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Date : 23rd January 2021.

FX Update – January 22 – USD Holds gains & PMI’s.


GBPUSD, H1
The Dollar has firmed up on a safe haven bid with the reflation trade having come to a firm stop. The USDIndex lifted moderately to a 90.25 high after basing out at a nine-day low at 90.05. The US currency gained only marginally against the Euro and Yen, but racked up gains of around 0.4% to 0.5% against the Pound and dollar bloc currencies. EURUSD ebbed back from an eight-day high at 1.2178, before recovering to 1.2188 following Eurozone PMI data, while USDJPY lifted to a two-day high at 103.70.



Global equity indices corrected from record highs in the cases of the main US indices and the MSCI Asia-Pacific Index. Base metals are also markedly lower. Lofty valuations and an increasing level of concern about the Covid situation have warranted increasing investor caution. Covid restrictions have been implemented across northern China, and the new highly transmittable variant of the SARS-Cov2 coronavirus — aka the British variant, where it was first detected — has shown up as far afield as Beijing and Australia. The EU looks set ban travel to the UK, while the UK has already imposed much tougher international travel restrictions. The rollout of the Covid vaccinations globally has also been proving to be bumpy.

Elsewhere, cryptocurrencies dropped sharply again, which will only add to their reputation for being too volatile for serious institutional investors to touch. Reports that the Biden administration has tighter regulations for cryptocurrencies on its ‘to do’ list have been driving cryptos lower. Bitcoin was showing an 11% loss on the day, as of the early London morning, at $30,860 — which is nearly 26% below the record high seen earlier in the month. The virtual coin earlier traded below $29,000 for the first time since January 1.



Eurozone Flash PMI readings declined as lockdowns were strengthened and/or extended. The last minute Brexit deal may have helped to prevent a worse number for the manufacturing sector at least, and the decline in the Eurozone manufacturing reading to 54.7 from 55.2 was actually less pronounced than feared with the number still pointing to a solid pace of expansion. Services meanwhile are clearly suffering. The Eurozone services PMI dropped back to 45.0 from 46.4, driven largely by a sharp deterioration in the French reading, which fell to 46.5 from 49.1. The German index held up better than feared and dipped only slightly – to 46.8 from 47.0. The overall composite for the Eurozone came in at 47.5, down from 49.1 at the end of last year and supporting expectations for a technical recession over the Q4 and Q1 period.



Across the Channel UK PMI data showed a woeful record for Services and came in much weaker than expected. The headline composite PMI plunged to 40.6 from 50.4 in December. The median forecast had been for a 45.5 reading. Pronounced weakness in the service sector drove the composite lower, with services bearing the brunt of the lockdown across the UK nations, which has been the most severe since last year’s ‘mother’ lockdown. The prelim services PMI headline dove to 38.8 from 49.4. The prelim manufacturing PMI fell to a headline reading of 52.9 from 57.5, which was near the median forecast for 53.0. Much of the manufacturing sector remains open, despite the lockdown. The drop in the composite reading, while sharp, is still less much less severe than was seen during early spring last year. There are hopes that the UK’s world-leading vaccination programme will start to see restrictions lifted from as early as mid February, by which time all the most vulnerable groups should have been vaccinated.

Cable trades down to test 1.3650, down from yesterday’s high at 1.3745 and today’s open at 1.3729.

Always trade with strict risk management. Your capital is the single most important aspect of your trading business.

Please note that times displayed based on local time zone and are from time of writing this report.

Click HERE to access the full HotForex Economic calendar.

Want to learn to trade and analyse the markets? Join our webinars and get analysis and trading ideas combined with better understanding on how markets work. Click HERE to register for FREE!

Click HERE to READ more Market news.

Stuart Cowell
Head Market Analyst
HotForex

Disclaimer: This material is provided as a general marketing communication for information purposes only and does not constitute an independent investment research. Nothing in this communication contains, or should be considered as containing, an investment advice or an investment recommendation or a solicitation for the purpose of buying or selling of any financial instrument. All information provided is gathered from reputable sources and any information containing an indication of past performance is not a guarantee or reliable indicator of future performance. Users acknowledge that any investment in FX and CFDs products is characterized by a certain degree of uncertainty and that any investment of this nature involves a high level of risk for which the users are solely responsible and liable. We assume no liability for any loss arising from any investment made based on the information provided in this communication. This communication must not be reproduced or further distributed without our prior written permission.

 

Date : 25th January 2021.

Events to Look Out for This Week.


A gigantic week is coming with 2 of the FAANGs, Tesla and Microsoft, reporting their Q4 earnings, along with the FOMC conference in focus as it could provide key information on fiscal support talks. Focus will also be on GDP data from the biggest economies in the world, including the US and Europe, but also on UK Job numbers that will show the impact of the original furlough deadline.
Monday – 25 January 2021

• German IFO (EUR, GMT 09:00) – German IFO business confidence is expected to slip slightly to 90.0 in January after the jump seen in December to 92.1.
• BoJ Monetary Policy Meeting Minutes (JPY, GMT 23:50) – The BoJ minutes should provide further guidance for 2021.

Tuesday – 26 January 2021

• Average Earnings Index & ILO rate (GBP, GMT 07:00) – UK Earnings with the bonus-included figure are expected to slow down to 2.3% y/y in the three months to November. UK ILO unemployment is expected higher at 5.1% in the three months to November.
• Consumer Confidence (USD, GMT 15:00) – The US Consumer confidence is expected to slip to 88.0 from 88.6 in December, versus a 6-year low of 85.7 in April. The confidence measures have shown divergent swings since mid-2020 that have a downward tilt into January, likely due to the surge in virus cases, more stringent lockdowns, and the bizarre political events of recent weeks. We should be seeing some lift from stimulus passage and vaccine distributions, however, which may be more evident in February.

