of Moscow’s oil production and distribution chains. Prices continued to surge as markets re-opened on Monday with WTI oil breaking above the $78-level with ease.

Next 24 Hours Bias

Strong Bullish

The post IC Markets Europe Fundamental Forecast | 13 January 2025 first appeared on IC Markets | Official Blog.

IC Markets Asia Fundamental Forecast | 13 January 2025

What happened in the U.S. session?

The non-farm payrolls (NFPs) rose strongly for the second consecutive month as 256K thousand jobs were added to the U.S. economy in December, easily surpassing the forecast of 164K, while the unemployment rate unexpectedly edged lower from 4.2% down to 4.1%. Categories such as health care, retail trade, government, and social assistance led the gains. The latest employment report highlighted a robust labour market but figures for October and November saw downward revisions, with November’s job gains falling to 212K from 227K. However, that did not stop demand for the greenback to surge causing the dollar index (DXY) to rally strongly from 109.10 to an overnight high of 109.96 before settling around 109.65 on Friday.

What does it mean for the Asia Session?

As Asian markets digest the latest employment figures by the Bureau of Labor Statistics (BLS), the DXY was hovering around 109.60 while spot prices for gold fell sharply towards $2,680/oz. Meanwhile, crude oil prices continued to surge as markets re-opened on Monday with WTI oil breaking above the $78-level on the back of tougher sanctions imposed on Russia’s crude oil exports. Also, take note that Japanese banks will be closed in observance of Coming-of-Age Day so traders should expect low liquidity and irregular volatility for the yen during the Asia session.

The Dollar Index (DXY)

Key news events today

No major news events.

What can we expect from DXY today?

Following the stronger-than-expected NFP result on Friday, demand for the greenback is likely to remain elevated on Monday. The DXY hit a session high of 109.96 on Friday – a level last seen in November 2022 – and this index should remain buoyed as the day progresses.

Central Bank Notes:

• The Board of Governors of the Federal Reserve System voted by a majority to lower the Federal Funds Rate target range by 25 basis points to 4.25 to 4.50% on 18 December. Voting against the action was Beth M. Hammack, who preferred to maintain the target range at 4.5 to 4.75%.
• The Committee seeks to achieve maximum employment and inflation at the rate of 2% over the longer run and judges that the risks to achieving its employment and inflation goals are roughly in balance.
• The economic outlook is uncertain, and the Committee is attentive to the risks to both sides of its dual mandate.
• Recent indicators suggest that economic activity has continued to expand at a solid pace while labour market conditions have generally eased, and the unemployment rate has moved up but remains low.
• Inflation has made further progress toward the Committee’s 2% objective but remains somewhat elevated.
• The Summary of Economic Projections (SEP) now indicates just two rate cuts in 2025 totalling 50 bps, compared to the full percentage point of reductions projected in the previous quarter.
• GDP growth forecasts were revised upward for 2024 (2.5% vs to 2% in the September projection) and 2025 (2.1% vs 2%), while remaining steady at 2% for 2026. Similarly, PCE inflation projections have been adjusted higher for 2024 (2.4% vs 2.3%), 2025 (2.5% vs 2.1%), and 2026 (2.1% vs 2%).
• In considering any adjustments to the target range for the federal funds rate, the Committee will carefully assess incoming data, the evolving outlook, and the balance of risks.
• In assessing the appropriate stance of monetary policy, the Committee will continue to monitor the implications of incoming information for the economic outlook and would be prepared to adjust the stance of monetary policy as appropriate if risks emerge that could impede the attainment of the Committee’s goals.
• In addition, the Committee will continue reducing its holdings of Treasury securities and agency debt and agency mortgage-backed securities. Beginning in June, the Committee slowed the pace of decline of its securities holdings by reducing the monthly redemption cap on Treasury securities from $60 billion to $25 billion.
• The Committee will maintain the monthly redemption cap on agency debt and agency mortgage-backed securities at $35 billion and will reinvest any principal payments in excess of this cap into Treasury securities.
• The next meeting runs from 28 to 29 January 2025.

Next 24 Hours Bias

Medium Bullish

Gold (XAU)

Key news events today

No major news events.

What can we expect from Gold today?

