IC Markets Europe Fundamental Forecast | 05 September 2022

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What happened across the Asia session?

Most currencies traded in a consolidative range with no major news events pushing prices in either direction. 

What does it mean for Europe and US Sessions?

Price movement could be choppy with the US and Canada on a bank holiday. Look for the price to break out of the current consolidation following the preexisting trend. 


The Dollar Index (DXY)

Key news events today

No major news events. 

What can we expect from DXY today?

On Friday, the US Non-Farm employment change was slightly better than expected at 315K (Forecast: 295K) while the unemployment rate rose to 3.7% from 3.5%. The release of mixed employment data for the US resulted in higher volatility in the DXY but a general move higher. With the price of DXY reaching a high of 110 following the bounce at the 109 level, a further move to the upside can be expected. The DXY is currently at the 109.85 price level, look for a retracement to the 109.60 price level before a possible continuation of the uptrend to the 110.55 target level. 

Central Bank Notes:

  • Federal Reserve hiked rates by 75bps taking interest rates to 2.50%
  • Next meeting on 22 September 2022
  • Balance Sheet reduction plan to continue at $60b (treasuries) and $35b (MBS) over a three-month timeframe

 

Next 24 Hours Bias

Medium Bullish 

Gold (XAU)

Key news events today

No major news events. 

What can we expect from Gold today?

Gold traded lower towards the 1690 price level but the move towards the downside halted as price action indicated a possible reversal and the price climbed to the 1720 price area. With the price currently back into the 1709 price area, Gold could trade lower to test the 1680 key support level again before a stronger rebound to the upside. Watch out for choppy price movement on Gold as price trades towards the key support level. 

Next 24 Hours Bias

Weak Bearish 

The Euro (EUR)

Key news events today

No Major News Events 

What can we expect from EUR today?

As the DXY traded with higher volatility on Friday, the EURUSD once again tested the parity price area but failed to sustain the move higher. With the EURUSD ending the week at the 0,99 price level, the subsequent move on the EURUSD is uncertain for now. Price is likely to trade between the 0.99 and 1.00 price level in the lead-up to the ECB interest rate decision on Thursday. Look for hawkish comments from the ECB regarding a larger than expected rate increase to bring the EURUSD higher above the parity level. 

Central Bank Notes:

  • Raised rate by 50bps 
  • Next meeting on 8 September 2022

 

Next 24 Hours Bias

Weak Bullish 

The Swiss Franc (CHF)

Key news events today

No Major News Events 

What can we expect from CHF today?

The USDCHF trades to the upside but continues to be resisted by the 0.9850 resistance area. Although the DXY is expected to climb higher, the further upside on the USDCHF could be unlikely. Look for a possible rejection of the resistance for a counter-trend move lower towards the 0.9750 price level. However, if the price breaks above 0.9850 strongly, the USDCHF could climb towards the 1.00 price level, similar to the move in May and June 2022. 

 

Central Bank Notes:

  • Surprise rate hike by 50bps to -0.25%
  • Next meeting on 22 September 2022

Next 24 Hours Bias

Weak Bullish

The Pound (GBP)

Key news events today

No Major News Events 

What can we expect from GBP today?

The GBPUSD suffers more downside as the price rejected the 1.1570 level to trade significantly lower. With the price of the GBPUSD currently at 1485 look for a brief retrace to test the 1.15 resistance level before another move lower. However, while the GBPUSD could trade lower to the 1.1440 price level, continual significant move downside could be limited with the historic low and key support level within touching distance.

Central Bank Notes:

  • Interest rate is currently at 1.75%
  • Peak inflation revised to more than 15% in 2023. 
  • Next meeting on 15 September 2022

Next 24 Hours Bias

Medium Bearish

The Canadian Dollar (CAD)

Key news events today

No Major News Events 

What can we expect from CAD today?

The USDCAD traded lower to test the 1.3077 support level before trading higher towards the 1.3165 resistance level again. The rejection of the support level was confirmed by the development of the price action and as energy prices climbed from their support levels. Look for the USDCAD to break above the 1.3165 resistance level to trade towards 1.32, especially if the DXY continues to strengthen further.

Central Bank Notes:

  • Increased rates by 100bps, taking interest rates to 2.50% 
  • Indicated further rate increases likely.
  • Next meeting on 7 September 2022

Next 24 Hours Bias

Medium Bearish

Oil

Key news events today

OPEC-JMMC Meetings

What can we expect from Oil today?

Energy prices rebounded on Friday as the DXY spikes to the upside with WTI climbing towards 89.90 and Brent to the near-term resistance of 96.00. With the OPEC meetings today expected to announce a cut in production levels from Saudi Arabia, fresh lockdowns in China, and intensified fears of recession due to continual large key rate hikes could bring more choppy price movement for energy prices across the board. Look for the price to trade within the wide range, for WTI between 90 and 92.40, and between 96.00 and 99 for Brent.

Next 24 Hours Bias
Medium Bearish