IC Markets Europe Fundamental Forecast | 30 November 2023
What happened in the Asia session?
The DXY is likely to recover from the drop in the past few weeks, and we could see Gold falling further later during the day if the US dollar index (DXY) bounces off the current support level and gains bullish momentum. We could see lesser volatility in the Asia session and price is most likely preparing for the upcoming US session, when there will be the US Unemployment Claims news release.
What does it mean for the Europe & US sessions?
The US dollar index (DXY) is consolidating now, trading between a range of 102.48 and 103.01. We could see volatility in the markets for the USD pairs as there is high impact news later on during the day, which could determine whether the DXY would breakout to the upside or fall further to the downside.
The Dollar Index (DXY)
Key news events today
Core PCE Price Index (1:30 pm GMT)
Unemployment Claims (1:30 pm GMT)
What can we expect from DXY today?
We could expect the DXY to react to a strong support level at where the current pice is at. The DXY could possibly gain enough bullish momentum here, rising up further during the Asia session. However, the DXY could continue its free fall if the Core PCE Price Index and Unemployment Claims show a negative result, which results in the overall negative outlook of the US economy.
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 Bearish
Gold (XAU)
Key news events today
Core PCE Price Index (1:30 pm GMT)
Unemployment Claims (1:30 pm GMT)
What can we expect from Gold today?
We could expect Gold to pullback slightly today, falling to a support level at 2037.5, before continuing its bullish momentum towards the upside. Gold could be in a range, trading between the low of $2,037.5 to $2,052. Gold could possibly continue its bullish momentum, however, it will be determined by the news release for the DXY later on during the day.
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 has been on the rise during the Asia session, hitting a high of 0.6643, and could continue rising up towards the previous high created at 0.6676. The Aussie could possibly break the highs at 0.6676, to create a higher high later on during the US session.
Central Bank Notes:
- The RBA increased the cash rate target by 25 basis points to 4.35%, the first increase in five meetings.
- Inflation in Australia has passed its peak but is still too high and is proving more persistent than expected a few months ago.
- 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 5 December 2023.
Next 24 Hours Bias
Medium Bullish
The Kiwi Dollar (NZD)
Key news events today
No major news events.
What can we expect from NZD today?
The Kiwi hit a low of 0.6137, and is gaining bullish momentum again, rising towards the previous highs at 0.6191. We could expect the Kiwi to continue rising towards the upside, possibly targeting the highs at 0.6220.
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
Medium Bullish
The Japanese Yen (JPY)
Key news events today
Core PCE Price Index (1:30 pm GMT)
Unemployment Claims (1:30 pm GMT)
What can we expect from JPY today?
The USD/JPY currency pair showed slower movements in the Asia session, however, we have a bearish sentiment as the USD/JPY has been creating lower highs and lower lows. Despite a slight recovery, we could see the USD/JPY continue falling to the next support level at 146.19.
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
Medium Bearish
The Euro (EUR)
Key news events today
Core CPI Flash Estimate (10:00am GMT)
CPI Flash Estimate (10:00am GMT)
ECB President Lagarde Speaks (1:30pm GMT)
What can we expect from EUR today?
The EUR/USD currency pair has been showing slower movements on the bullish side, and is now testing a key pullback support level. Bouncing off the support level could indicate that the EUR/USD will rise towards the upside, while falling below the support level could indicate a bearish reversal to the downside. A hawkish sentiment from ECB President Lagarde could push prices up.
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 events.
What can we expect from CHF today?
The USD/CHF currency pair hit a low of 0.8720, and has been falling during the Asia session. The USD/CHF could possibly fall lower towards the next support at 0.8699 as price is showing strong bearish momentum.
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
Medium Bearish
The Pound (GBP)
Key news events today
No major news events.
What can we expect from GBP today?
The Pound has been showing slower movements during the Asia session, and we could possibly see the Pound trading between a range of 1.2665 and 1.2728, before breaking out either to the upside or the downside.
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 Bullish
The Canadian Dollar (CAD)
Key news events today
GDP (1:30pm GMT)
What can we expect from CAD today?
The USD/CAD could possibly continue its bearish momentum, falling to the support level at 1.3544. The USD/CAD has been creating lower highs and lower lows, and with the bearish confirmation during the Asia session, price could continue falling, creating a new lower low. A lower than expected reading for the CAD GDP could push prices further to the downside.
Central Bank Notes:
- The Bank of Canada held its target for the overnight rate at 5.0%, for the second meeting in a row.
- Canada’s economy has weakened with growth forecast for 2023 lowered to 1.2% from 1.8%
- Economic growth is expected to continue to be weak, growing 0.9% and 2.5% in 2024 and 2025 respectively.
- The Bank expects CPI inflation to average around 3.5% through the middle of 2024 before gradually easing to 2.0% in 2025.
- However, the near-term path for CPI is higher because of energy prices and ongoing persistence in core inflation.
- Next meeting is on 6 December 2023.
Next 24 Hours Bias
Medium Bearish
Oil
Key news events today
OPEC-JMMC Meetings (All Day)
What can we expect from Oil today?
Following dismal economic indications from China, the world’s largest importer, oil prices fell in Asian trade on Thursday. Traders are now waiting for an impending OPEC+ meeting, when it is widely anticipated that the cartel would announce more production reductions.
WTI Oil dropped 0.4% to $77.54 a barrel by the end of January, while Brent Oil declined 0.4% to $82.81 a barrel. In November, both contracts were expected to lose three to five percent.
Next 24 Hours Bias
Weak Bearish