Gold prices rallied following stronger-than-expected employment data on Friday as it hit a session high of $2,697.88/oz on Friday. However, this precious metal was selling off hard on Monday with prices tumbling towards $2,680/oz at the beginning of the Asia session.

Next 24 Hours Bias

Medium Bullish

The Australian Dollar (AUD)

Key news events today

No major news events.

What can we expect from AUD today?

The Aussie remained under 0.6200 and with no signs of overhead pressures dissipating on Friday. This currency pair was edging higher towards 0.6170 as Asian markets came online on Monday but any retracement to the upside could be limited.

Central Bank Notes:

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

Next 24 Hours Bias

Weak Bearish

The Kiwi Dollar (NZD)

Key news events today

No major news events.

What can we expect from NZD today?

Just like its Pacific neighbour, the Kiwi continues to remain depressed as it tumbled as low as 0.5542 on Friday. This currency pair was retracing higher toward 0.5580 at the beginning of Monday’s Asia session but overhead pressures remain.

Central Bank Notes:

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

Next 24 Hours Bias

Weak Bearish

The Japanese Yen (JPY)

Key news events today

Coming-of-Age Day (All Day)

What can we expect from JPY today?

Japanese banks will be closed in observance of Coming-of-Age Day so traders should expect low liquidity and irregular volatility for the yen during the Asia session – USD/JPY edged lower towards 157.50 as demand for the dollar waned slightly as markets re-opened.

Central Bank Notes:

• The Policy Board of the Bank of Japan decided on 19 December, by a 8-1 majority vote, to set the following guideline for money market operations for the intermeeting period:
  1. The Bank will encourage the uncollateralized overnight call rate to remain at around 0.25%.
  2. The Bank will embark on a plan to reduce the amount of its monthly outright purchases of JGBs so that it will be about 3 trillion yen in January-March 2026; the amount will be cut down by about 400 billion yen each calendar quarter in principle.
• Japan’s economy has recovered moderately, although some weakness has been seen in part. Exports and industrial production have been more or less flat while corporate profits have been on an improving trend and business sentiment has stayed at a favourable level.
• The employment and income situation has improved moderately while private consumption has been on a moderate increasing trend despite the impact of price rises and other factors.
• On the price front, the year-on-year rate of increase in the consumer price index (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 passthrough to consumer prices of cost increases led by the past rise in import prices have waned; inflation expectations have risen moderately.
• With regard to the CPI (all items less fresh food), while the effects of the pass-through to consumer prices of cost increases led by the past rise in import prices are expected to wane, underlying CPI inflation is expected to increase gradually, since it is projected that the output gap will improve and that medium- to long-term inflation expectations will rise with a virtuous cycle between wages and prices continuing to intensify.
• Japan’s economy is likely to keep growing at a pace above its potential growth rate, with overseas economies continuing to grow moderately and as a virtuous cycle from income to spending gradually intensifies against the background of factors such as accommodative financial conditions.
• The next meeting is on 24 January 2025.

Next 24 Hours Bias

Weak Bullish

The Euro (EUR)

Key news events today

No major news events.

What can we expect from EUR today?

The Euro dived as low as 1.0216 on Friday as stronger-than-expected NFPs hit the news wires – this currency pair was hovering around 1.0250 as Asian markets came online.

Central Bank Notes:

• The Governing Council reduced the three key ECB interest rates by 25 basis points on 12 December to mark the third successive rate cut.
• Accordingly, the interest rate on the main refinancing operations and the interest rates on the marginal lending facility and the deposit facility will be decreased to 3.15%, 3.40% and 3.00% respectively.
• The disinflation process is well on track and most measures of underlying inflation suggest that inflation will settle at around the Governing Council’s 2% medium-term target on a sustained basis.
• Staff see headline inflation averaging 2.4% in 2024, 2.1% in 2025, 1.9% in 2026 and 2.1% in 2027 when the expanded EU Emissions Trading System becomes operational. For inflation excluding energy and food, staff project an average of 2.9% in 2024, 2.3% in 2025 and 1.9% in both 2026 and 2027.
• Staff now expect a slower economic recovery than in the September projections. Although growth picked up in the third quarter of this year, survey indicators suggest it has slowed in the current quarter – the economy is expected to grow by 0.7% in 2024, 1.1% in 2025, 1.4% in 2026 and 1.3% in 2027
• The Eurosystem no longer reinvests all of the principal payments from maturing securities purchased under the pandemic emergency purchase programme (PEPP), reducing the PEPP portfolio by €7.5 billion per month on average and the Governing Council intends to discontinue reinvestments under the PEPP at the end of 2024.
• The Governing Council stands ready to adjust all of its instruments within its mandate to ensure that inflation stabilises sustainably at its 2% target over the medium term and to preserve the smooth functioning of monetary policy transmission.
• The next meeting is on 30 January 2025.

