IC Markets Europe Fundamental Forecast | 23 September 2022

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What happened across the Asia session?

The BoJ released the policy rate and accompanying statement with no significant changes. This led to the USDJPY surging higher towards the 146 resistance level. 

What does it mean for Europe and US Sessions?

With the SNB and BoE rate decision due, lookout for significant volatility on the USDCHF and GBPUSD. 


The Dollar Index (DXY)

Key news events today

USD Flash Services PMI 

What can we expect from DXY today?

The Federal Reserve hiked rates by 75bps, taking interest rates to 3.25%. This led to the DXY strengthening significantly to reach the 111.40 price level. In addition to the rate hike, Chair Powell commented that ‘ongoing increases will be appropriate’ and signaled a strong commitment to bringing down inflation despite a slowdown in the economy. These comments added to the overall hawkish sentiment for the DXY.  With the Service PMI numbers tonight, we might expect an industry contraction with data less than 50.0 expected to weaken the USD briefly.

Central Bank Notes:

  • Federal Reserve hikes rates by 75bps taking interest rates to 3.25%
  • Next meeting on 3 November 
  • Further rate increases can be anticipated, with rate cuts expected only if Fed Reserve is confident inflation is moving back down to 2%

 

Next 24 Hours Bias

Weak Bullish 

Gold (XAU)

Key news events today

No major news events. 

What can we expect from Gold today?

Gold surged strongly to the upside, testing the 1680 resistance level as the DXY weakened briefly. However, the move higher was short lived as the resistance level held strong, resulting in Gold ending the trading session at the 1670 price level. Look for Gold to trade lower towards the 1655 support level as the DXY strengthens. Gold is expected to remain between the 1655 and 1680 price range  

Next 24 Hours Bias

Weak Bearish

The Euro (EUR)

Key news events today

Flash Manufacturing PMI

Flash Services PMI

What can we expect from EUR today?

The DXY’s strength caused the EURUSD to trade at a lower price of around 0.98. The PMI data to be released with forecasts of data remaining below 50 and lower than previous. If the actual data is as expected, along with the border uncertainty between Russia and Ukraine, a move lower to the downside for the EURUSD can be anticipated. The next important support level is at 0.97, therefore watch for a price break below the current support level to indicate the further possibility for downward movement.

Central Bank Notes:

  • Raised rate by 75bps to take overall rates to 1.25%
  • Next meeting on 27 October 2022

 

Next 24 Hours Bias

Weak Bearish

The Swiss Franc (CHF)

Key news events today

No Major News Event

What can we expect from CHF today?

Due to the strength of the DXY, the USDCHF surged up overnight, approaching the key resistance area of 0.9852 levels. The upward movement was swiftly retraced, and the USDCHF is currently trading around 0.9784. With a rate increase of 75 bps anticipated in the SNB rate decision, the CHF has created some volatility in the market and is projected to strengthen. 

 

Central Bank Notes:

  • Rate hiked by 75bps to 0.5%
  • Next meeting on 15 December 2022

 

Next 24 Hours Bias

Weak Bullish

The Pound (GBP)

Key news events today

Flash Services PMI 

Flash Manufacturing PMI

What can we expect from GBP today?

The price of the GBPUSD is currently near the support area 1.12, continuing its downward trend. Despite the possibility of additional decline, the GBPUSD is already at a crucial support level. The Bank of England raised interest rates by 50 basis points yesterday, pushing price up momentarily. However, strong bearish momentum is still in place do keep an eye on today’s PMI numbers which might bring GBPUSD further to the downside

Central Bank Notes:

  • Interest rate is currently at 2.25%
  • Peak inflation revised to more than 15% in 2023. 
  • Next meeting on 3 November 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?

As the DXY gained momentum, the USDCAD surged sharply to reach the 1.3520 price level. Further gains are projected as long as the upward trend continues and there are no significant upcoming news events for the Canadian economy. After the price retraces to the temporary support level of 1.3470, look for buying opportunities on the USDCAD, with the next significant resistance level at 1.37.

Central Bank Notes:

  • Increased interest rates to 3.25%  
  • Indicated further rate increases likely.
  • Next meeting on 26 October 2022

Next 24 Hours Bias

Medium Bearish

Oil

Key news events today

No Major News Events 

What can we expect from Oil today?

WTI is currently trading at 83.58 and Brent is at 90.818. Although there has been a lot of volatility in energy prices especially due to Russia’s military mobilisation recently, Brent and WTI are still trading within a large consolidation range. For the medium term, price is expected to swing between these levels. As a result, do anticipate WTI to be trading between 81.75 and 86.68 and Brent fluctuating between 88.305 and 96.538.

Next 24 Hours Bias
Weak Bearish