Wednesday – 27 January 2021

• Consumer Price Index (AUD, GMT 00:30) – Australian inflation data in Q4 is expected to decline at 1.5% q/q while headline remains in line with Q3 at 0.7% y/y.
• Durable Goods (USD, GMT 12:30) – Durable goods orders are expected to rise 3.0% in December with an 8.3% climb in transportation orders. A defense orders gain is pegged at 3.0%, following a 3.7% November bounce. Boeing orders jumped to 90 in December with the lifting of the 737 MAX grounding, from 27 in November and zero in the two months before that. Durable shipments should rise 1.0%, and inventories should rise 0.5%.
• Interest Rate Decision and Conference (USD, GMT 19:00) – The FOMC is due to meet (Tuesday, Wednesday) but no changes are expected. The FOMC didn’t make any big changes in its policy stance at the December 16 meeting. However, it did tweak its statement to emphasize its uber-accommodative posture, which was underscored several times by Chair Powell in his press conference. The forecasts indicate that current rates will remain in place through 2023.

Thursday – 28 January 2021

• Harmonized Index of Consumer Prices (EUR, GMT 13:00) – The German prel. HICP inflation for January is anticipated to be released at -0.6% y/y from -0.7% y/y. Germany’s temporary VAT cut is partly to blame as are base effects from oil prices, but it is also clear that a lack of demand and the closure of the hospitality sector continue to keep a lid on headline inflation numbers.
• Gross Domestic Product (USD, GMT 12:30) – The prelim. Gross Domestic Product should advance at 4.1% in Q4 and 3.2% in Q1, after 33.4% growth in Q3. We expect a Q4 moderation in consumption growth to 2.2% from 41.0% in Q3 as heightened coronavirus restrictions impacted spending, while government purchases contract at an estimated -5% rate, and nonresidential investment in structures fall at a -9% pace. We saw in Q3 a continued boom in housing activity and equipment spending.

Friday – 29 January 2021

• Gross Domestic Product (EUR, GMT 09:00) – Eurozone’s GDP contracted -5.0% last year, according to the first estimate for economic activity last year. That compared to a modest rise of 0.6% in 2019 and while it was somewhat better than median expectations, the numbers refer to unadjusted data. Adjusted for calendar effects, GDP was actually down -5.3%. There is no data for the last quarter yet, but it is pretty clear that after the recession in the first quarter and the rebound over the summer, virus developments weighed on growth again in the last quarter of 2020, although less than feared at one point.
• Personal Income/Consumption (USD, GMT 12:30) – A 0.1% increase in headline rise for personal income in December is anticipated after a -1.1% drop in November, alongside a -0.7% drop in consumption after a -0.4% November decline.

Always trade with strict risk management. Your capital is the single most important aspect of your trading business.

Please note that times displayed based on local time zone and are from time of writing this report.

Click HERE to access the full HotForex Economic calendar.

Want to learn to trade and analyse the markets? Join our webinars and get analysis and trading ideas combined with better understanding on how markets work. Click HERE to register for FREE!

Click HERE to READ more Market news.

Andria Pichidi
Market Analyst
HotForex

Disclaimer: This material is provided as a general marketing communication for information purposes only and does not constitute an independent investment research. Nothing in this communication contains, or should be considered as containing, an investment advice or an investment recommendation or a solicitation for the purpose of buying or selling of any financial instrument. All information provided is gathered from reputable sources and any information containing an indication of past performance is not a guarantee or raeliable indicator of future performance. Users acknowledge that any investment in FX and CFDs products is characterized by a certain degree of uncertainty and that any investment of this nature involves a high level of risk for which the users are solely responsible and liable. We assume no liability for any loss arising from any investment made based on the information provided in this communication. This communication must not be reproduced or further distributed without our prior written permission.

 

Date : 26th January 2021.

FX & Market Update – January 26.


FX News Today
USD & JPY stage a wee comeback. US Equities had a very volatile day – (Huge surge in Options trading) US Futures down and Asian markets weaker – amid fears of a delay in stimulus programs and warnings of asset bubbles in China weighed. In Europe, virus developments remain in focus with clear signs that lockdowns are working in new infection numbers, but worries about the impact of virus mutations and in the EU dissatisfaction with the slow rollout of vaccines. Yellen confirmed as Treasury Secretary, Trump impeachment passed to the Senate, Italian PM Conte quits and NZD & China sign new trade deal.

This week – FED on Wednesday, GDP from EU & US and a big week for US Earnings – FB, Microsoft, Tesla, Apple and DAVOS goes on-line.

USDIndex – Holds over 90.00. Trades to 90.50, – PP 90.30 – R1 90.55, R1 90.70
EUR – Back to 1.2115 now – PP – 1.2145, s1 1.2106, S2 1.2077
JPY – Remains under 104.000 – Trades at 103.75 (PP) – S1 103.60, r1 103.88
GBP – Back to test 1.3612 (low from Thursday) form 1.3720 high yesterday. – s1 13645, s2 1.3605
AUD – Under 0.7700 – trades at 0.7675 (S1) now. S2 0.7654,
NZD – Under 0.7200 – trades at 7170 (s1) S2 – 0.7146
CAD – rallies over 1.2700 – trades at 1.2775 (R1). r2 1.2830
CHF – rallied from 0.8850 to 0.8890 now. – PP 0.8875 – R1 0.8900




BTC – Retraces back to S1 at $31,500. – PP today $33,200, s2 sub $30,000 – $29,900

GOLD – Holds over 1850 – (1869 high yesterday) PP 1856, s1 1845, R1 1866 USOil – Trades at $52.45 (PP) Today s1 52.15, r1 53.15

USA500 – Closed up 13 (+0.36%) 3855 – USA500 FUTS now at 3834 – 57 days north of 20SMA (3789).

