Forex-novosti i prognoze od 19-04-2021

FXStreet notes that USD/NOK has fallen lately to around 8.30. NOK has strengthened in tandem with other risk-sensitive currencies while safe-havens like the USD have weakened. According to economists at Nordea, USD’s weakness will likely turn around and see very limited downside in USD/NOK ahead.

“From a technical perspective, the current RSI of 30 suggests that NOK is overbought against the USD and that USDNOK is very close to the bottom.”

“Looking forward, we are convinced that there is more upside for long US rates as the US economy is about to embark on a path of strong growth... This should be positive for the USD.”

“A continued strengthening of both NOK and USD is why we see a fairly stable USD/NOK ahead. If we were forced to lean in any direction, the USD could strengthen somewhat more than NOK due to the outperformance of the US economy. Anyhow, we see very limited downside in USD/NOK ahead.”

FXStreet notes that copper (LME) resumed its bull run last week and further spiked to $9,436/t this morning. According to economists at ING Bank, macro tailwinds, lingering risks to supply and a cyclical uplift that is driving demand could see upside risks to copper prices dominate over the second quarter.

“We think upside risks to prices could dominate over 2Q21. The current inflationary environment and negative real rates are tailwinds to the commodities sector, and copper stands out thanks to its constructive fundamentals, especially the strong narrative of medium to longer-term demand linked to energy transition. A further weakening in the greenback could well provide a further boost.”

“From a fundamentals perspective, factors that have been fuelling the bullish optics still have room to run in the short-term. Firstly, there hasn't been a meaningful improvement to mine supply yet, and the situation is still vulnerable to disruption. Secondly, demand recovery from major economies outside of China riding the ongoing restocking cycles, and pent-up demand should remain a key theme throughout the year.”

“Macro tailwinds, combined with copper's constructive fundamentals and a 'green' narrative in medium to longer-term demand, could see upside risks dominate for copper during 2Q21, suggesting the red metal could be on a parabolic run, testing previous highs. However, this strength may dampen as the current restocking cycle approaches an end and slowing credit growth in China weighs on investment demand, which may become more evident in the second half of this year.”

FXStreet notes that a higher oil price and improved risk sentiment has brought EUR/NOK slightly below 10.00 again. While economists at Nordea do see more downside in the cross ahead, it is probably limited.

“EUR/NOK could fall a bit more in the short-term, but the downside is very limited. From a technical perspective, the current RSI of 35 implies we are close to the bottom for now, but EUR/NOK has a bit more to fall until RSI reaches 30 - a level that would indicate that NOK is overbought against the EUR.”

“At some point, the fall in EUR/NOK will take a break, and we would not be surprised if the cross moves up again. Since the meltdown in March last year, the whole way down has been characterised by EUR/NOK moving two steps down, one step up, etc. This will likely continue also ahead. But the overall direction towards the summer is lower.”

“The combination of higher oil prices and higher rates in Norway is why we hold our view for EUR/NOK coming further below 10.00 towards and over the summer. But the downside is restricted: EUR/NOK traded mostly in the range 9.50-10.00 during 2018/19 and we don’t expect to see much more downside than 9.50.”

FXStreet notes that having depreciated against both the US dollar and the euro since the start of this year, the franc rose against both currencies in March. Nonetheless, economists at Capital Economics forecast the franc to ease back over the coming years.

“We expect the rotation trade to resume soon, in part because we expect long-term yields in the US to rise again, and also because we think that the vaccine-driven bouncebacks in activity may disproportionately benefit stock market sectors more sensitive to the health of the economy. Against this backdrop, we think that it will only be a matter of time before the Swiss franc resumes its gradual decline.” 

“We have pencilled in the currency falling to CHF 1.14 per euro by year-end, from CHF 1.10 at present, and to close to parity with the US dollar over the same period (from CHF 0.92 currently).”

