IC Markets Asia Fundamental Forecast | 15 October 2021

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What happened in the US session?

The US PPI came in weaker than expected at 0.5% (expected 0.6%, prev. 0.7%), reinforcing the central bank’s view that the rising inflation remains transitory. The greenback pared losses against the risk currencies while gaining against the safe-haven counterparts.

What does it mean for the Asia Session?

The US dollar is likely to continue its gains versus the yen while retreating towards the lows from September against the antipodeans and the precious metal.

The Dollar Index (DXY)

Key news events today

Core Retail Sales m/m, 1230 GMT

Retail Sales m/m, 1230 GMT

What can we expect from DXY today?

Hawkish tones from five Fed speakers would provide firm support for a dollar retaliation against the bears. The speakers are largely aligned towards a taper of asset purchases in November, inflation as transitory and premature to discuss a rate hike timeline.

Central Bank Notes:

  • Tapering likely to start in November, December; end in mid-2022
  • Pace of reduction is $10b in treasuries and $5b in MBS
  • Sees one hike in 2022, three hikes in 2023

Next 24 Hours Bias

Medium Bullish

Gold (XAU)

Key news events today

No major news events.

What can we expect from Gold today?

Fears of a relentless rise in inflation, in particular a possible scenario of stagflation, was eased by the latest weaker than expected US PPI. The precious metal should continue to hover just below the psychological resistance at $1,800, until inflation risks rises again.

Next 24 Hours Bias

Weak Bearish

The Australian Dollar (AUD)

Key news events today

No major news events.

What can we expect from AUD today?

The anticipated recovery of the Australian economy with the planned re-opening of its international border from November should continue to see the Aussie head towards the highs from September, around the 0.7460 region.

Central Bank Notes:

  • Asset purchase programme intact until February 2022
  • Unlikely to raise current record low rate of 0.1% until 2024

Next 24 Hours Bias

Weak Bullish

The Kiwi Dollar (NZD)

Key news events today

No major news events.

What can we expect from NZD today?

With the country facing a new high in COVID-19 cases in nearly six weeks while vaccination rates still lag the target of 90% by a stretch, the case for RBNZ to raise rates again by the end of the year, following the first increase in seven years, remains dim under these circumstances.

Central Bank Notes:

  • Official Cash Rate hiked by 25bps on 6 October, stands at 0.5%
  • Will continue to reduce monetary policy stimulus
  • Future moves contingent on inflation and employment.

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?

Sustained gains of the greenback over the yen remains justified from the respective countries’ monetary policy directives and economic outlook.

Central Bank Notes:

  • Lowered assessment on exports and output amid supply bottlenecks in Asia
  • Willing to ease monetary policy further without hesitation, if required

Next 24 Hours Bias

Weak Bearish