Today – UK jobs report, US consumer confidence, ECB’s Villeroy, Earnings – Microsoft, Verizon, General Electric, Johnson & Johnson, Lockheed Martin, 3M, Starbucks, Raytheon, LVMH, UBS and Novartis

Biggest (FX) Mover @ (07:30 GMT) AUDJPY (-0.41%) Rejected 80.30 yesterday, broke 20 & 200hr MA and 80.00 to test to 77.75 low. Recovered into 80.0 at close but has moved below S1 and yesterday’s low to 79.70. Fast MAs aligned and trending lower, RSI 35 and falling, MACD histogram & signal line aligned lower and remain south of 0 line from the breach of 80.00 yesterday. Stochastics in OS zone from earlier. H1 ATR 0.1004, Daily ATR 0.5780.

Always trade with strict risk management. Your capital is the single most important aspect of your trading business.

Please note that times displayed based on local time zone and are from time of writing this report.

Click HERE to access the full HotForex Economic calendar.

Want to learn to trade and analyse the markets? Join our webinars and get analysis and trading ideas combined with better understanding on how markets work. Click HERE to register for FREE!

Click HERE to READ more Market news.

Stuart Cowell
Head Market Analyst
HotForex

Disclaimer: This material is provided as a general marketing communication for information purposes only and does not constitute an independent investment research. Nothing in this communication contains, or should be considered as containing, an investment advice or an investment recommendation or a solicitation for the purpose of buying or selling of any financial instrument. All information provided is gathered from reputable sources and any information containing an indication of past performance is not a guarantee or reliable indicator of future performance. Users acknowledge that any investment in FX and CFDs products is characterized by a certain degree of uncertainty and that any investment of this nature involves a high level of risk for which the users are solely responsible and liable. We assume no liability for any loss arising from any investment made based on the information provided in this communication. This communication must not be reproduced or further distributed without our prior written permission.

 

Date : 27th January 2021.

FX News & Market Update – January 27.


FX News Today
USD slips again ahead of the FED and clarification over stimulus package. US Equities closed flat, (Verizon -3%, J&J +2.7%, GE +2.7% & MS) all beat Earnings expectations (MS up 6% after hours). Asian markets also flat. US Consumer confidence much better than expected. Overnight, AUD CPI improved, JPY data flat and German Consumer Confidence dropped significantly (-15.6 from -7.5). Vaccine rollout continues apace in the UK but the virus death toll passed 100,000 yesterday and unemployment hit a new record. Trump impeachment likely to fail as only 5 of the required 17 Senate Republicans agreed it should proceed.

This week – FED later Today, GDP from EU & US and a big week for US Earnings – FB, Microsoft, Tesla, Apple and DAVOS goes on-line.

USDIndex – Holds over 90.00. Tracks lower from 90.60 high to trade at 90.15, – PP 90.30 – S1 89.95.55, R1 90.48

EUR – Back to to test 1.2165 now – PP – 1.2145, s1 1.2120, r1 1.2188
JPY – Remains under 104.000 – Trades at 103.65 (PP) – R1 103.76, S1 103.50
GBP – Back over 1.3700 to test 1.3760. PP – s1 13645, s2 1.3605
AUD – back over 0.7700 – trades at 0.7740
NZD – Over 0.7200 – trades at 0. 7225
CAD – holds over 1.2700 – trades at 1.2718
CHF – declined from test of 0.8900 to 0.8865 now (s1)



BTC – Pivots through $31,800. – R1 today $32,500, S1 30,000

GOLD – Holds and pivots at 1850 – (1861 high yesterday) PP 1856, s1 1847,
USOil – Trades at $52.95 (R1) Today PP 52.65, S1 52.10
USA500 – Closed down 5 (-0.15%) 3849 – USA500 FUTS now at 3850 – 58 days north of 20SMA (3796).

Today – US Durable Goods, DoEs, FOMC rate decision & Fed Chair Powell press conference, NZ trade, ECB’s Hakkarainen, Lane, Earnings from Apple, AT&T, Facebook, Boeing, Tesla, Blackstone

Biggest (FX) Mover @ (07:30 GMT) GBPCAD (+0.28%) Rallied from open today following break of 20hr MA yesterday. Support now PP 1.7435 andn testing R1 at 1.7490. . Fast MAs aligned and trending higher, RSI 70 rising & testing OB zone, MACD histogram & signal line aligned higher and significantly north of 0 line. MFI in OB zone from earlier. H1 ATR 0.0012, Daily ATR 0.0103.

Always trade with strict risk management. Your capital is the single most important aspect of your trading business.

Please note that times displayed based on local time zone and are from time of writing this report.

Click HERE to access the full HotForex Economic calendar.

Want to learn to trade and analyse the markets? Join our webinars and get analysis and trading ideas combined with better understanding on how markets work. Click HERE to register for FREE!

Click HERE to READ more Market news.

Stuart Cowell
Head Market Analyst
HotForex

Disclaimer: This material is provided as a general marketing communication for information purposes only and does not constitute an independent investment research. Nothing in this communication contains, or should be considered as containing, an investment advice or an investment recommendation or a solicitation for the purpose of buying or selling of any financial instrument. All information provided is gathered from reputable sources and any information containing an indication of past performance is not a guarantee or reliable indicator of future performance. Users acknowledge that any investment in FX and CFDs products is characterized by a certain degree of uncertainty and that any investment of this nature involves a high level of risk for which the users are solely responsible and liable. We assume no liability for any loss arising from any investment made based on the information provided in this communication. This communication must not be reproduced or further distributed without our prior written permission.

 

Date : 28th January 2021.

FX News & Market Update – January 28.


FX News Today
BOOM – Stocks tank (-2%+ worst day in 3 months), USD gets safe haven lift, AUD & NZD hit. Hedge Funds squeezed, stimulus stalled? and vaccine rollout questions. FED – No change to rates & $120 bln/month in QE, the mantra remains until “substantial further progress has been made toward the Committee’s maximum employment and price stability goals.” Durable Goods missed earlier in the day. Earnings from the tech players all exceed expectations (APPLE (-0.77% $100bln+ in revenues and record iPhone sales) FB record revenues but closed down -3.5% “significant uncertainty” ahead. TESLA (-2% missed expectations, but talked up deliveries and a new van. Asian markets closed down -1.53%. The VIX closed over its 200-day moving average for the first time since November 4.

