Novosti i prognoe: devizno tržište od 02-01-2022

• AUD/USD bounces off short-term support line to refresh intraday high.
• Upper line of rising wedge challenges immediate advances.
• Firmer RSI, successful break of 200-SMA favor buyers inside bearish chart pattern.

AUD/USD posted around 6.0% yearly losses despite providing a positive end to 2021, up 0.10% intraday near 0.7275 during Monday’s Asian session. The corrective pullback, however, struggles to overcome the rising wedge bearish chart pattern. The bull’s exhaustion could also be witnessed from the RSI conditions lingering around the overbought region. Hence, pullback moves seem to be brewing.

Though, a clear downside break of a two-week-old ascending support line, near 0.7255, becomes necessary for the seller’s entry.

Following that, a south-run to the late December’s swing low around 0.7200 becomes imminent. However, the 200-SMA and tops marked during late November to early December, offer strong support to challenge the pair’s further weakness near 0.7170.

Adding to the downside filter is the support line of the stated monthly rising wedge, near 0.7160, a break of which will theoretically make it vulnerable to plunge towards the last yearly bottom of 0.6993.

Alternatively, an upside clearance of the wedge’s resistance, near 0.7285, acts as an immediate hurdle for the AUD/USD buyers to crack, which in turn rejects the bearish formation and directs prices further north towards the mid-November tops surrounding 0.7370.

AUD/USD: Four-hour chart

Trend: Further upside expected

• GBP/JPY struggles after three-day uptrend, near multi-day high.
• Supply crisis feared as new Brexit rules kick in, Ireland pushes for faster resolution of NI border talks.
• UK PM Johnson stays hopeful even as No10 pushes for contingency plans to battle Omicron.
• Holidays in Japan, the UK to restrict market moves, risk catalysts are the key.

GBP/JPY seesaws around 155.85 during the initial Asian session on Monday. The cross-currency pair pokes two-month high the previous day but a lackluster start to 2022 and fears emanating from Brexit, as well as the South African covid variant called Omicron, probes the bulls of late.

With the new post-Brexit border checks kicking in, trade bodies have warned of food shortages and a jump in prices looking forward, As per the new rules, the UK importers will have to present a full customs declaration versus up to the previous rule allowing 175 days of leeway. While identifying this, the British Frozen Food Federation said, per The Guardian that Britain’s small businesses should expect trade with the EU to be “permanently damaged” from 1 January.

On the same line is the Financial Times’ (FT) Brexit news quoting Irish Foreign Minister Simon Coveney. “Negotiations on the Northern Ireland Protocol need to reach a conclusion by the end of February,” said the news.

Not only the Brexit fears but a jump in the UK’s covid numbers also challenge the GBP/JPY bulls. As per the recent news from Reuters, “UK government seeks to mitigate workforce disruption from Omicron.” The news also mentioned, “The daily number of new COVID-19 infections across the United Kingdom rose to a record 189,846 on Friday, far higher than during previous peaks. However, hospitalizations and deaths have remained at much lower levels than in previous waves.” Even so, UK PM Boris Johnson was quoted saying that Britain is in a comparatively better position in battling COVID-19.

Elsewhere, Japan also registered a jump in the covid cases by refreshing a two-month high with the latest figures of 554 for Sunday, per Kyodo News.

It’s worth noting that off in Japan and the UK challenge the GBP/JPY traders while cautious optimism over the virus variant keeps the pair buyer hopeful, at least for the short-term. Also positive for the pair is the Bank of England’s (BOE) bullish bias versus the Bank of Japan’s (BOJ) preference for easy money.

Technical analysis

Unless dropping back below the mid-November tops surrounding 154.75, GBP/JPY remains on the buyer’s radar. However, tops marked during May and early November 2021, close to 156.00 becomes crucial for further upside.

“The British government has asked public sector managers to test their contingency plans against a worst-case scenario of 25% staff absence as part of efforts to minimize disruption from the rapid spread of the Omicron variant of COVID-19,” per the weekend news from Reuters.

The news cites government fears to witness disruption in business and public services due to the record high daily infections.

