IC Markets Europe Fundamental Forecast | 23 September 2021

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What happened across the Asia session?

The US dollar pared gains against other major currencies while US President Biden suggested that an increase in corporate taxes is imminent.

Fitch lowered China’s GDP growth forecast to 8.1% (prev. 8.4%), citing a slowdown in the property market following a likely curtailment of the high leverage business model employed by Chinese developers.

What does it mean for the Europe and US Sessions?

In an absence of surprises from the central bankers from Switzerland and England, the hawkish tilt from the US Fed would provide strength for the greenback against other major currencies, except Loonie.

The Dollar Index (DXY) Update

Key news events today

No major news events.

What can we expect from DXY today?

The likelihood of an official announcement on tapering in November is high; following Fed chair Powell’s statement that the taper of asset purchases may end in the middle of next year.

The Fed maintained its view on inflation as being transitory and the labour market unemployment to fall to 3.5% in 2023.

Next 24 Hours Bias

Weak Bullish

Gold (XAU) Update

Key news events today

No major news events.

What can we expect from Gold today?

Fed chair Powell’s dismissal of Evergrande’s impact on the US and a hawkish tilt of the central bank are likely to subdue the ‘flight-to-safety’ demand for the precious metal, evident from sustained gains in both the equities and commodities markets.

Next 24 Hours Bias

Weak Bearish

The Euro (EUR)

Key news events today

German Flash Manufacturing PMI, 0730 GMT

German Flash Services PMI, 0730 GMT

What can we expect from EUR today?

Despite the progress in the tapering of US asset purchases from the latest FOMC meeting, EUR/USD reclaimed the key 1.1700 level at the time of writing. Against the backdrop of a relatively dovish ECB to the hawkish Fed, an opportunity to short the single currency is presented.

Next 24 Hours Bias

Weak Bearish

The Swiss Franc (CHF)

Key news events today

SNB Monetary Policy Assessment, 0730 GMT

What can we expect from CHF today?

No policy change from the Swiss National Bank is expected. The central bank is likely to reiterate that the currency remains ‘highly valued’ and the pledge to intervene in the market when necessary.

Next 24 Hours Bias

Weak Bearish

The Pound (GBP)

Key news events today

Asset Purchase Facility, 1100 GMT

MPC Asset Purchase Facility Votes, 1100 GMT

Monetary Policy Summary, 1100 GMT

What can we expect from GBP today?

The upcoming Bank of England meeting is widely anticipated to be a non-event where no change in policy is expected.  Traders’ focus on the meeting may lean towards the tone of the policy summary and/ or more MPC members switching to stand in line with Saunders who voted for a reduction in the bond buying programme.

Next 24 Hours Bias

Weak Bullish

The Canadian Dollar (CAD)

Key news events today

No major news events.

What can we expect from CAD today?

With the backdrop of a stable political scene and a continuity of the hawkish monetary policies from the central bank, the firm oil price derived from a higher-than-expected draw from crude inventories should maintain the strength of the Loonie.

Next 24 Hours Bias

Medium Bullish

Oil

Key news events today

No major news events.

What can we expect from Oil today?

Following Nigeria’s intentions to seek a higher quota under the current OPEC+ agreement, the Iraqi oil minister hinted a similar intention after an end to the OPEC+ output restrictions, citing that Iraq will be able to produce 5 million barrels per day.

Next 24 Hours Bias

Weak Bearish