Next 24 Hours Bias

Weak Bearish

The Swiss Franc (CHF)

Key news events today

No major news events.

What can we expect from CHF today?

Stronger-than-anticipated NFPs drove USD/CHF towards 0.9200, hitting a session high of 0.9188 before easing towards 0.9160 on Friday. This currency pair remained buoyed as markets re-opened on Monday and should make another attempt to break above 0.9200 this week.

Central Bank Notes:

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

Next 24 Hours Bias

Medium Bullish

The Pound (GBP)

Key news events today

No major news events.

What can we expect from GBP today?

The pound has been the worst-performing major currency last week as Cable dived under 1.2200 following the robust employment figures out of the U.S. on Friday. Intense overhead pressures remain for this currency pair and it is likely to extend its downward fall again.

Central Bank Notes:

• The Bank of England’s Monetary Policy Committee (MPC) voted by a majority of 6 to 3 to maintain the Bank Rate at 4.75% on 19 December 2024 – three members preferred to reduce the Bank rate by 25 basis points, bringing it down to 4.50%.
• The MPC also voted unanimously to reduce the stock of UK government bond purchases held for monetary policy purposes, and financed by the issuance of central bank reserves, by £100B over the next 12 months to a total of £558B, starting in October 2024. On 18 December 2024, the stock of UK government bonds held for monetary policy purposes was £655B.
• Twelve-month CPI inflation had increased to 2.6% in November from 1.7% in September, slightly higher than previous expectations while services consumer price inflation had remained elevated, at 5.0%, while core goods price inflation had risen to 1.1%.
• Headline CPI inflation was slightly higher than previous expectations, owing in large part to stronger inflation in core goods and food, and is expected to continue to rise slightly in the near term.
• Most indicators of UK near-term activity have declined with Bank staff expecting GDP growth to be weaker at the end of the year than originally projected in the November Monetary Policy Report.
• Bank staff now expected zero GDP growth in 2024 Q4, weaker than the 0.3% that had been incorporated in the November Report, broadly consistent with the latest combined steer from business surveys and the available official data.
• The Committee now judges that the labour market is broadly in balance as annual private sector regular average weekly earnings growth picked up quite sharply in the three months to October but there remains significant uncertainty around developments in the labour market.
• Monetary policy has been guided by the need to squeeze remaining inflationary pressures out of the economy to achieve the 2% target both in a timely manner and on a lasting basis. Over recent quarters there has been progress in disinflation, particularly as previous external shocks have abated, although remaining domestic inflationary pressures are resolving more slowly.
• The Committee continues to monitor closely the risks of inflation persistence and will assess the extent to which the evolving evidence is consistent with more constrained supply, which could sustain inflationary pressures, or with weaker demand, which could lead to the emergence of spare capacity in the economy and push down inflation; a gradual approach to removing monetary policy restraint remains appropriate.
• Monetary policy will need to continue to remain restrictive for sufficiently long until the risks to inflation returning sustainably to the 2% target in the medium term have dissipated further and the Committee will decide the appropriate degree of monetary policy restrictiveness at each meeting.
• The next meeting is on 6 February 2025.

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?

The Loonie continues to depreciate as weakness in the Canadian economy persists. Combined with robust NFPs out of the U.S. last Friday, USD/CAD rallied strongly towards 1.4450. Strong  tailwinds remain firmly in place for this currency pair.

