IC Markets Asia Fundamental Forecast | 19 November 2021

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What happened in the US session?

The Philly Fed Manufacturing Index spiked in November to the highest since April at 39 (expected 24.2, prev. 23.8). Unemployment claims fell to 268k (expected 260k, prev. 269k).

What does it mean for the Asia Session?

With no data releases during this session, the Forex pairs are likely to consolidate their moves until policymakers from the ECB and Fed give their views on the current state of affairs. No deviations are expected from the overarching central bank directives, however.

The Dollar Index (DXY)

Key news events today

No major news events.

What can we expect from DXY today?

As expected, the buck consolidated its gains, from the first half of the week, amid a lack of tier-one data releases. A similar scenario can be expected going into the weekend, with intermittent spikes in volatility from reactions to anticipated hawkish Fedspeak.

Central Bank Notes:

  • Taper at the preset pace of US15 billion per month from mid-November
  • Emphasised clear divide between tapering and rate liftoff
  • Next meeting on 15 December 2021

Next 24 Hours Bias

Weak Bullish

Gold (XAU)

Key news events today

No major news events.

What can we expect from Gold today?

Easing concerns over rampant global inflation, from the insistence of the ECB on transitory price increases to Canada’s tamed CPI increase, is likely to continue to put a drag on the gold bulls towards the $1,900 aspiration.

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 overarching dovish monetary policy directive and recent reiterations by the RBA, as opposed to the hawkish lean see in the US, is likely to see the AUD/USD pair continue to trend lower on the central banks’ divergence.

Central Bank Notes:

  • Plausible that the first rate increase will be not before 2024
  • Will not raise rates to control house prices/ inflation
  • Next meeting on 7 December 2021

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?

A hike of at least 25bps for the Official Cash Rate during next week’s central bank meet has been priced-in. The possibility of a 50bps rate hike is plausible, given that the latest RBNZ inflation expectations survey shows prices increases to accelerate in the fourth quarter of 2021.

Central Bank Notes:

  • Will continue to reduce monetary policy stimulus
  • Future moves contingent on inflation and employment.
  • Next meeting on 24 November 2021

Next 24 Hours Bias

Weak bullish

The Japanese Yen (JPY)

Key news events today

No major news events.

What can we expect from JPY today?

The country’s stimulus plan is expected to be passed today. The total size of the package is rumoured to be as high as $690 billion.

Supply chain constraints are likely to put a drag on the major car exporter owing to a likely continuation of a shortage of chips globally.

Central Bank Notes:

  • Lowered FY2021 GDP projection to 3.4% (prev. 3.8%); core inflation projection to 0.0% (prev. 0.6%)
  • Governor Kuroda stated that current weakness in Yen reflects the fundamentals
  • Next meeting on 17 December 2021

Next 24 Hours Bias

Mixed