Carsten Brzeski, the Global Head of Macro for ING Research, and Antoine Bouvet, ING's Senior Rates Strategist, believe that the risks to ECB this week’s meeting are tilted to the downside, and they forecast real interest rates will remain near record lows this year. 

"After all the excitement ahead of the March meeting and speculation about how the European Central Bank would react to higher inflation rates and bond yields, it took a while for the ECB to communicate its reaction function."

"In short, the ECB will look through any temporary increases in headline inflation and will not accept any increases in bond yields unless they are the result of improved growth prospects. The front-loading of asset purchases was meant to support this view."

"With clarity on the reaction function and very little news on economic and inflation development since the last meeting, next week’s meeting should be an unexciting one. The ECB should try to bridge the time to the June meeting without any new communication accident. In June, the eurozone should have seen some reopenings, there will be new staff projections and the ECB will reassess the pace of its asset purchases."

"The debate about the ECB’s reaction function has spotlighted real rates as a key metric (among a range of other indicators) to assess how supportive monetary policy is."

"Also, their relevance extends not only to economics and ECB policy but also to risk appetite in financial markets. In short, the lower real rates are, the more of an incentive investors have to chase returns on other markets."

"Put in historical context, the -140 basis points in negative rates currently prevailing in the eurozone (using as an example the difference between 10-year EUR inflation swap and 10-year EUR nominal swaps) are close to a record low."

"This current state of play results from rising inflation expectations, with 10-year inflation, swaps just shy of 1.5%, while nominal swap rates have remained relatively contained around 0%. Barring a major accident on the road to recovery, we find it difficult to envision inflation swaps falling materially this year, especially taking the US recovery into account. This suggests that at most, the adjustment higher in nominal rates we’re expecting for the rest of the year, by roughly 30bp to 0.35% in 10Y swaps, will bring real rates to -110bp."

"By all account, this would still be extremely accommodative levels for the economy. This would also provide a tailwind to asset valuations across financial markets. This also goes to show that our forecast for higher EUR rates this year, is relatively benign, and not something that would keep the ECB up at night."

U.S. stock-index futures declined on Monday after S&P 500 and Dow closed at record highs in the previous session amid signs of a strong global economic recovery and solid corporate earnings.

Global Stocks:

FXStreet reports that analysts at Credit Suisse note that EUR/GBP has completed a bearish “reversal day” to throw a serious question mark over the base with a break below 0.8626/21 needed to confirm the risk has indeed turned lower again.

“Below 0.8626/21 is still needed to confirm the base has indeed been negated as this would also see a small top completed for a retreat back to 0.8578 initially. Whilst we would look for an initial hold here and eventual break should see a move back to the 0.8471/65 April low and then the ‘measured objective’ from the long-term top at 0.8430.” 

“Resistance is seen at 0.8651 initially, with a break above 0.8674 needed to ease the immediate downside bias for a move back to 0.8699, then 0.8722."

(company / ticker / price / change ($/%) / volume)

The Canada Mortgage and Housing Corp. (CMHC) reported on Monday the seasonally adjusted annual rate of housing starts was at 335,200 units in March, up 21.6 percent from an upwardly revised 275,567 units in February (originally 245,922 units). This was the highest level since records became available in January 1977.

Economists had forecast an annual pace of 250,000 for March.

According to the report, urban starts climbed by 24.4 percent m-o-m last month to 300,973 units, as multiple urban starts surged by 33.8 percent m-o-m to 222,358 units, while single-detached urban starts rose by 3.6 percent m-o-m 78,615 units. At the same time, rural starts were estimated at a seasonally adjusted annual rate of 34,227 units

GBP strengthened against most of its major rivals in the European session on Monday as investors prepared for the releases of some key economic data in the UK later this week, which are expected to show that the UK's economy is recovering from its worst recession in more than 300 years, supported by a fast rollout of COVID-19 vaccines and gradual easing of lockdowns. 