Central Bank Notes:

• The Bank of Canada reduced its target for the overnight rate by 50 basis points bringing it down to 3.25% while continuing its policy of balance sheet normalization on 11 December; this marked the fifth consecutive meeting where rates were reduced.
• Canada’s economy grew by 1% in the third quarter, somewhat below the Bank’s October projection, and the fourth quarter also looks weaker than projected. Third-quarter GDP growth was pulled down by business investment, inventories and exports.
• The unemployment rate rose to 6.8% in November as employment continued to grow more slowly than the labour force while wage growth showed some signs of easing, but remains elevated relative to productivity.
• Headline CPI has declined significantly from 2.7% in June to 1.6% in September while shelter costs inflation remains elevated but has begun to ease; the preferred measures of core inflation are now below 2.5%.
• CPI inflation has been about 2% since the summer, and is expected to average close to the 2% target over the next couple of years. Since October, the upward pressure on inflation from shelter and the downward pressure from goods prices have both moderated as expected.
• Looking ahead, the GST holiday will temporarily lower inflation but that will be unwound once the GST break ends. In addition, the possibility the incoming US administration will impose new tariffs on Canadian exports to the United States has increased uncertainty and clouded the economic outlook.
• With inflation around 2%, the economy in excess supply, and recent indicators tilted towards softer growth than projected, the Governing Council decided to reduce the policy rate by a further 50 basis points to support growth and keep inflation close to the middle of the 1-3% target range.
• The Governing Council has reduced the policy rate substantially since June and going forward, they will be evaluating the need for further reductions in the policy rate one decision at a time.
• The Bank is committed to maintaining price stability for Canadians by keeping inflation close to the 2% target.
• The next meeting is on 29 January 2025.

Next 24 Hours Bias

Medium Bullish

Oil

Key news events today

No major news events.

What can we expect from Oil today?

Crude oil notched its third successive week of higher gains to close at $76.57 per barrel last Friday, gaining almost 10% over this period. WTI oil rallied more than 3.5% on Friday alone as the U.S. imposed tougher sanctions on Russia’s crude oil exports. President Joe Biden’s administration imposed fresh sanctions targeting Russian oil producers, tankers, intermediaries, traders and ports, aiming to hit every stage of Moscow’s oil production and distribution chains. Prices continued to surge as markets re-opened on Monday with WTI oil breaking above the $78-level with ease.

Next 24 Hours Bias

Strong Bullish

The post IC Markets Asia Fundamental Forecast | 13 January 2025 first appeared on IC Markets | Official Blog.

Its been a notable session of new highs and lows. I’ve been tweeting them as they happened rather than posting them, but here they are for the record:

• GBP/USD hits a 14 month low under 1.2193

  (GBPeso?) … and its since dropped lower

• AUD/USD falls under 0.6140 and to its lowest since April 2020
  (ps. Some chatter of a move down under 0.60 is around the place https://forexlive.com/news/some-chatter-about-on-the-potential-for-audusd-to-drop-under-060-20250110/…
  )

• EUR/USD under 1.0210 to its lowest since November 2022

The dollar is king after the US jobs report on Friday:

• ForexLive Asia-Pacific FX news wrap: US jobs report Asia response, EUR and GBP weak again
• Forexlive Americas FX news wrap 10 Jan: Strong US jobs sends the USD & yields higher.

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

I posted earlier on the news:

• US and UK tighten sanctions on Russian oil industry

The news broke on Friday:

• US will impose sanctions on 180 vessels transporting Russian crude, dozens of traders and two major oil companies

Oil update:

