IC Markets Europe Fundamental Forecast | 11 th December 2023
What happened in the Asia session?
The Unemployment Rate data was released on 8th of December, the unemployment rate is at 3.70%, lower than forecasted. This month’s data is lower than last month’s 3.90%. The data is positive for the dollar index (DXY), which resulted in a new high of 104.306.
What does it mean for the Europe & US sessions?
In the Asian session, the DXY opened higher at 103.937, showing signs of recovery. The DXY is likely to continue the bullish trend, with price rising to resistance level at 104.385.
The Dollar Index (DXY)
Key news events today
10 year Bond Auction (6.01pm GMT)
What can we expect from DXY today?
The DXY is rising towards the resistance level at 104.385 and could potentially break through this resistance level.
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
10 year Bond Auction (6.01pm GMT)
What can we expect from Gold today?
Gold made a new low of 1993.358 in the Asian session today. The bearish trading session was affected by the positive Unemployment Rate data.
We can expect the Gold to fall further in the Asian session and find new support at the 1972.361 level.
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 AUD/USD pair has broken through the support level at 0.659 and could potentially continue falling to our support level at 0.653.
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
Medium Bearish
The Kiwi Dollar (NZD)
Key news events today
Key news events today
No major news events.
What can we expect from NZD today?
The Kiwi has fallen from a resistance at 0.6131, 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 144.505. In the Asian session, we could expect the USD/JPY to continue rising towards 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 is bouncing off the support level at 1.0764. It is rising towards the resistance level at 1.0835. We can expect the EUR/USD to be bullish in the Asian session.
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
Medium 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 continues to rise towards the resistance level at 0.8819. There are signs of slowing down in the Asian session, the USD/CHF opened lower at 0.88070.
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
No major news events.
What can we expect from GBP today?
The currency pair GBP/USD has closed at a low of 1.250 and is continuing on the downtrend. Price could potentially fall to support level at 1.247 before bouncing off and rise to the resistance level at 1.261.
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?
The USD/CAD currency pair is showing signs of bearish reversal, with current price moving towards the resistance level at 1.36213 and thereafter, could potentially fall to the support level at 1.34884. In the Asian session, price had reached the resistance area at 1.360, it could potentially fall back to the support level.
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?
On Friday, 8th December, oil prices surged by over 2% following supportive U.S. data that bolstered expectations of demand growth. However, both benchmarks recorded their seventh consecutive week of decline, marking the longest period of weekly downturns in five years, due to lingering concerns about oversupply.
In Monday’s Asian session, oil prices saw a slight increase for a second consecutive session. This uptick was driven in part by U.S. initiatives to restock strategic reserves, offering some backing. However, apprehensions about an excess of crude supply and a potential slowdown in fuel demand growth in the coming year persisted.
WTI Oil prices rose by 0.1% at $71.30 a barrel and Brent Oil dropped 0.2%, to $75.95 a barrel.
Next 24 Hours Bias
Weak Bullish
