IC Markets Asia Fundamental Forecast | 06 March 2023

What happened in the US session? The US ISM Services PMI data shows an actual value of 55.1 compared to the forecast of 54.5. However, it is slightly lower than the previous value of 55.2, indicating moderate growth and a steady economy. What does it mean for today’s Session? Switzerland and Canada are expected to report slightly weaker economic data. The Swiss CPI is expected to increase by 0.5% from the previous month, a somewhat lower rate of increase than the last month. This suggests that inflationary pressures in Switzerland may be moderating. Similarly, the Ivey PMI for Canada’s manufacturing sector is forecasted to decline from 60.1 to 55.9. This indicates that the pace of growth in Canada’s manufacturing sector may be slowing down, which could affect the broader economy.  The Dollar Index (DXY) Key news events today No major news events. What can we expect from DXY today? Factory Orders m/m, a leading economic indicator for the US economy, is expected to decrease by 1.8%, following a previous increase of 1.8%. This could pressure the USD upon data release, albeit temporarily. Central Bank Notes:

• The Committee has raised the federal funds rate target range to 4.5-4.75% and plans to continue increasing it to return inflation to 2%
• The Committee will monitor incoming information and adjust the stance of monetary policy as appropriate to achieve its goals
• A majority vote from the Committee supported the decision to raise the target range
• Next meeting is on 23 March 2023

Next 24 Hours Bias Mixed

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Gold (XAU) Key news events today No major news events. What can we expect from Gold today? Swiss CPI data release for the month is forecasted to show a 0.5% MoM increase, slightly lower than the previous 0.6%. It could impact gold prices depending on market sentiment, with a higher figure potentially increasing demand for gold as a hedge against inflation, while a lower figure could decrease demand. Next 24 Hours Bias Weak Bearish

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The Australian Dollar (AUD) Key news events today No major news events. What can we expect from AUD today? A further increase in the upcoming MI Inflation Gauge m/m data may lead to higher interest rates, increasing AUD value. Previous data showed a 0.9% increase. Central Bank Notes:

• Cash rate stands at 3.35%
• Future rate rises are expected as RBA targets the 2-3% inflation target
• Next meeting on 7 March 2023

Next 24 Hours Bias Mixed

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The Kiwi Dollar (NZD) Key news events today No major news events. What can we expect from NZD today? RBNZ Governor Adrian Orr signalled a cautious approach to interest rate hikes in his latest speech. Central Bank Notes:

• Monetary Policy Committee increased the OCR from 4.25% to 4.75%
• Higher interest rates are needed to reduce inflation and support employment sustainably
• Severe storms in North Island will increase inflation and disrupt production.
• Next meeting is on 5 April 2023

Next 24 Hours Bias Bearish

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The Japanese Yen (JPY) Key news events today No major news events. What can we expect from JPY today? Previously released data will likely influence the price direction. The Tokyo Core CPI year-over-year figure remains at 3.3%, which aligns with the forecasted and previous readings of 3.3% and 4.3%, respectively. The unemployment rate is currently at 2.4%, lower than the forecasted and earlier readings of 2.5%. Central Bank Notes:

• Cash rate stands at -0.1%
• Expanded range for 10-year JGB yield fluctuations to 0.5%
• Next meeting is on 8 March 2023

Next 24 Hours Bias Mixed-to-Weak Bullish

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The Euro (EUR) Key news events today No major news events. What can we expect from EUR today? The upcoming data releases for EUR, including the forecasted Sentix Investor Confidence of -5.6 (previous reading of -8.0) and a forecasted Retail Sales m/m of 0.7% (previous reading of -2.7%), may have a potentially positive impact on the EUR. Central Bank Notes:

• Main Refinancing Rate is currently at 3.00%
• ECB Governing Council to continue raising interest rates and reducing holdings of securities
• Future policy decisions to be data-dependent
• Next meeting on 16 March 2023

Next 24 Hours Bias Bullish

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The Swiss Franc (CHF) Key news events today CPI m/m What can we expect from CHF today? Switzerland’s upcoming CPI m/m data is forecasted at 0.5%, slightly lower than the previous 0.6%. However, the impact on CHF could remain uncertain and depends on market sentiment. Central Bank Notes:

• Current policy rate is at 1.00%
• Next meeting on 23 March 2023

Next 24 Hours Bias Weak Bearish

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The Pound (GBP) Key news events today No major news events. What can we expect from GBP today? UK Construction PMI forecasted at 48.7 and previous at 48.4. Both readings of the country’s Construction PMI indicate a contraction in the construction sector. Central Bank Notes:

• MPC voted to increase Bank Rate by 0.5 percentage points to 4%
• Near-term data developments are crucial in assessing how quickly external and domestic inflationary pressures will abate
• MPC’s updated projections show CPI inflation falling back sharply from its current level
• Next meeting on 23 March 2023

Next 24 Hours Bias Bearish

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The Canadian Dollar (CAD) Key news events today Ivey PMI What can we expect from CAD today? Ivey PMI, a monthly economic indicator for Canada’s manufacturing sector, is forecasted to decline from 60.1 to 55.9. A reading above 50 indicates expansion, and below 50 indicates contraction. The impact on CAD may be mixed, depending on how much the actual data deviate from the forecast. Central Bank Notes:

• Increased rates to 4.50%; indicated pause of future rate hikes
• Inflation in Canada is projected to drop to around 3% in the middle of 2023
• Goal is to reach the 2% inflation target by 2024
• Next meeting on 8 March 2023

Next 24 Hours Bias Weak Bearish

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Oil Key news events today No major news events. What can we expect from Oil today? The UAE is reportedly discussing leaving OPEC, which could disrupt the balance of global oil supply and demand, leading to increased competition and potentially lower prices for consumers, but also destabilising the oil market and harming oil-exporting countries. Next 24 Hours Bias Bearish

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