IC Markets Asia Fundamental Forecast | 24 November 2021

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What happened in the US session?

The stronger-than-expected European flash manufacturing and services PMIs did little to move EUR/USD off its multi-month lows. The overarching central bank policy divergence theme remains strongly in play.

What does it mean for the Asia Session?

The US dollar is likely to consolidate prior to the release of the FOMC Meeting Minutes. Traders would be keen to see mentions of a faster pace in tapering of more than $15 billion per month for next year before sending the greenback higher, especially against central bank divergence plays on EUR, AUD and JPY.

The Dollar Index (DXY)

Key news events today

Prelim GDP q/q, 1330 GMT

Core PCE Price Index m/m, 1500 GMT

FOMC Meeting Minutes, 1700 GMT

What can we expect from DXY today?

The upcoming month-on-month Core PCE Price Index release (expected 4.1%, prev. 3.6%) is likely to reaffirm the latest CPI figure from the US Bureau of Labour Statistics, where it was reported that the annual CPI jumped to 6.2% in October from 5.4% in September, the strongest inflation seen in over three decades.

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 bears took the $1,800 psychological level amid covid woes in Europe, where the World Health Organisation warns that COVID death toll could exceed 2.2 million by March.

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 upcoming speeches by RBA Assist Governor Bullock is likely to re-iterate the dovish stance of the Australian central bank, likely giving AUD/USD a boost lower towards its September and August lows around 0.7170 and 0.7100, respectively.

Central Bank Notes:

  • Plausible that the first interest 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

Strong Bearish

The Kiwi Dollar (NZD)

Key news events today

Official Cash Rate, 0100 GMT

RBNZ Monetary Policy Statement, 0100 GMT

RBNZ Rate Statement, 0100 GMT

RBNZ Press Conference, 0200 GMT

What can we expect from NZD today?

An increase of 25bps in the OCR is fully priced-in by the markets. Only a higher increase, likely by 50bps, would see a sustained spike in the kiwi. Traders would also be expecting the forward guidance by RBNZ to remain hawkish in the coming year.

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?

USD/JPY looks poised to sustain gains towards the 2016/2017 highs around the 118.50 region, amid overarching monetary policy divergences from respective central banks.

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 bearish