IC Markets Asia Fundamental Forecast | 26 August 2021

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What happened in the US session?

ECB’s Lane remains dovish, suggesting that an end to the pandemic emergency purchase programme is too early to discuss in the upcoming central bank meeting in September. The chief economist retains a transitory view on inflation and favours an accommodative policy to the first quarter of 2022.

What does it mean for the Asia Session?

Anticipation of the Jackson Hole symposium and light data releases for the session is likely to see a sideways movement for the major currency pairs.

The Dollar Index (DXY)

Key news events today

Prelim GDP q/q, 12.30pm GMT

What can we expect from DXY today?

Light data releases kept the dollar trading in a range. Focus shifts to the quarter-on-quarter Preliminary GDP to be released today, where the economy is expected to grow to 6.7% (prev. 6.5%). The Jackson Hole symposium would take centre stage thereafter, where traders would be looking for hints of a taper timeline for the Fed’s asset purchases.

Next 24 Hours Bias

Weak Bullish

Gold (XAU)

Key news events today

No major news events.

What can we expect from Gold today?

Possible comments from central bankers on inflation being non-transitory from the Jackson Hole symposium happening later this week would likely lead to a quicken expectation on tightening and increase the opportunity cost of holding Gold.

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?

As the Delta variant continues to spread at record highs in the country, the low rate of fully vaccinated adults, at 30%, would continue to impede a swift re-opening of the economy. Australia’s pandemic modelling advisor stated that the country can proceed with re-opening plans with a 70-80% vaccination rate.

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?

Covid-19 infections in the country continue to rise, impeding planned hikes that the central bank intended to execute. RBNZ has repeatedly insisted that a rate hike, up to 50bps, was on the cards before the first case of the virus since February 2021 was reported.

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 currency’s safe haven status (demand) seems to be challenged by the weakness on the yen from the COVID-19 situation in the country (supply), evident from the price action where the 110.10 resistance region is being tested for a third time at the time of this writing.

Next 24 Hours Bias

Weak Bearish