Market Roundup
• New Zealand RBNZ Offshore Holdings (Aug) 56.90%, 56.30% previous
• Japan Tertiary Industry Activity Index (Jul) 2.50, 1.50 previous
• Japan Tertiary Tertiary Industry Activity Index (MoM) (Jul) 1.4%,0.8% forecast, -1.2% previous
Looking Ahead Economic Data (GMT)
• 09:00 EU ZEW Economic Sentiment (Sep) 16.3 forecast, 17.9 previous
• 09:00 German ZEW Current Conditions (Sep) -77.3 previous
•09:00 German ZEW Economic Sentiment (Sep) 17.1 forecast, 19.2 previous
Looking Ahead Events And Other Releases (GMT)
•No Events Ahead
Currency Forecast
•EUR/USD: The euro was little changed against the dollar on Tuesday as focus shifted to U.S. Federal Reserve, which is widely expected to kick off its policy easing cycle this week. All eyes will be on the U.S. central bank's interest rate decision on Wednesday, with money markets pencilling in a 61% chance of a 50-basis-point rate cut, and a total easing of 120 bps in 2024. Looking ahead, Eurozone data releases will include the final August HICP, flash September consumer confidence, and the German ZEW survey. Several European Central Bank officials, including President Lagarde, are also scheduled to speak. Immediate resistance is noted at 1.1142 (23.6%fib), with a breakout potentially pushing the pair towards 1.1191 (Higher BB). On the downside, immediate support is at 1.1075 (Sep 16th low), a drop below this level could lead the pair towards 1.1000 (Psychological level).
•GBP/USD: The British pound gained against the dollar on Tuesday as attention turned to this week's UK inflation data and the central bank meeting. All attention will turn towards the U.S. Federal Reserve this week where they are expected to announce at least a 25-basis-point cut to interest rates at the conclusion of its September policy meeting on Wednesday. Markets are currently pricing in an 62% probability of a 50-bp easing at the conclusion of the two-day meeting, against 43% on Friday. The odds have narrowed sharply after media reports revived the prospect of a more aggressive easing.UK Inflation data, due for release on Wednesday, will be crucial ahead of the BoE's policy decision. Immediate resistance can be seen at 1.3220(23.6%fib), an upside break can trigger rise towards 1.3256(Higher BB).On the downside, immediate support is seen at 1.3121(38.2%fib), a break below could take the pair towards 1.3033(61.8%fib).
• AUD/USD: The Australian dollar hovered around on Tuesday as investors were cautious ahead of start of the Federal Reserve's easing cycle that could see policymakers deliver an outsized rate cut. Weaker dollar, stronger commodities prices has lifted Australian currency recently as Australia is a net exporter of major commodities. Looking ahead, Australia will release its August jobs data on Thursday where analysts forecast a moderate rise of 25,500 and a steady unemployment rate of 4.2%.Any increase in the jobless rate would narrow the odds on a November rate cut. Immediate resistance can be seen at 0.6766(23.6%fib), an upside break can trigger rise towards 0.6823(Aug 29th high).On the downside, immediate support is seen at 0.6697(38.2%fib), a break below could take the pair towards 0.6639(50%fib).
NZD/USD: The New Zealand dollar eased slightly against the U.S. dollar on Tuesday as the kiwi was pressured by recent signs of economic weakness in China, New Zealand's largest trading partner. Data due on Thursday are expected to show a 0.4% contraction in the economy for the second quarter, highlighting the need for additional policy easing. Markets are fully priced for a quarter-point cut in October, with a 25% chance of a 50-basis-point reduction. Swaps imply 87 basis points of easing over the next two meetings. The kiwi dollar held steady at $0.6190, following a 0.7% rally in the previous session. Immediate resistance can be seen at 0.6203(38.2%fib), an upside break can trigger rise towards 0.6277(23.6%fib).On the downside, immediate support is seen at 0.6144(50%fib), a break below could take the pair towards 0.6121(Lower BB).
•USD/JPY: The dollar showed slight recovery against the yen on Tuesday, but gains were limited as investors remained cautious ahead of the upcoming Fed rate decision. Extended holidays in China and South Korea resulted in thin trading conditions, with attention focused on Wednesday's Fed decision. Odds have increased over the past week in favor of a 50-basis-point rate cut, keeping the dollar near its lowest level in over a year against the yen at 140.70. Futures indicate a 67% chance that the Fed could cut rates by half a percentage point at its monetary policy meeting on Wednesday. Top of FormBottom of FormStrong resistance can be seen at 141.67(38.2%fib), an upside break can trigger rise towards 142.50(Sep 11th high). On the downside, immediate support is seen at 140.00 (Psychological level), a break below could take the pair towards 139.66(Lower BB).
Equities Recap
Asian equities were higher on Tuesday , driven by increasing expectations of a significant rate cut by the U.S. Federal Reserve in its meeting starting later in the day.
South Korean KOSPI was up 0.13%,Hang Seng was up1.23%
Commodities Recap
Oil prices extended gains on Tuesday as the market focused on U.S. output concerns following Hurricane Francine and anticipated lower U.S. crude stockpiles.
Brent crude futures for November rose 34 cents, or 0.5%, at $73.09 a barrel at 0420 GMT. U.S. crude futures for October climbed 49 cents, or 0.7%, at $70.58 a barrel.
Gold prices held steady on Tuesday, hovering near record highs reached in the previous session, as markets anticipate the start of a U.S. easing cycle, with expectations that it might begin with a substantial rate cut.
