IC Markets Asia Fundamental Forecast | 22 November 2021

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What happened in the US session?

Austria announced that it will re-enter a full lockdown for up to 20 days from 22 November, as the country attempts to slow the current wave of Covid-19 that is crippling its healthcare system.

Neighbouring countries, including Germany and Netherlands, are feared to follow in Austria’s footsteps, potentially dealing a blow to the recovery in Eurozone.

What does it mean for the Asia Session?

Hawkish Fed speak and prospects of further lockdowns in Europe could see the precious metals under bearish pressure from a stronger dollar and a drop in inflation risk expectations.

The Dollar Index (DXY)

Key news events today

No major news events.

What can we expect from DXY today?

Both Fed’s Clarida and Waller are in favour of a quicker pace in the speed of tapering, with the latter suggesting a $30 billion per month taper across treasuries and MBS. In this scenario, a hike in interest rates may come as early as Q2 2022.

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?

The prospects of further lockdowns in the European continent lowers inflation risk expectations in the bloc, putting a dent on the bet of a sustained global rise in prices.

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 Australian dollar’s bearish prospects are probably second only to the Euro, with Covid-19 woes pushing the latter to first place as uncertainty on the economic front clouds the bloc.

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 positioning of trades for a plausible 50bps rate hike by RBNZ on Wednesday is likely to see NZD/USD hover around the 0.7000 handle prior. A hike of at least 25bps for the Official Cash Rate has been priced-in.

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

Bank Holiday

What can we expect from JPY today?

The Japanese government approved a record $490 billion stimulus plan to alleviate the economic devastation brought upon by the Covid-19 pandemic.

Safe-haven flows due to the deteriorating Covid situation in Europe is likely to  continue to see a support for the yen.

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

Weak bullish