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

• Bitcoin Futures Analysis Today
• S&P 500 Futures Analysis Today
• China intensified efforts on Monday to stabilize the weakening yuan
• China December USD denominated Exports +10.7% y/y (expected +7.3%) Imports +1.0% (-1.5%)
• HKMA and PBoC to set up a CNY 100bn liquidity facility for trade finance
• Some Chinese trade data is dribbling out. 2024 total imports +2.3% y/y
• Singapore bans Polymarket
• More on China’s Central Bank, Forex Regulators Pledge to Stabilize Yuan
• Yen finding a bid on the Japanese market holiday
• PBoC Gov Pan says interest rate and RRR tools will be utilized to maintain ample liquidity
• Weekend – China’s Ministry of Commerce promised to enhance domestic consumption
• China Foreign Exchange Committee (CFXC) held meeting – pledged to support yuan
• PBOC sets USD/ CNY reference rate for today at 7.1885 (vs. estimate at 7.3442)
• PBoC and SAFE move to allow Chinese firms greater access to foreign capital
• US economy “reaccelerating”, there’s a near coin toss chance of a Fed rate hike this year
• Australian December inflation gauge 0.6% m/m (prior 0.2%) & 2.6% y/y (prior 2.9%)
• UBS expects further Federal Reserve rate cuts, but at a slower pace
• ICYMI – Bank of America see no Fed interest rate cuts in 2025, risk skewed towards a hike
• Optimism for higher gold prices in 2025, but what are the risks?
• US and UK tighten sanctions on Russian oil industry
• Canada PM Trudeau says has counter-tariffs ready If Trump launches a trade war
• Goldman Sachs now expect two Federal Reserve interest rate cuts in 2025, down from three
• ICYMI – Morgan Stanley expect the Fed to cut rates in March
• New Zealand November building approvals +5.3% m/m, huge jump from -5.2% the prior month
• Trade ideas thread – Monday, 13 January, insightful charts, technical analysis, ideas
• Monday morning open levels – indicative forex prices –

Weekend:

• Weekly Market Outlook (13-17 January)
• Newsquawk Week Ahead: US CPI & Retail Sales, China Activity Data, UK CPI, Aussie jobs
• How the Federal Reserve might be reshaped in Trump’s term
• Forexlive Americas FX news wrap 10 Jan: Strong US jobs sends the USD & yields higher.

The
reverberations of the blockbuster US December jobs report continued
in Asia today:

• US
  treasury yields remained firmly near recent 14-month highs
• the
  USD flexed, sending EUR and GBP sliding lower
• US
  equity index futures slipped lower in Sunday evening (US time)
  Globex trading
• Regional
  equities here in Asia weakened

Oil
moved higher, the Friday news of the US and UK tightening sanctions on
Russian oil continuing to impact.

It
was a holiday in Japan today, which thinned out liquidity somewhat.
Despite the holiday the yen carved its own path, initially losing
some ground against the USD (session highs were above 157.90 briefly)
before the yen strengthened, taking USD/JPY back under 157.50. Yen
crosses were pounded, GBP/JPY and EUR/JPY notable losers.

We
had a barrage of announcements from China today, supportive of the
yuan (or intended to be), see the posts above for the details but, in
brief:

• the
  PBoC and SAFE increased the macro-prudential adjustment parameter
  from 1.5 to 1.75, allowing companies to borrow more from abroad
• the
  China Foreign Exchange Committee pledged to keep the yuan exchange
  rate stable at reasonable levels, combat pro-cyclical market
  behaviors, and prevent excessive exchange rate volatility
• PBOC
  Governor Pan Gongsheng reiterated that China has the capability to
  maintain the stable operation of its foreign exchange market.

The
yuan was reasonably steady against the USD in response, not dropping
like EUR and GBP.

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

Chinese trade data for December 2024, USD denominated figures:

Trade Balance 104.84bn

• expected 99.8bn, prior 97.44bn
• surge in exports balloons out the surplus even more

Exports +10.7% y/y

• expected +7.3%, prior +6.7%
• exports have likely been boosted by the surge to send goods offshore ahead of expected Trump tariffs

Imports +1.0% y/y

• expected -1.5%, prior -3.9%

China’s December trade surplus with the US is 33.5bn USD vs. 29.7bn in November.

• for 2024 as a whole China’s trade surplus with the US was 361 bn USD

This is likely to give us more of this:

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

Hong Kong Monetary Authority statement:

• HKMA and PBoC will set up CNY 100bln liquidity facility for trade finance
• China to encourage listings and debt issuance in Hong Kong
• Bond Connect Southbound Scheme hours to be extended
• onshore investor choices for international bonds through link to expand

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

Data dripping out from China’s Customs.

Customs officials say that imports were impacted by global commodities price changes in H2 of 2024.

• Some countries’ ‘politicization of economic and trade issues’ and ‘abuse of export controls’ also impacted China’s imports last year.
• There is still plenty of space for China’s imports growth this year.

more to come

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