USDIndex – Holds over 90.50 (PP). Tracks higher to 90.81 now – S1 90.15, R1 90.90

EUR – Back to to test 1.2100 now – Low yesterday 1.2057. PP – 1.2115, s1 1.2054, r1 1.2165

JPY – Breached 104.000 – Trades at 104.35 (R1) – PP 103.96, r2 104.55

GBP – Back down over a whole number to 1.3650. PP – s1 13700, S1 1.3640

AUD – biggest loser today – back to test 0.7600 – trades at 0.7607 (S1)

NZD – back to also test S1 0.7125, – pp & 200Ma 0.7186

CAD – breaches 1.2800 – trades at R1 1.2850 – pp 1.2770

CHF – up to test 0.8900 once again. PP 0.8895, r1 0.8915



BTC – Pivots through $31,000. – R1 today $32,900, S1 29,000

GOLD – Lost pivot at 1850 – down to 1836 and tested S1 (1832) earlier – PP 1840.

USOil – Trades at $52.50 (PP) – Big draw down – spiked to 53.30 (R1) – but stock sell off pulled prices lower.

USA500 – Closed down 99.85 (-2.57%) 3750 – USA500 FUTS now at 3727 (50SMA) – 58 day north of 20SMA (3790) over.

Today – German CPI, US GDP (Q4), PCE, Weekly Claims, ECB’s Schnabel. EARNINGS – Comcast, American Airlines, Visa, Southwest Airlines, McDonalds, Mastercard, STMicroelectronics.

Biggest (FX) Mover @ (07:30 GMT) AUDUSD (-0.60%) Rejected 0.7750 yesterday breached 20 & 200HR MA early PM. Support now S1 0.7615. Fast MAs aligned and trending lower, RSI 31 falling & testing OS zone, MACD histogram & signal line aligned lower and significantly south of 0 line. Stochs in OS zone from earlier. H1 ATR 0.0019, Daily ATR 0.0075.

Always trade with strict risk management. Your capital is the single most important aspect of your trading business.

Please note that times displayed based on local time zone and are from time of writing this report.

Click HERE to access the full HotForex Economic calendar.

Want to learn to trade and analyse the markets? Join our webinars and get analysis and trading ideas combined with better understanding on how markets work. Click HERE to register for FREE!

Click HERE to READ more Market news.

Stuart Cowell
Head Market Analyst
HotForex

Disclaimer: This material is provided as a general marketing communication for information purposes only and does not constitute an independent investment research. Nothing in this communication contains, or should be considered as containing, an investment advice or an investment recommendation or a solicitation for the purpose of buying or selling of any financial instrument. All information provided is gathered from reputable sources and any information containing an indication of past performance is not a guarantee or reliable indicator of future performance. Users acknowledge that any investment in FX and CFDs products is characterized by a certain degree of uncertainty and that any investment of this nature involves a high level of risk for which the users are solely responsible and liable. We assume no liability for any loss arising from any investment made based on the information provided in this communication. This communication must not be reproduced or further distributed without our prior written permission.

 

Date : 29th January 2021.

FX & Market Update – January 29.


It’s the final trading day of the week and month, and the dollar majors have mostly been holding within their respective Thursday ranges amid a backdrop of whippy global asset markets, which have once again turned to a risk-off positioning mode. The exception has been USDJPY, which floated to a seven-week high at 104.9 on the back of yen weakness, which saw GBPJPY lift to an 11-month high and AUDJPY to a two-day high. This price action is a break in correlation for the Yen, which historically has tended to strengthen during phases of risk aversion in global markets.



EURUSD, meanwhile, has been narrowly orbiting the 1.2100 level for a second day. The Dollar posted modest gains versus the Pound and dollar bloc, and most other currencies, though largely remained off highs seen yesterday. In stock markets, the MSCI Asia-Pacific lost over 0.5% and is set for its biggest weekly decline since last September, of nearly 4%. S&P 500 futures are showing a decline of nearly 1%, more than reversing declines seen by the cash version of the index yesterday on Wall Street. The extraordinary spectacle of retail investors coordinating, via social media, purchases of GameStop and other shares, such as Blackberry, AMC and Bed, Bath and Beyond with the specific aim of forcing hedge funds to stop out of their short positions on such stocks, has been creating volatility and drama in markets this week. The “Reddit Quartet” fell -44.29%, -56.63%, -41.63% and -36.40%, respectively.



Concerns about the SARS-Cov2 coronavirus have in the meantime increased palpably, with US vaccine developer Novavax reporting that its candidate vaccine showed only a 60% efficacy in Phase 3 trials for the South African variant, compared to a 90% efficacy for the non-South African variants. Uncertainty about the effectiveness of available vaccinations against new coronavirus variants (and how easy it would be for vaccines to be tweaked to accommodate new strains) has potential to keep markets on a wary footing until more data is available.



The Pound has pulled back from highs this week, but continues to show gains since the UK’s departure from the transitory membership of the EU’s single market and customs union. The UK currency’s perkiness has been a response to the consequence of the UK Brexiting with a deal, bringing a long-awaited end to uncertainty, as well as the UK’s ahead-of-the-game Covid vaccination program, which could see the UK government start to reverse out of restrictions as soon as mid February, when all of the most-vulnerable groups should have been vaccinated. In this context it should be noted that the Pound remains at historically weak levels by the measure of the real effective exchange rate. The Economist magazine’s Big Mac index, a more informal measure of 56 currency valuations according to the theory of purchasing power parity, shows the Pound to be 22% undervalued against the Dollar.

Always trade with strict risk management. Your capital is the single most important aspect of your trading business.

Please note that times displayed based on local time zone and are from time of writing this report.