This week, market participants will receive the UK's manufacturing and services PMI survey data together with reports on the labour market, inflation, retail sales and consumer confidence. 

It is expected that Britain's economic recovery will be faster than that in the European Union (EU), which is struggling with a third wave of the COVID-19. 

Coca-Cola (KO) reported Q1 FY 2021 earnings of $0.55 per share (versus $0.51 per share in Q1 FY 2020), beating analysts’ consensus estimate of $0.50 per share.

The company’s quarterly revenues amounted to $9.000 bln (+4.7% y/y), beating analysts’ consensus estimate of $8.581 bln.

KO rose to $54.20 (+0.97%) in pre-market trading.

FXStreet reports that according to the Credit Suisse analyst team, the EUR/USD pair has surged above resistance at 1.1992/97 this morning, with a close above here suggesting that an important low is in place.

“A close above 1.1992/97 would suggest we have seen a more important low established near the 1.1695 key retracement support/target (38.2% of the 2020/2021 uptrend). If seen, this should then clear the way for further strength to resistance at 1.2027 next and then more importantly at the March high and 61.8% retracement of the 2021 fall at 1.2103/13, with the potential downtrend from the 2021 high just above at 1.2127/33.” 

“A reversal back below 1.1992 into today’s close followed by a clear break of support at 1.1950/46 would quickly turn the risks lower again for a fall back to 1.1928/23, then 1.1883."

FXStreet reports that FX Strategists at UOB Group note that extra weakness in USD/CNH is likely below the 6.5150 level.

24-hour view: “Last Friday, we noted that ‘the current movement is viewed as part of a consolidation and USD is likely to trade between 6.5200 and 6.5400’. Our view was not wrong even though USD traded within a narrower range than expected (6.5208/1.6367). Neutral momentum indicators suggest that USD could continue to consolidate, expected to be within a 6.5210/6.5410 range.”

Next 1-3 weeks: “USD subsequently traded in a quiet manner and downward momentum is beginning to wane. For now, we continue to hold the same view but USD has to move and stay below 6.5150 within these couple of days or the odds for further USD weakness would diminish quickly. On the upside, a breach of 6.5530 (no change in ‘strong resistance’ level) would indicate that the downside risk has dissipated.”

April 19

Before the Open:

Coca-Cola (KO). Consensus EPS $0.50, Consensus Revenues $8580.92 mln

After the Close:

IBM (IBM). Consensus EPS $1.62, Consensus Revenues $17354.24 mln

United Airlines (UAL). Consensus EPS -$6.82, Consensus Revenues $3282.36 mln

April 20

Before the Open:

Johnson & Johnson (JNJ). Consensus EPS $2.33, Consensus Revenues $21997.33 mln

Procter & Gamble (PG). Consensus EPS $1.20, Consensus Revenues $18002.20 mln

Travelers (TRV). Consensus EPS $3.01, Consensus Revenues $7446.07 mln

After the Close:

Netflix (NFLX). Consensus EPS $2.94, Consensus Revenues $7131.69 mln

April 21

Before the Open:

Verizon (VZ). Consensus EPS $1.28, Consensus Revenues $32473.30 mln

April 22

Before the Open:

American Airlines (AAL). Consensus EPS -$3.91, Consensus Revenues $4042.44 mln

AT&T (T). Consensus EPS $0.79, Consensus Revenues $42692.16 mln

Dow (DOW). Consensus EPS $1.06, Consensus Revenues $11017.46 mln

Freeport-McMoRan (FCX). Consensus EPS $0.51, Consensus Revenues $4737.71 mln

After the Close:

Intel (INTC). Consensus EPS $1.14, Consensus Revenues $17968.34 mln

Snap (SNAP). Consensus EPS -$0.05, Consensus Revenues $739.61 mln

April 23

Before the Open:

American Express (AXP). Consensus EPS $1.48, Consensus Revenues $9189.48 mln

Honeywell (HON). Consensus EPS $1.79, Consensus Revenues $8066.59 mln

FXStreet reports that the Credit Suisse analyst team notes that USD/JPY starts the week under serious downside pressure, with the market breaking below key support at 108.33, the key lows from March and “neckline" support. A close below here, which looks very likely, would see a top complete to mark an important turn lower.

