IC Markets Europe Fundamental Forecast| 12th December 2023
What happened in the Asia session?
DXY is rising towards the resistance level at 104.385 and could potentially break through this resistance level. There could be volatility in the market due to the high impact news releasing today.
What does it mean for the Europe & US sessions?
The dollar index (DXY) opened lower at 157.380 in the US session yesterday.
The upcoming core CPI data releasing today, the data is an indicator of inflation, it could cause the market to be volatile.
The Dollar Index (DXY)
Key news events today
Core CPI (1.30pm GMT)
What can we expect from DXY today?
The DXY could expect some volatility due to the high impact news, CPI data releasing later today. The CPI data measures the change in price of goods and services purchased by consumers. The consumer prices account for a majority of inflation.
Central Bank Notes:
- The Federal Funds Rate target range remained unchanged at 5.25% to 5.50% for the second meeting in a row.
- The Committee seeks to achieve maximum employment and inflation at the rate of 2.0% over the longer run.
- The Committee will continue to assess additional information and its implications for monetary policy.
- In determining the extent of additional policy firming that may be appropriate to return inflation to 2.0% over time, the Committee will take into account the cumulative tightening of monetary policy, the lags with which monetary policy affects economic activity and inflation, and economic and financial developments.
- Next meeting runs from 12 to 13 December 2023.
Next 24 Hours Bias
Weak Bullish
Gold (XAU)
Key news events today
Core CPI (1.30pm GMT)
What can we expect from Gold today?
Gold made a new low of 1976.73 during the trading session yesterday. The bearish trading session continued to be affected by the positive Unemployment Rate data.
In the Asian session, Gold has bounced off the support level at 1979.42, despite bouncing off the support level, market sentiments are still bearish. We could expect the market to be experiencing volatility today due to the high impact of the new release.
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?
In the Asian session, the AUD/USD pair has bounced off the support level at 0.653 and could potentially rise to our resistance level at 0.659. We can expect the price to break through the resistance level in the long term.
Central Bank Notes:
- The RBA decided to leave the cash rate target unchanged at 4.35 percent and interest rate paid on Exchange Settlement balances unchanged at 4.25 percent.
- The decision reflected the RBA view that progress in bringing inflation back to the target range of 2 to 3 percent was looking slower than earlier forecasts.
- Whether further tightening of monetary policy is required to ensure that inflation returns to target in a reasonable timeframe will depend upon the data and the evolving assessment of risks.
- Next meeting is on 6 February 2024.
Next 24 Hours Bias
Weak Bearish
The Kiwi Dollar (NZD)
Key news events today
Key news events today
No major news events.
What can we expect from NZD today?
In the US session yesterday, the Kiwi closed at a new low of 0.612. The Kiwi has fallen from a resistance at 0.61583, market sentiment is bearish and we can expect the Kiwi to continue to fall to the support level at 0.6053.
Central Bank Notes:
- The Monetary Policy Committee kept the OCR unchanged at 5.50% for the third meeting in a row.
- The Committee agreed that the OCR needs to stay at a restrictive level to ensure that annual consumer price inflation returns to the 1 to 3% target range and to support maximum sustainable employment.
- While supply constraints in the economy continue to ease, inflation remains too high.
- Spending needs to remain subdued to better match the economy’s ability to supply goods and services, so that consumer price inflation returns to its target range.
- Next meeting is on 28 February 2024.
Next 24 Hours Bias
Weak Bearish
The Japanese Yen (JPY)
Key news events today
No major news events.
What can we expect from JPY today?
The USD/JPY currency pair has bounced off the support level of 144.760, showing signs of recovery. In the Asian session, price could potentially react off the resistance level at 146.251.
Central Bank Notes:
- The Bank will continue with QQE with Yield Curve Control, aiming to achieve the price stability target of 2.0%, as long as it is necessary for maintaining that target in a stable manner.
- The Bank of Japan decided on the following measures:
- Yield curve control: Negative interest rate of -0.1% on policy-rate balances and purchase of Japanese government bonds to keep 10-year JGB yields at around 0% while regarding the upper bound of 1.0% for 10-year JGB yields as a reference in its market operations.
- Medium- to long-term inflation expectations have risen moderately. Even as actual inflation decelerates, inflation expectations are expected to rise moderately toward the end of the projection period, with the output gap turning positive and changes in firms’ wage- and price-setting behaviour and in labour-management wage negotiations. This will likely lead to a sustained rise in prices accompanied by wage increases.