Click HERE to access the full HotForex Economic calendar.

Want to learn to trade and analyse the markets? Join our webinars and get analysis and trading ideas combined with better understanding on how markets work. Click HERE to register for FREE!

Click HERE to READ more Market news.

Stuart Cowell
Head Market Analyst
HotForex

Disclaimer: This material is provided as a general marketing communication for information purposes only and does not constitute an independent investment research. Nothing in this communication contains, or should be considered as containing, an investment advice or an investment recommendation or a solicitation for the purpose of buying or selling of any financial instrument. All information provided is gathered from reputable sources and any information containing an indication of past performance is not a guarantee or reliable indicator of future performance. Users acknowledge that any investment in FX and CFDs products is characterized by a certain degree of uncertainty and that any investment of this nature involves a high level of risk for which the users are solely responsible and liable. We assume no liability for any loss arising from any investment made based on the information provided in this communication. This communication must not be reproduced or further distributed without our prior written permission.

 

Date : 1st February 2021.

Events to Look Out for Next Week.


Equity markets have been for sale so far as the “game stocks” frenzy and volatility have added to virus and vaccine woes and uncertainty over stimulus to further shake confidence, while sentiment was supported by earnings. Next week’s heavy dose of global data releases includes US NFP, Eurozone Retail Sales, GDP and CPI but also rate decisions from the BoE and RBA. The data are likely to reveal the many negative impacts from the second wave. Meanwhile, there is a slew of earnings and guidance, which will be key as two giants report, i.e. Amazon and Alphabet.
Monday – 1 February 2021

• Manufacturing PMI (CNY, GMT 01:00 Sunday) – The Non-Manufacturing PMI is expected to slow down to 52.6 from 55.7 in January.
• Retail Sales (EUR, GMT 07:00) – German Retail Sales jumped 1.9% m/m after rising 2.6% m/m in Oct. For December, it is anticipated to drop -2.0% m/m.
• ISM Manufacturing PMI (USD, GMT 15:00) – The ISM index is expected to fall to 59.0 in January from a 2-year high of 60.7 in December, versus an 11-year low of 41.5 in April, a 14-year high of 60.8 in August of 2018, and a low of 34.5 during the last recession in December of 2008.

Tuesday – 2 February 2021

• RBA Rate Statement & Interest Rate (AUD, GMT 03:30) – In December, RBA Governor Lowe said the RBA doesn’t expect to lift the cash rate for at least three years. Hence the RBA is expected to keep policy settings unchanged with yield target at 0.10% and the cash rate target also at 0.10%. Like other central banks world wide, the RBA could stress again that “monetary and fiscal support will be required for some time.”
• Gross Domestic Product (EUR, GMT 10:00) – German GDP is expected to have grown by 0.3% on an annualized rate in the first quarter of the year, compared to the -1.9% fall in Q4 2020.
• Labor data (NZD, GMT 21:45) –In Q4, the unemployment rate is expected to have risen to 5.4% from 5.3%.

Wednesday – 3 February 2021

• Consumer Price Index (EUR, GMT 10:00) – The Euro Area preliminary core CPI for January is forecasted to remain unchanged at 0.2% y/y.
• ADP Employment Change (USD, GMT 13:15) – Employment change is seen spiking to 49k in the number of employed people in January, compared to the -123K reading seen last month.
• ISM Services PMI (USD, GMT 15:00) –The ISM-NMI index is expected to slip to 57.0 from 57.2 in December, versus a 17-month high of 58.1 in July, an 11-year low of 41.8 in April, a 13-year high of 61.2 in September of 2018, and an all-time low of 37.8 in November of 2008. Producer sentiment has remained firm into the turn of the year as businesses scramble to rebuild inventories, despite headwinds from delays for both stimulus and vaccine distributions, alongside tightened coronavirus restrictions through the holidays.

Thursday – 4 February 2021

• Retail Sales (EUR, GMT 10:00) – Retail Sales should contract to -3.4% m/m in December, leaving the headline at 0.8% y/y.
• BOE Interest Rate & APF Decision, MPC Mins & Vote (GBP, GMT 12:00) – BoE leaders remain skeptical on negative rates. There was nothing much from BoE officials in January, but Governor Bailey and Deputy Governor Broadbent recently confirmed that the top brass at the central bank remains very cautious on negative rates, which means in the central scenario of a gradual recovery in the second half of the year, the BoE is unlikely to join the negative rate club. Still, like other central banks the BoE is not expected to be in any hurry to rein in stimulus measures and is likely to confirm a “vigilant wait-and-see stance” at next week’s meeting.
• BoE’s Governor Bailey speech

Friday – 5 February 2021

• NFP and Labour Market Data (USD, GMT 13:30) – A 100k January nonfarm payroll increase is seen, after a -140k drop in December, but gains of 336k in November and 654k in October. We assume a 30k factory jobs increase in January, after a 38k December rise. The jobless rate should hold steady from 6.7% in December. Hours-worked are assumed to bounce 0.2% after a -0.4% December decline, with the workweek ticking back up to match the 20-year high of 34.8 from 34.7 in December. Average hourly earnings are assumed to rise 0.1% in January, the 0.8% December spike is partly reversed with the big drop in low-wage workers.
• Labour Market Data (CAD, GMT 13:30) – Employment contracted -62.6k in December after the 62.1k gain in November. The decline was larger than expected (we saw a -30k drop) but not a shock given the increase in regional lockdowns during the month that accompanied the spike in virus cases. The December number was the first monthly employment decline since April. The pull-back was driven by a -99.0k tumble in part time jobs that followed the -37.4k decline in November. The unemployment rate rose to 8.6% in December from 8.5% in November, as the participation rate dipped to 64.9% from 65.1%. The contraction in the job market as lockdowns were reinstated is consistent with a reiteration of the BoC’s whatever-it-takes policy guidance.

Always trade with strict risk management. Your capital is the single most important aspect of your trading business.