Key quotes

FX implications

The news should weigh on the GBP/USD prices considering the coronavirus fears. However, holidays in the UK and most Asia-Pacific markets limit the reaction to the news. That said, the cable pair trades near 1.3530 by the press time.

Read: GBP/USD Price Analysis: Bulls looking for a fresh corrective high into the 1.36s

German Finance Minister Christian Lindner unveiled tax relief for at least 30 billion euros ($34.1 billion) to individuals and companies during 2023 in his latest comments to the Bild am Sonntag newspaper, per Reuters.

The diplomat also said, per Reuters, that the 2022 budget was put together by the previous government under Chancellor Angela Merkel. “Draft for 2023 will include relief such as on pension insurance contributions, and the end of an electricity price surcharge,” adds German Finance Minister Lindner.

Key quotes

FX implications

Although the off in multiple Asia-Pacific markets on Monday restricts reaction to the news, hopes of tax relief can favor EUR/USD bulls to extend the late 2021 rebound.

Read: EUR/USD Price Analysis: Bulls need validation from 1.1385

• EUR/USD battles short-term key hurdle to the north, sidelined of late.
• 50-DMA, seven-week-old horizontal resistance guard immediate upside.
• Bullish MACD signals, successful trading above 21-DMA keeps buyers hopeful.
• Four-month-old descending trend line acts as extra resistance.

EUR/USD bulls attack crucial resistance around 1.1385, poking the highest level since mid-November, during the early Asian session on Monday. That said, the quote flashes 1.1375 level by the press time.

In doing so, the major currency pair battles the 50-DMA and a horizontal area comprising multiple resistances since mid-November.

Given the bullish MACD signals and the pair’s successful run-up beyond 21-DMA, EUR/USD buyers are likely to overcome the immediate hurdle.

However, a downward sloping trend line from early September, around 1.1440 by the press time, will be critical to watch for the bulls afterward, a break of which will direct the run-up towards October’s low and 100-DMA, respectively near 1.1525 and 1.1540.

On the contrary, pullback moves may aim for a 21-DMA retest, close to 1.1310 at the latest, before challenging an ascending support line from late November around 1.1250.

Should EUR/USD prices break the 1.1250 support, the bears will have a rush towards the year 2021 low near 1.1185.

EUR/USD: Daily chart

Trend: Further upside expected

• USD/CAD is on the move to the downside, bears look to 1.2600.
• A correction to the upside could be on the cards for the start of the year. 

USD/CAD fell below a critical support zone during the holiday thin markets which leave a bearish bias on the charts. However, there are prospects of a bullish correction and the following illustrates the prospects for price action in the opening sessions of the week. 

USD/CAD daily chart

USD/CAD has broken the trendline support and is due for a correction. However, that is not to say that the price can not continue lower before a meaningful correction occurs. 1.26 the figure could be tested in the opening sessions of this week. 

USD/CAD H1 chart

From an hourly perspective, the price has already started to correct, although there is more to go until the correction might be significant enough before sellers may become interested to enter or reenter and target the 1.26 figure or lower. 1.2660 on the flip side is a compelling level that meets the 38.2% Fibo. 

• NZD/USD pauses three-day uptrend, gaps down to kick-start 2022 trading.
• Omicron, Fed rate-hike could keep bears hopeful despite late 2021 consolidation.
• New Zealand reaches 90% vaccination targets but virus infections create the problem.
• Off in Australia, New Zealand restrict market moves, US PMIs for December eyed for today, US NFP is the key.

NZD/USD seesaws around the short-term key resistance, following a year-start gap down to 0.6832, during the early Monday morning in Asia. That said, Holidays in major Asia-Pacific markets offer a dull start to 2022, which in turn clutches the kiwi pair around 0.6830-35 despite snapping a three-day uptrend amid the coronavirus woes.

New Zealand managed to meet, actually surpass their 90% double jabbing target with 92.1% population being double vaccinated for the coronavirus. Even so, the coronavirus cases keep rising with the latest count of 105 new cases and 53 deaths per NZ Herald.

On the other hand, 14-day average cases in the US jumped 200% by January 01, to near 386,000, whereas death toll eased 4% to 1,240 new virus-linked loss of life, as per figures from New York Times (NYT).