“A close below 108.33 would see a top complete to mark a more important turn lower. We would then see support next at the 38.2% retracement of the Q1 rally and 55-day average at 107.82/77, which we would look to hold at first. This though would be seen as a temporary hold ahead of a move to the uptrend from January at 107.49 next. We would note though the ‘measured top objective’ would be seen a lot lower at 106.05.” 

“Resistance moves to 108.84 initially, then 108.97, with a break above 109.10 needed to ease the immediate downside bias for 109.57, then 109.76/78."

• Germany's economic output decreased in Q1 2021
• Only parts of the economy are not directly affected by tighter restrictions
• Manufacturing industry does not have a renewed demand problem; the industry's recovery will continue
• Higher inflation can be expected from H2 2021 due to base effects
• It could very well exceed 3% by the end of the year

FXStreet reports that economists at HSBC discuss gold prospects.

“The base inflation effects have started to lift US YoY CPI over the next couple of months, which could see US headline CPI inflation approaching nearly 4% in May. Nevertheless, we also expect inflation pressures in the US to moderate in the second half of the year. If the US inflation outlook unfolds in the manner expected, then US Treasury yields and possibly the USD could ease later in the year, allowing for gold gains.”

“Monetary and fiscal policies continue to provide underlying support for gold. As such, any further gold weakness over the near term should be modest. As we continue to expect a modest USD decline this year, it is also potentially supportive of gold, as is any uptick in trade tensions or geopolitical risks. Possible financial market instability due to asset price appreciation could also spark renewed quality asset demand for gold.”

Reuters reports that the European Central Bank said that large euro zone banks have been underreporting their risky assets by using their own models to quantify potential losses.

A five-year review by the ECB found that the euro zone's top banks had undercounted their risk-weighted assets by 275 billion euros, or 12%, for example by underestimating losses in cases where a borrower goes bust.

This lowered the ratio between those banks' capital and their risky assets, a key gauge of a lender's solidity, by 70 basis points on average between 2018 and 2021.

The ECB said "further improvement" was needed in some areas, for example to ensure that the probability of default that banks assume is in line with long-run averages and sufficiently conservative.

The way borrowers are rated also needed "to be amended or adapted", the euro zone's top banking supervisor added.

According to the report from Eurostat, in February 2021 compared with January 2021, seasonally adjusted production in the construction sector decreased by 2.1% in the euro area and by 1.6% in the EU. In January 2021, production in construction increased by 0.8% in the euro area and by 1.0% in the EU.

In February 2021 compared with February 2020, production in construction decreased by 5.8% in the euro area and by 5.4% in the EU.

In the euro area in February 2021, compared with January 2021, civil engineering decreased by 3.4% and building construction by 1.9%. In the EU, civil engineering decreased by 3.2% and building construction by 1.3%.

In the euro area in February 2021, compared with February 2020, civil engineering decreased by 10.4% and building construction by 4.8%. In the EU civil engineering decreased by 9.8% and building construction by 4.1%.

Reuters reports that British finance minister Rishi Sunak announced the launch of a new taskforce for a potential Bank of England central bank digital currency and other measures to promote international share-trading.

"We're launching a new taskforce between the Treasury and the Bank of England to coordinate exploratory work on a potential central bank digital currency. Alongside this we will set up a new financial market infrastructure 'sandbox' for firms innovating with technologies like distributed ledger technologies," Sunak told.

Sunak also said the government would consult on capital market reforms such as easing curbs on share trading.