Please note that times displayed based on local time zone and are from time of writing this report.

Click HERE to access the full HotForex Economic calendar.

Want to learn to trade and analyse the markets? Join our webinars and get analysis and trading ideas combined with better understanding on how markets work. Click HERE to register for FREE!

Click HERE to READ more Market news.

Andria Pichidi
Market Analyst
HotForex

Disclaimer: This material is provided as a general marketing communication for information purposes only and does not constitute an independent investment research. Nothing in this communication contains, or should be considered as containing, an investment advice or an investment recommendation or a solicitation for the purpose of buying or selling of any financial instrument. All information provided is gathered from reputable sources and any information containing an indication of past performance is not a guarantee or raeliable indicator of future performance. Users acknowledge that any investment in FX and CFDs products is characterized by a certain degree of uncertainty and that any investment of this nature involves a high level of risk for which the users are solely responsible and liable. We assume no liability for any loss arising from any investment made based on the information provided in this communication. This communication must not be reproduced or further distributed without our prior written permission.

 

Date : 2nd February 2021.

FX News Today – Tech Giants Day!


Stock markets moved broadly higher after a positive close on Wall Street yesterday. Concern over volatility in retail trading has started to recede and stimulus hopes and vaccine progress are keeping sentiment underpinned. Tech stocks outperformed ahead of earnings from the likes of Amazon and Alphabet today. GER30 and UK100 futures are currently up 0.4% and 0.6% respectively. US futures are also higher, with the tech-heavy USA100 outperforming. The JPN225 closed with a gain of 0.97%. The 10-year Treasury yield is up 0.3 bp at 1.08%, while Australian 10-year rates climbed 0.5 bp even as the RBA announced an extension of asset purchases worth an additional AUD 100 bln. The Dollar was on bid overall on Monday, with a new month reportedly seeing USD inflows, despite the general risk-on conditions seen, which typically weigh on the USD.

Headlines:

• For Europe it is clear that vaccination programs won’t bring a quick reopening of economies, even in the UK.
• US records deadliest month of the pandemic.
• RBA left key rates unchanged, as expected, with the target of 10 basis points for the cash rate on the yield on the 3-year Australian Government bond maintained.
• US-China: China calls for its relationship with the US to be put back on a predictable and constructive track.
• Biden had a “substantive and productive discussion” with Republican senators on Covid relief.
• South Korea is preparing a fourth round of coronavirus cash handouts.
• CME futures exchange has raised its margin on silver futures by 18%.
• Robinhood, the online broker at the centre of the boom in day trading, has raised $2.4bn in its second capital infusion in a week to shore up finances strained by turbulent trading.
• Japanese government saying it would extend Covid related lockdowns and restrictions in various areas of the country for an additional month, to March 7, appeared to have weighed on the Yen as well.
• Traders continue to price out any hope of additional rate cuts from BoE and ECB and data releases today are likely to be bond negative, with preliminary GDP numbers for the Eurozone and French HICP inflation likely to come in higher than originally anticipated

Forex Market

EUR – is trading at 1.2071, bellow PP and a breath above 2-month Support at 1.2000.
GBP – dollar safe haven strength drifted Pound to 1.3600 territory. Currently close to PP at 1.3690.
JPY – Resistance is at the psychological 105.00 level, with buy-stops noted above the level. A break higher will see the 200-day moving average at 105. 63 as the next upside target. The pairing last traded above the 200-DMA in June of 2020. Currently below R3 at 104.97.
AUD – ranging between the PP and S1, (0.7600-0.7665).
CAD – at 1.28 from 1.2860 highs.
Silver – in retreat, fell by 4% back below $28 – CME has raised its margin on silver futures which is arguably a significant factor in driving prices lower today.
USOil – surged to 54.35.

Today: Focus mainly on GDP reading for the Eurozone, and the Labor data for New Zealand . OPEC meeting on tap as well.

Biggest Mover AUDCAD (+0.32% as of 08:00 GMT) – The Australian Dollar ebbed after the RBA left interest rates unchanged but extended its QE program following its February board meeting. Governor Lowe also noted in the central bank’s statement that the exchange rate “has appreciated and is in the upper range of the recent year.” AUDUSD edged out a five-day low at 0.7603.

RBA left key rates unchanged, as expected, with the target of 10 basis points for the cash rate on the yield on the 3-year Australian Government bond maintained. The parameters of the Term Funding Facility were also confirmed, but the RBA decided to purchase an additional AUD 100 bln of bonds issued by the government, states and territories “when the current bond purchase program is completed in mid April. These additional purchases will be at the current rate of AUD 5 bln a week”. The statement said the outlook for the global economy has improved over recent months thanks to vaccine developments. It warned, however, that the expected recovery is likely to “remain bumpy and uneven” and “remains dependent on the health situation and on significant fiscal and monetary support”. The central scenario is for the Australian economy to expand 3 1/2 percent this year as well as expected to “return to its end-2019 level by the middle of this year”. Spare capacity is likely to stay for some time. Inflation and wages growth are expected to pick up from weak levels, but to remain “below 2% over the next couple of years”.

Always trade with strict risk management. Your capital is the single most important aspect of your trading business.

Please note that times displayed based on local time zone and are from time of writing this report.

Click HERE to access the full HotForex Economic calendar.

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Click HERE to READ more Market news.

Andria Pichidi
Market Analyst
HotForex

Disclaimer: This material is provided as a general marketing communication for information purposes only and does not constitute an independent investment research. Nothing in this communication contains, or should be considered as containing, an investment advice or an investment recommendation or a solicitation for the purpose of buying or selling of any financial instrument. All information provided is gathered from reputable sources and any information containing an indication of past performance is not a guarantee or reliable indicator of future performance. Users acknowledge that any investment in FX and CFDs products is characterized by a certain degree of uncertainty and that any investment of this nature involves a high level of risk for which the users are solely responsible and liable. We assume no liability for any loss arising from any investment made based on the information provided in this communication. This communication must not be reproduced or further distributed without our prior written permission.