While identifying this, "When you have so many, many cases, even if the rate of hospitalization is lower with Omicron than it is with Delta, there's still the danger that you're going to have a surging of hospitalizations that might stress the health care system," said Anthony Fauci, Director of the National Institute of Allergy and Infectious Diseases per CNN.

It’s worth noting that the Kiwi pair rose 0.35% during December and over 5.0% in the year 2021 as the hawkish Fed superseded the Reserve Bank of New Zealand’s (RBNZ) rate hike. Adding to the bearish bias for the NZD/USD was the worsening of the COVID-19 conditions and the Sino-American tussles, not to forget the financial market crisis in China.

Looking forward, the covid variant linked to South Africa, dubbed as Omicron, becomes a major short-term challenge to the market sentiment and NZD/USD prices even as optimistic studies keep policymakers hopeful. Also important are the recently firmer US inflation expectations, as per 10-Year Breakeven Inflation Rate numbers from the Federal Reserve Bank of St. Louis (FRED) that jumped to the highest levels since November 24 at the latest and fuel hopes of a faster Fed rate hike in 2022.

For the day, the final reading of US PMIs will be important to watch for near-term direction while the US jobs report for December 2021, up for publishing on Friday will be crucial.

Technical analysis

Successful trading above 21-DMA joins the bullish MACD signals and firmer RSI line to keep NZD/USD buyers hopeful. However, a clear upside break of a three-month-old horizontal area near 0.6860 becomes necessary for the kiwi pair’s further upside.

Meanwhile, pullback moves may aim for the 21-DMA retest, around 0.6790 by the press time.

• GBP/USD bulls on the march, eyes on the 1.36 area.
• A correction on the hourly chart could be rinning its course. 

GBP/USD has been on the march for the latter part of December and is starting the New Year on the front foot. The following illustrates the prospects of a bullish extension for the sessions ahead. 

GBP/USD daily chart

The daily chart shows that the price is on the way towards mitigating the space between here and 1.3605. However, for the meanwhile, there are prospects of pressures to the downside towards 1.3520. 

GBP/USD H1 chart

The hourly chart shows prospects of a price running into support near 1.3520 and correcting back to the upside for a higher high in the coming sessions.

• Gold is meeting a critical resistance level on the charts on a busy start to the week.
• The US calendar is key for gold traders with the FOMC minutes and NFPs.
• Gold 2022 Outlook: Correlation with US T-bond yields to drive yellow metal.

The price of gold was firm on the last trading day of 2020 and rallied some 0.77% to print a high of $1,830.38 on Friday. The yellow metal is now on track for a test of $1,850 as per the technical analysis below. However, in the meantime, there are plenty of risk events for the week ahead with a close eye on the risks associated with COVID-19. 

Gold has benefited from weakness in the greenback and stronger global equities while real yields remain subdued. However, in the absence of any new marginal hawkish developments, gold might struggle to get much higher from here beyond the next layer of technical existence. 

'' With precious metal markets well priced for the hawkish Fed, as noted by falling ETF holdings and skew toward short positions in the latest CFTC data, upside CTA had been the main driver keeping the yellow metal elevated,'' analysts at TD Securities explained. 

However, the analysts also noted that the yellow metal could begin to lose steam so long as Fed expectations remain as status quo. ''In this sense, omicron fears and their potential impact on the economy will be a key focus in the near-term, and we would likely need to see economic weakness generate doubts that the Fed will be able to deliver on their hawkish stance for the yellow metal to maintain the recent momentum.''

In that sense, this week will reveal the minutes of the Federal Open Market Committee after the Fed's move to double the pace of QE tapering with its projection of a significantly more hawkish dot plot. Traders will be looking for clues of just how hawkish the Fed will be in the first quarter of 2022.

Additionally, US president Joe Biden's nominations for three Fed governor seats could also garner attention. At the end of the week, the US jobs market will be back in vogue with the US Nonfarm Payrolls report. ''The late-December COVID surge likely came too late to prevent a pickup in US payrolls after the gain in November (210k) appeared to be held down by an overly aggressive seasonal factor,'' analysts at TD Securities explained. 

