IC Markets Asia Fundamental Forecast | 8 December 2021

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What happened in the US session?

Easing concerns on Omicron’s transmissibility and severity fuelled a surge in the equity markets and sustained gains in the antipodeans against the greenback. Interestingly, safe-havens assets maintained their ranges.

What does it mean for the Asia Session?

Sustained demand on safe-haven assets highlights the lingering worry on Omicron, despite early reports indicating that its severity remains mild. This development could stem from the new variant’s high transmissibility and its low-level susceptibility to current covid vaccines.

The Dollar Index (DXY)

Key news events today

No major news events.

What can we expect from DXY today?

A continuation of consolidation for the greenback would be the most likely scenario, following another light calendar day. Focus would be maintained on the recent hawkishness reiterated by the members of the US Fed.

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?

Advances in the precious metal, anticipated to be technically driven amid a lack of tier-one data from the US, is likely to be capped amid the overarching hawkishness from the US central bank. An upcoming US CPI data set release due on Friday may rock the boat.

Next 24 Hours Bias

Mixed

The Australian Dollar (AUD)

Key news events today

No major news events.

What can we expect from AUD today?

The Australian central bank reiterated its commitment to maintain its highly supportive monetary conditions, maintaining previous monetary policy settings 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 1 February 2022

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 continuation of the bullish effect from RBNZ’s rate hike cycle is likely to stay on the bid, following a bounce from the yearly lows registered nearer to the 0.6700 handle on NZD/USD. Easing concerns over lockdowns due to Omicron pads the bulls.

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?

The double whammy from easing concerns over the new covid variant and BoJ’s highly accommodative monetary policies should keep the yen subdued.

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