 

Date : 3rd February 2021.

Amazon, Alphabet & Stimulus top boost to the Equity market


Stock markets extended their rally overnight and yields climbed higher. 10-year rates jumped more than 11 bp in New Zealand after the country approved the first Covid-19 vaccine. The ongoing earnings season is adding support and better than expected revenue estimates from Alphabet and Amazon helped to bolster confidence.

The major indexes climbed back toward recent highs, unperturbed by the threat of six more weeks of winter as Punxsutawney Phil saw his shadow. Treasury yields have lifted 0.9 bp to 1.1%, while JGB rates are up a modest 0.1 bp at 0.05%. The JPN225 gained 1% and the ASX 0.9%, although Hang Seng and CSI 300 are currently both marginally lower after the People’s Bank of China drained some funds from the financial system. The GER30 and UK100 futures are up 0.4% and 0.3% respectively.

The earnings season is in full swing now and so far hasn’t dented the renewed surge in risk appetite and confidence that vaccination programs will help the global recovery to strengthen this year. Wall Street had another very good day yesterday and the move higher in stocks is set to resume today, also helped by hopes of accelerated fiscal stimulus in the US. Against that background any lingering expectations of additional rate cuts in Europe are being priced out, which should keep pressure on core EGBs.

Headlines:

• President Biden and Senate Democrats look to pass the $1.9 tln relief bill via “reconciliation” (51 votes) and bypassing the Republicans.
• US: New cases of Covid-19 fall for a 3rd week in a row – the first time this has been seen since September.
• According to IBES data from Refinitiv: More than 80% of reports from USA500 companies so far have surpassed analysts’ earnings expectations, with 97% of reports from technology companies beating.
• Amazon — Shares of the retailer were up 1% in after-hours trading on the back of quarterly results that beat analyst expectations. Amazon reported earnings per share of $14.09 on revenue of $125.56 billion. Analysts polled by Refinitiv expected a profit of $7.23 per share on revenue of $119.7 billion.
• The company also announced that CEO Jeff Bezos will move to the role of executive chairman in the third quarter and be replaced by Amazon Web Services head Andy Jassy as chief executive officer.
• Alphabet — Alphabet shares jumped 6% after the tech giant reported better-than-expected results for the previous quarter. The company reported earnings per share of $22.30 on revenue of $56.9 billion. Analysts polled by Refinitiv expected a profit of $15.90 per share on a revenue of $53.13 billion.
• GameStop — Shares of the brick-and-mortar video game retailer continued to tumble in after-hours trading on Tuesday following a 60% drop in the regular session. Shares are down more than 70% this week as the short squeeze trade unravels.
• Amazon, Alphabet, Microsoft and Salesforce are all investing in a $28 billion start-up company that crunches big data.
• China Caixin services PMI dropped to 52.0 in January from 56.3.
• Japan Jan Services PMI fell to 46.1 from 47.7 in December.
• New Zealand Q4 2020 Unemployment rate 4.9% (vs. expected 5.6%).
• BOJ Deputy Governor Wakatabe watered down expectations of much change from the bank’s monetary policy review due next month.

Forex Market

EUR – decline continues with the asset trading below 1.2100. S1 at 1.2007.
GBP – fell against the USD but remains above 20-DMA. S1: 1.3615, PP: 1.3660, R1: 1.3715.
JPY – lifted to 105.05, as the Yen weakened.
AUD – founds floor at 50-DMA (0.7600).
CAD – tumbled in 4-day range. Currently above S1 at 1.2750.
Silver – sharp reversal, filling the week’s gap. CFTC and CME warnings helped to quell price speculation.
USOil – at $55.20 with the move higher due to signs of tightening supply.

Today: Focus mainly on fundamentals which will be a focal point near term with ADP and ISM services reports today, and the jobs report Friday. Also Eurozone inflation data and final readings for Eurozone and UK Services PMIs meanwhile will act as a reminder that for now virus restrictions continue to weigh on overall activity and keep Europe on track for a recession over Q4/Q1.

Biggest Mover NZDJPY (+0.41% as of 08:00 GMT)



Always trade with strict risk management. Your capital is the single most important aspect of your trading business.

Please note that times displayed based on local time zone and are from time of writing this report.

Click HERE to access the full HotForex Economic calendar.

Want to learn to trade and analyse the markets? Join our webinars and get analysis and trading ideas combined with better understanding on how markets work. Click HERE to register for FREE!

Click HERE to READ more Market news.

Andria Pichidi
Market Analyst
HotForex

Disclaimer: This material is provided as a general marketing communication for information purposes only and does not constitute an independent investment research. Nothing in this communication contains, or should be considered as containing, an investment advice or an investment recommendation or a solicitation for the purpose of buying or selling of any financial instrument. All information provided is gathered from reputable sources and any information containing an indication of past performance is not a guarantee or reliable indicator of future performance. Users acknowledge that any investment in FX and CFDs products is characterized by a certain degree of uncertainty and that any investment of this nature involves a high level of risk for which the users are solely responsible and liable. We assume no liability for any loss arising from any investment made based on the information provided in this communication. This communication must not be reproduced or further distributed without our prior written permission.

 

Date : 4th February 2021.

February: Emergence of more virulent strains.


The New Year’s rally on Wall Street and global markets ran into turbulence during January. Rising virus cases and more stringent lockdowns, a shaky rollout of the vaccine in the US and Europe and the emergence of more virulent strains tempered optimism about the recovery. A frenzy in select stocks prompted a surge in anxiety and volatility on Wall Street. But the equity market bounced back into February, supported by still intact recovery expectations and a calming in market volatility. The uptrend in bond yields sputtered amid myriad developments and uncertainties, only to resume as stocks rebounded.



HotForex · February- Emergence Of More Virulent Strains






In February, fundamentals will continue to inform recovery expectations, while the market remains alert for another round of volatility fueled by retail investors.