According to the report from European Central Bank, the current account of the euro area recorded a surplus of €26 billion in February 2021, decreasing by €9 billion from the previous month. Surpluses were recorded for goods (€32 billion) and services (€11 billion). These were partly offset by deficits for secondary income (€16 billion) and primary income (€2 billion).

In the 12 months to February 2021, the current account recorded a surplus of €259 billion (2.3% of euro area GDP), compared with a surplus of €263 billion (2.2% of euro area GDP) in the 12 months to February 2020. This decline was driven by a reduction in the surplus for primary income (down from €48 billion to €18 billion) and an increase in the deficit for secondary income (up from €151 billion to €167 billion). These developments were partly offset by larger surpluses for services (up from €36 billion to €58 billion) and for goods (up from €330 billion to €350 billion).

In financial account, euro area residents’ net acquisitions of foreign portfolio investment securities totalled €804 billion and non-residents’ net sales of euro area portfolio investment securities totalled €21 billion in 12 months to February 2021

FXStreet reports that FX Strategists at UOB Group noted further gains are expected in EUR/USD once the 1.2000/10 band is cleared.

Next 1-3 weeks: “Our latest narrative was from last Thursday where we highlighted that ‘overbought shorter-term conditions could slow the pace of advance but a break of 1.2010 would not be surprising’. However, 1.2010 remains intact as EUR struggled to move above 1.2000 for the past couple of days. Conditions remain overbought and upward momentum is beginning to wane. Unless EUR breaks clearly above 1.2000/1.2010 within these couple of days, the chance or further EUR strength would diminish quickly. Conversely, a breach of 1.1915 (no change in ‘strong support’ level) would indicate that the EUR strength that started about 2 weeks ago has come to an end.”

FXStreet reports that economists at Capital Economics doubt the renminbi’s recent rebound against the US dollar will continue. 

“In the US, we expect rapid growth thanks to the economy reopening and large fiscal stimulus. By contrast, China’s economic recovery from the virus is now largely in the rear-view mirror. We expect growth there to be much lower than it has been over the past year as the economy returns toward its pre-virus trend, policy support is withdrawn, and the pandemic-related boost to the country’s exports fades.”

“We think the spread between the two countries’ long-term bond yields will begin to narrow again before too long. We think the eventual narrowing of China’s massive current account surplus – which probably boosted the currency last year –  will hold back the renminbi as the global economy continues to return to normal.”

“We expect the recent strength in the renminbi to prove short-lived: we forecast USD/CNY to finish 2022 at 6.90, compared with ~6.50 at present.”

During today's Asian trading, the US dollar rose slightly against the euro, but fell against the pound and the yen.

The focus of the market this week is the meeting of the European Central Bank (ECB), which will be held on Thursday. Traders do not expect the ECB to take any action, but will wait for signals from it regarding the future normalization of policy. "The ECB is likely to leave both the level of key rates and the volume of asset repurchases unchanged. The tone of this meeting will be similar to the one in March, the ECB will remain in a wait - and-see position and will assess the change in financial conditions against the backdrop of the economic recovery," TD Securities experts said.

Goldman Sachs experts raised the three-month target for EUR/USD to $1.25 per euro from $1.21, noting, in particular, the expected improvement in the situation in the euro area.

The yield on 10-year US Treasuries on Monday is 1.562% per annum, compared with 1.584% on Friday. Interest rates fell last week on fears of a slowdown in the global vaccination rate after information emerged that the US Food and Drug Administration (FDA) had recommended suspending the use of Johnson & Johnson's COVID-19 coronavirus vaccine due to cases of thrombosis.

The ICE index, which tracks the dollar's performance against six currencies (euro, swiss franc, yen, canadian dollar, pound sterling and swedish krona), fell 0.06%.

Bloomberg reports that the property website Rightmove said that U.K. house prices surged to a record this month with a tax break on purchases and rock-bottom interest rates prompting a “buying frenzy”.