- Japan’s economy is likely to continue recovering moderately for the time being, supported by factors such as the materialization of pent-up demand, although it is expected to be under downward pressure stemming from a slowdown in the pace of recovery in overseas economies.
- Next meeting is on 19 December 2023.
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 EUR/USD currency pair is showing signs of recovery and has bounced off the support level at 1.07525. It is rising towards the resistance level at 1.0835. In the Asian session, EUR/USD is showing signs of slowing down and is on the support level. We can expect the price to bounce off the support level at 1.0764.
Central Bank Notes:
- The ECB kept the three key interest rates unchanged.
- Inflation is still expected to stay too high for too long, and domestic price pressures remain strong.
- The Governing Council’s past interest rate increases continue to be transmitted forcefully into financing conditions.
- The Governing Council will continue to follow a data-dependent approach to determining the appropriate level and duration of restriction.
- Next meeting is on 14 December 2023.
Next 24 Hours Bias
Weak Bullish
The Swiss Franc (CHF)
Key news events today
No major news event.
What can we expect from CHF today?
The USD/CHF currency pair hit a new low in the US session yesterday at 0.87759. In the Asian session, price opened lower at 0.87705 and is continuing the downtrend and towards our support level at 0.86921.
Central Bank Notes:
- The SNB unexpectedly kept the policy rate unchanged at 1.75% in September.
- Inflation forecasts remain unchanged at 2.2% for both 2023 and 2024 while it was lowered from 2.1% to 1.9% for 2025.
- SNB predicts modest growth for the rest of the year due to subdued foreign demand, loss of purchasing power from inflation, and stricter financial conditions.
- The projection for GDP growth this year remained unchanged at 1.0%.
- Next meeting is on 14 December 2023.
Next 24 Hours Bias
Weak Bearish
The Pound (GBP)
Key news events today
Claimant Count Change (7.00am GMT)
What can we expect from GBP today?
The Claimant Count Change data will be released today, it is the first indication of the employment situation, even though it is a lagging indicator, the data provides an insight of overall economic health for the UK economy.
The currency pair GBP/USD has closed higher at 1.259. We are expecting it to continue downwards before bouncing off the support at 1.257 and rise to resistance level at 1.2605. We could expect volatility in the market due to the high impact of the new release.
Central Bank Notes:
- The Bank of England’s Monetary Policy Committee (MPC) voted by a majority of 6-to-3 to maintain its Official Bank Rate at 5.25%.
- Three members preferred to increase the Bank Rate by 0.25 percentage points to 5.5%.
- CPI inflation remains well above the 2% target, but is expected to continue to fall sharply, to 4¾% in 2023 Q4, 4½% in 2024 Q1 and 3¾% in 2024 Q2.
- This decline is expected to be accounted for by lower energy, core goods and food price inflation and, beyond January, by some fall in services inflation.
- The mean projection for CPI inflation is 2.2% and 1.9% at the two and three-year horizons respectively.
- Next meeting is on 14 December 2023.
Next 24 Hours Bias
Weak Bearish
The Canadian Dollar (CAD)
Key news events today
No major news events
What can we expect from CAD today?
In the Asian session, price has hit a new low at 1.3546, and is expected to continue with the downtrend and fall to resistance level at 1.3488.
Central Bank Notes:
- The Bank of Canada held its target for the overnight rate at 5.0%, for the third meeting in a row.
- Bank rate at 5.25% and deposit rate at 5%
- The Bank of Canada decided to hold the policy rate at 5% and to continue normalizing the Bank’s balance sheet.
- Real GDP contracted a rate of 1.1% in the third quarter, following growth of 1.4% in the second quarter.
- Next meeting is on 24 January 2024.
Next 24 Hours Bias
Weak Bearish
Oil
Key news events today
No major news events.
What can we expect from Oil today?
Oil prices remained stable on Tuesday, with investors awaiting important announcements regarding interest rates and inflation. There were also concerns about whether the production cuts planned by OPEC+ for the next year would be sufficient to balance the oversupply of crude oil and the subdued growth in fuel demand.
In Asia, Market sentiment remained nervous due to additional indications of economic fragility in China, which is a major oil importer. Additionally, caution prevailed ahead of the release of crucial inflation data from the United States and India.
WTI Oil prices rose by 9 cents at $71.32. a barrel and Brent Oil rose by 19 cents at $76.03
Next 24 Hours Bias
Weak Bullish