Fundamentals were briefly pushed to the side in the final week of January, as a frenzy erupted around shares of GameStop and AMC that was driven by retail investors taking cues from internet message boards. However, a rise in margin requirements and curbs on trading activity calmed trading in those high profile shares, easing the market’s anxiety.

The vaccine rollout was a bit rougher than hoped in the US and Europe during January, with reports circulating of unused doses and challenges with distribution. Moreover, the emergence of mutated strains globally prompted worries that the vaccines may not be as effective against the new strains, delaying a return to normal activities. Moderna and Pfizer reported that based on laboratory studies, their vaccines are only effective against one of the new variants. The mutations are an evolving situation that the markets will follow closely in February, even as vaccine distribution ramps up globally.

But as February began, encouraging signs emerged on vaccine distribution, infection rates and hospitalizations in the US and Europe. Consequently, global recovery expectations have been rolled ahead, not reduced or eliminated.

In the Eurozone, the Q4 GDP growth wasn’t as bad as feared. However, the risk of a double dip recession in both the Eurozone and the UK remains firmly on the table, as services in particular continue to suffer. Inflation has jumped higher at the start of the year, especially in Germany, which backs expectations that neither the ECB, nor the Bank of England are likely to add additional rate cuts. Eurozone Q4 GDP contracted -0.7% (q/q, sa), less than initially expected in the light of renewed lockdowns towards the end of the year. Economic activity was down -5.1% in the last quarter of 2020, compared to a year earlier, highlighting that there is a long way to go before activity has reached pre-pandemic levels even if restrictions are lifted quickly, which is unlikely to be the case. Hence, the risk of a technical recession remains firmly on the table, while data also highlights the growing divergence between Eurozone countries, which will pose a challenge for politicians and central bankers alike going forward.

Germany’s economy seems to have weathered the pandemic better than many other Eurozone countries, largely thanks to a resilient manufacturing sector, which has remained open during the current lockdown, and the recovery in major export markets. Like elsewhere, the central scenario remains for a recovery in activity in the second half of the year. But looking ahead, it will be key that the government doesn’t go back to the pre-pandemic status quo, but focuses on a structural renewal that helps to lift long term growth potential. The fact that Chancellor Merkel will leave the political stage following the general election in the second half of the year may be the chance to achieve just that.

German economic activity contracted -5.0% last year, somewhat less than feared, although adjusted for calendar effects the contraction was somewhat higher at -5.3% y/y. Of course Covid-19 developments and lockdowns are largely to blame, with much of the weakness concentrated in the first half of 2020, when strict lockdowns brought activity to a standstill.



Activity picked up over the summer, before another wave of infections resulted in the current lockdown. While this lockdown is less strict than in some other European countries, the hospitality and travel industries remain effectively shut down without the prospect of a swift easing of restrictions. Vaccination programs have started, but remain in the state hands, which has led to a very uneven rollout. Still, the manufacturing sector remains largely open and construction actually managed to expand last year. Furthermore, stock building exercises ahead of Brexit helped to boost manufacturing in Q4. However, there will likely be demand missed in the first quarter of this year and the chances are that there will be a technical recession over Q4 2020 and Q1 2021.

Still, the main scenario is for a recovery in the second half of the year, also helped by very favourable financing conditions and fiscal support that was scaled up substantially in 2020. The overall debt to GDP ratio is still much lower than in many other Eurozone countries, and with government bond yields negative out to the 10-year area and the ECB continuing to buy substantial amounts in the secondary market, clearly Germany doesn’t have a real problem financing the debt, especially with a huge current account surplus.

A healthy fiscal situation already helped Germany to scale up wage support programs and job retention schemes at the start of the pandemic and the jobless number has remained low by comparison — falling to just 6.1% at the end of last year. Like elsewhere it will take time before the true impact on the labour market will become clear — once government support has been phased out. The risk is that the pandemic will lead to higher structural unemployment if and when there are major structural shifts, with the older generation likely to struggle to re-integrate into a changed labour market.

Indeed, the pandemic has highlighted fundamental problems in Germany’s economic model. Like in other countries, the challenge for the government will be to use the funds being made available now to facilitate a shift in focus and a structural renewal. Economically that requires a move away from the focus on manufacturing and a strengthening of the still woefully inadequate digital infrastructure. The success of BioNTech in the search for a vaccine highlighted that there is still life in Germany’s R&D sector, but the overall number of start ups has been quite low in recent years compared to other countries. Germany will need to focus on promoting structural renewal — the exit of Chancellor Merkel from the political stage and the end of a focus on budget consolidation should provide the perfect opportunity for that.



Chancellor Merkel, who has been in office since 2005, really is on the way out now. She already relinquished the party leadership at the end of 2018, and will likely leave the political stage at the general election in the second half of the year. The experienced leader still helped to guide Germany through the pandemic. Her background in science clearly was beneficial during the first wave of the pandemic, when a swift reaction to developments prevented the type of death numbers seen elsewhere in Europe. Ironically though, that actually backfired to a certain extent as the lack of cases and excess deaths early on played into the hands of conspiracy theorists denying the existence of a real virus threat, leaving Chancellor Merkel with state premiers that not only went further in re-opening the economy over the summer than Merkel would have liked but also delayed the reaction to the renewed rise in case numbers later in the year.



There already have been coalitions between the conservatives and the former protest party at the state level, but whether this is a viable option for Berlin will also depend on who will become the candidate for Merkel’s succession in the general election. Merkel’s CDU is currently busy trying to determine a new party leader, and business-man Merz seems to have the upper hand. Under Merz, the CDU is likely to move more to the right and a pre-Merkel type of conservativism that would make cooperation with the Green Party more difficult. On the other hand, it may help the CDU/CSU win back some of the voters that went over to the AfD in protest against Merkel’s immigration policy. As such it could help to de-fragment the German political landscape.