The average cost of a home rose 2.1% to 327,797 pounds ($450,983) in April, marking only the second time in the past five years it rose that much in a single month. Almost a quarter of sales were for properties on the market less than a week, with larger homes outside London snapped up quickest.

The figures reflect an urge by consumers to move outside cities following three national lockdowns to control the coronavirus in the past year. Buyers are also taking advantage of borrowing costs near a record low and aid from the Treasury in the form of a holiday on stamp duty and support for borrowers with small deposits.

eFXdata reports that Danske Research discusses its expectations for ECB policy meeting.

"The ECB meeting on Thursday will be a stock taking meeting with focus on the resilient economic data and positive outlook for coming months while Lagarde will face questions on the recent PEPP purchase behaviour. We expect the growth outlook to be ‘broadly balanced’ paving the way for the PEPP purchase pace going back to February levels around EUR60bn after the June meeting. We think Lagarde will repeat the ‘delayed and not derailed’ recovery narrative. While we expect the June meeting will conclude in a lower PEPP buying, the battle about PEPP’s future is set for September in our view," Danske notes. 

"For EUR/USD, ECB is unlikely to be a key story. At the last meeting, ECB’s optimism did spill over but given also the recent rally in spot from 1.17 to nearly 1.20, we would argue there is less scope to turn the tactical story even more positive. On net, we think that optimism towards the euro area is well priced in to inflation- and earnings expectations as well as FX," Danske adds. 

Reuters reports that Ministry of Finance data showed that Japan's exports posted their strongest growth in more than three years in March, led by a surge in China-bound shipments.

Data showed exports surged 16.1% in March from a year earlier, marking the steepest rise since November 2017. That was better than an 11.6% jump expected by economists, and followed a 4.5% contraction in February.

The exports surge was also marked by especially strong shipments to Japan's largest trading partner China, while the pace of recovery in firms' exports to the United States remained relatively slow, said analysts.

Shipments to China, Japan's largest trading partner, soared 37.2% in the year to March, led by nonferrous metals and plastic materials, and also boosted by stronger exports of semiconductor machinery.

Exports to the United States, the world's top economy, rose 4.9% to post their first year-on-year gain in five months, as strong demand for cars and construction machinery such as bulldozers offset lower shipments of aircrafts.

Shipments to Asia as a whole gained 22.4%, while those to the European Union advanced 12.8% in March.

Imports rose 5.7% in March compared with the same month a year earlier, versus the median estimate for a 4.7% increase, bringing a trade surplus of 663.7 billion yen ($6.11 billion) versus the median estimate for a 490.0 billion yen surplus.

EUR/USD

Resistance levels (open interest**, contracts)

$1.2089 (1357)

$1.2059 (3548)

$1.2036 (1722)

Price at time of writing this review: $1.1958

Support levels (open interest**, contracts):

$1.1933 (530)

$1.1906 (744)

$1.1873 (1758)

Comments:

- Overall open interest on the CALL options and PUT options with the expiration date May, 7 is 51633 contracts (according to data from April, 16) with the maximum number of contracts with strike price $1,2000 (3548);

GBP/USD

$1.3961 (2268)

$1.3942 (262)

$1.3910 (529)

Price at time of writing this review: $1.3849

Support levels (open interest**, contracts):

$1.3776 (668)

$1.3727 (382)

$1.3696 (1864)

Comments:

- Overall open interest on the CALL options with the expiration date May, 7 is 13520 contracts, with the maximum number of contracts with strike price $1,4200 (3728);

- Overall open interest on the PUT options with the expiration date May, 7 is 16980 contracts, with the maximum number of contracts with strike price $1,3700 (1899);

- The ratio of PUT/CALL was 1.26 versus 1.28 from the previous trading day according to data from April, 16

* - The Chicago Mercantile Exchange bulletin (CME) is used for the calculation.

** - Open interest takes into account the total number of option contracts that are open at the moment.