IC Markets Europe Fundamental Forecast | 15 September 2021

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What happened across the Asia session?

North Korea fired two ballistic missiles into the sea, according to South Korea’s military. Japan has condemned the launches and warns that the actions of the hermit state threaten the world.

What does it mean for the Europe and US Sessions?

The safe-haven currencies could gain some traction from the continued defiance from North Korea.

The upcoming inflation data for Canada and the UK is unlikely to alter the stance on their respective central banks, given that both Governors have reiterated that any upside surprise in CPI is likely transitory.

The Dollar Index (DXY)

Key news events today

No major news events.

What can we expect from DXY today?

On the geo-political front, US President Biden proposed a face-face meeting with China’s President Xi in their call last week but the latter did not respond to the request. Biden has denied that Xi turned down the request.

The Delta variant would have an adverse impact on the US labour market in the short-term but the prospects for an improvement remains valid in the longer-term, according to Whitehouse advisor Desee.

Next 24 Hours Bias

Weak Bullish

Gold (XAU) Update

Key news events today

No major news events.

What can we expect from Gold today?

The precious metal sustained gains from the bullish reaction to the lower US CPI numbers, closing above $1,800 for the first time in a week. A dovish surprise at the US Federal Open Market Committee meeting from 21-22 September would provide further bullish impetus.

Next 24 Hours Bias

Weak Bullish

The Euro (EUR)

Key news events today

No major news events.

What can we expect from EUR today?

News flow from Europe remains light following the latest European Central Bank decision to slow the pace of purchases under the pandemic emergency purchase programme. Focus could turn to the German elections on 26 September where polling indicates that no party is likely to gain a majority.

Next 24 Hours Bias

Weak Bearish

The Swiss Franc (CHF)

Key news events today

No major news events.

What can we expect from CHF today?

The lower-than-expected inflation data set from the US kept USD/CHF below the tested multi-month resistance around the 0.9230 region.

The country’s PPI came in much higher-than-expected but data seldom drives the safe-haven currency as much as the overall global risk sentiment.

Next 24 Hours Bias

Weak Bearish

The Pound (GBP)

Key news events today

CPI y/y, 6pm GMT

What can we expect from GBP today?

UK year-on-year CPI is expected to rise to 2.9% (prev. 2.0%) but likely to be viewed by the Bank of England as transitory even if expectations materialise.

The central bank’s attention is likely to be the effects on the labour market once the Job Retention Scheme ends on 30 September. An estimated 100,000 jobs would likely be lost in the travel sector alone.

Next 24 Hours Bias

Weak Bearish

The Canadian Dollar (CAD)

Key news events today

CPI m/m, 12.30am GMT

What can we expect from CAD today?

Month-on-month CPI for Canada is expected to drop to 0.1% (prev. 0.6%) while yearly inflation measures are expected to remain unchanged. In the event of a higher-than-expected CPI data set, the Bank of Canada is likely to shrug it off as transitory, as stated in the latest central bank’s meeting in September.

Next 24 Hours Bias

Weak Bearish

Oil

Key news events today

No major news events.

What can we expect from Oil today?

China, the world’s largest importer of oil, would hold its first auction from the country’s strategic reserves in a bid to ease the cost of crude. About 7.38 million barrels of crude of different grades would be put on the market on 24 September.

On the supply front, shut-in oil production from the US Gulf of Mexico is gradually returning while Russia confirmed an output hike 10.68m barrels per day (bpd) versus the August average at 10.43m bpd.

Next 24 Hours Bias

Weak Bearish