IC Markets Asia Fundamental Forecast | 7 December 2021

IC Markets No Comments

What happened in the US session?

Safe-haven assets largely weakened against the greenback as the severity of Omicron is deemed to be mild.

ECB’s Holzmann holds the view that inflation in the euro zone is not likely to go below 2% in 2022.

What does it mean for the Asia Session?

The safe-haven assets are likely to continue to face downward pressures as the risk-on sentiment recovers from reports on the mild severity of Omicron. The Japanese yen, with its highly accommodative central bank, is likely to bear the brunt of easing covid concerns.

The Dollar Index (DXY)

Key news events today

No major news events.

What can we expect from DXY today?

The light calendar day for the US dollar is likely to shift focus back to the recent hawkishness demonstrated by the members of the central bank. A continuation in consolidation for the world’s reserve currency would be the most likely scenario.

Central Bank Notes:

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

Next 24 Hours Bias

Mixed

Gold (XAU)

Key news events today

No major news events.

What can we expect from Gold today?

A quiet day in terms of data for the US dollar is likely to translate to a similar consolidation tone for the precious metal. The overarching hawkishness from the US Fed is likely to cap intra-day gains motivated by the technical crowd.

Next 24 Hours Bias

Mixed

The Australian Dollar (AUD)

Key news events today

Cash Rate, 0330 GMT

RBA Rate Statement, 0330 GMT

What can we expect from AUD today?

The central bank is expected to keep its current policy setting, with Cash Rate at 0.1%. and weekly bond purchases of AUD 4 billion per week until mid-February 2022.

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

Weak Bearish

The Kiwi Dollar (NZD)

Key news events today

No major news events.

What can we expect from NZD today?

With easing concerns over the severity of the Omicron covid variant, the bullish effect from RBNZ’s rate hike cycle is likely to creep into bids amid new yearly lows registered nearer to the 0.6700 handle.

Central Bank Notes:

  • Need to raise OCR to 2.6% by 2024, pending economic outlook
  • Downgrades to GDP in 2022 and unemployment rate; upgrades to CPI and GDP in 2023
  • Considered a 50bps rate hike at the latest meeting but sees 25bp as a steady approach
  • Next meeting on 23 February 2022

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?

With an easing of concerns over the new covid variant undermining its safe-haven status, coupled with BoJ’s accommodative monetary policies, the yen looks set to give back some gains accumulated over the past week.

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