DXY 95 the figure is key

Meanwhile, the US dollar is teasing bulls with a move to the downside in the DXY index following a break of the support near 96.  There was a move all the way into 95.50s, but it still remains in the 95-97 trading range that has largely held since mid-November.  This leaves 95 the figure as a major level for the start of the New Year and a critical milestone for gold should it be breached. 

Gold technical analysis

Gold, Chart of The Week: XAU/USD meeting critical resistance near $1,830

For the very near term, the focus is on the resistance and prospects for a correction as follows:

The 4-hour chart above sees the formation of a W pattern which is a reversion formation whereby the price would be expected to retest the prior highs or even the neckline of the W-formation. 

• AUD/USD bulls getting set for the next bullish impulse and a fresh corrective high for the coming days. 
• Risks are aplenty for the week ahead with a focus on global COVID-19 cases and US economic data in the main. 

AUD/USD ended 2021 on the front foot, adding 0.3% on Friday, reaching as high as 0.7277. However, there are a number of risk events on the US calendar this week and plenty of jitters surrounding COVID-19 to give the bulls reason to remain cautious at the start of the New year.  

From the US, Nonfarm Payrolls will be one of the main highlights. ''The late-December COVID surge likely came too late to prevent a pickup in US payrolls after the gain in November (210k) appeared to be held down by an overly aggressive seasonal factor,'' analysts at TD securities argued. 

Additionally, the Federal Open market Committee minutes of the last Federal Reserve meeting will be out this week. ''Following the FOMC's decision to double the pace of QE tapering and the projection of a significantly more hawkish dot plot, the focus will now turn to the elements that led to the evolution of views among policymakers (including on "maximum employment") after the November meeting,'' the analysts at TD Securities explained.

Global COVID-19 risks

Meanwhile, given that there are no domestic data on the cards for the week ahead, attention may otherwise turn to the COVID-19 Omricon outbreak both ''Home & Away''. While the early reports suggest omicron is less deadly, it is also much more infectious and can still overload healthcare systems around the world. AUD is a high beta currency so it would be expected to struggle in such an environment whereby investors will shield capital away from riskier asset classes, such as global equities.

While AUD can be affected by global risks related to COVID-19, the northwestern industrial and tech hub of Xi’an in China is a cause for concern for Aussie economic growth and markets in general given the rising numbers of infections there and impacts of global growth due to renewed lockdowns. Despite an arsenal of some of the world’s toughest measures, China has started 2022 with its highest tally of local coronavirus cases for any seven-day period since subduing the country’s first epidemic nearly two years ago.

Moreover, domestically, the COVID-19 situation is no better. New coronavirus infections soared again in Australia before the New Year Eve celebrations to a record of more than 32,000, just days after surpassing 10,000 for the first time. Experts say the explosion is being driven by the highly contagious omicron variant and recent relaxation of restrictions in Sydney and other areas.

''Markets are likely to watch policy announcements closely as the record cases suggest lockdowns could return,'' analysts at TD Securities said. ''The COVID situation in Australia is looking worrisome with NSW & VIC registering record new daily COVID cases. Hospitalisations have climbed, but the incidence of severe illness remained low probably due to the high vaccination coverage in Australia (91% double vaccinated).''

The February 1 Reserve Bank of Australia will be critical because ahead of the holidays, most observers were becoming more confident that the central bank would end QE altogether by then. However, if omicron disrupts the economy, then the RBA may need to hold off fully and review the situation again at the May 3 meeting. 

AUD/USD technical analysis

From a daily perspective, the price action has left the bull's footprints in the form of a W-formation, a retest of the neckline on a 38.2% Fibonacci retracement and a subsequent extension of the bullish correction. This leaves the bias bullish for the near term. 

From an hourly perspective, however, there could be a meanwhile process of re-accumulation before the next move to the upside:

The 38.2% Fibo and the 21-EMA have a confluence in what would be expected to be a firm area of support in the 0.7260s. We may see a deeper correction prior to the next bullish impulse and before we see a higher corrective high.