Forex-novosti i prognoze od 22-04-2021

The Conference Board announced on Thursday its Leading Economic Index (LEI) for the U.S. went up 1.3 percent m-o-m in March to 111.6 (2016 = 100), following a revised 0.1 percent m-o-m gain in February (originally a 0.2 percent m-o-m advance).

Economists had forecast an increase of 1.0 percent m-o-m.

“While the pace of increase in the U.S. LEI has slowed since mid-2020, January’s gains were broad-based “The U.S. LEI rose sharply in March, which more than offset February’s slightly negative revised figure,” noted Ataman Ozyildirim, Senior Director of Economic Research at The Conference Board. “The improvement in the U.S. LEI, with all ten components contributing positively, suggests economic momentum is increasing in the near term. The widespread gains among the leading indicators are supported by an accelerating vaccination campaign, gradual lifting of mobility restrictions, as well as current and expected fiscal stimulus. The recent trend in the U.S. LEI is consistent with the economy picking up in the coming months, and The Conference Board now projects year-over-year growth could reach 6.0 percent in 2021.”

The report also revealed the Conference Board Coincident Economic Index (CEI) for the U.S. rose 0.6 percent m-o-m in March to 104.0, following a 0.1 percent m-o-m drop in February. Meanwhile, its Lagging Economic Index (LAG) for the U.S. fell 0.5 percent m-o-m in March to 105.1, following a 1.6 percent surge in February.

The European Commission (EC) said on Thursday its flash estimate showed the consumer confidence indicator for the Eurozone rose by 2.7 points to -8.1 in April from an unrevised -10.8 in the previous month. This was the highest reading since February 2020.

Economists had expected the index to stay -10.8.

Considering the European Union (EU) as a whole, consumer sentiment improved by 3.1 points to -9.0.

Given this month’s gains, both indicators are now above their long-term averages of -11.1 (Eurozone) and -10.6 (EU).

The National Association of Realtors (NAR) announced on Thursday that the U.S. existing home sales fell 3.7 percent m-o-m to a seasonally adjusted rate of 6.01 million in March from a revised 6.24 million in February (originally 6.22 million). This was the lowest reading since August 2020.

Economists had forecast home resales decreasing to a 6.19 million-unit pace last month.

In y-o-y terms, existing-home sales rose 12.3 percent in March

According to the report, all four major regions recorded m-o-m drops in existing-home sales in March but continued to see gains in y-o-y terms. The median existing-home price for all housing types in March was $329,100, up 17.2 percent y-o-y, as prices increased in every region.

Single-family home sales stood at a seasonally-adjusted annual rate of 5 5.30 million in March, down 4.3 percent from 5.54 million in February, but up 10.4 percent from one year ago. The median existing single-family home price was $334,500 in March, up 18.4 percent y-o-y. Meanwhile, existing condominium and co-op sales were recorded at a seasonally-adjusted annual rate of 710,000 units in March, up 1.4 percent from February and up 29.1 percent from one year ago. The median existing condo price was $289,000 in March, an increase of 9.6 percent y-o-y.

Consumers are facing much higher home prices, rising mortgage rates, and falling affordability, however, buyers are still actively in the market," noted Lawrence Yun, NAR's chief economist. "The sales for March would have been measurably higher, had there been more inventory," he added. "Days-on-market are swift, multiple offers are prevalent, and buyer confidence is rising."

• Our views are largely the same as in March
• Vaccination pace is improving but we're also seeing more pressure on economic and health sector from virus
• We still have this overall environment of uncertainty and that's very much reflected in the consumer
• Reduction of PEPP is data dependent, not based on calendar; it depends on financing conditions and the inflation outlook
• Obviously we look at what other central banks do
• ECB policy won’t move in tandem with Fed

U.S. stock-index futures traded flat on Thursday, as solid Q1 earnings from AT&T (T) and better-than-expected data on U.S. weekly jobless claims offset concerns over an increase in COVID infections, particularly in Asia, and its implications for global recovery.

Global Stocks:

• Pandemic continues to constrain activity; near-term outlook remains clouded by uncertainty
• Vaccine underpins expectation of a firm rebound in economic activity
• Governing Council expects PEPP in this quarter to be conducted at significantly higher pace than in Q1
• PEPP envelop need not be used in full if favorable financing conditions maintained; can also be boosted if needed
• GDP was 4.9% below pre-pandemic level at year end
• Incoming data, surveys suggest that economic may have contracted in Q1 but point to resumption of growth in Q2
• Medium-term risks are more balanced
• Headline inflation likely to increase further in coming months
• Inflation expectations are at subdued levels
• Fiscal measures should be targeted and temporary
• We will continue to monitor foreign exchange developments

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

Statistics Canada reported on Thursday the New Housing Price Index (NHPI) climbed 1.1 percent m-o-m in March, following a 1.9 percent m-o-m gain in the previous month, as the strong demand for new houses, fueled by lower borrowing costs and work from home restrictions, continued pushing up new home prices.

Economists had forecast the NHPI to increase 1.4 percent m-o-m in March.

According to the report, new home prices increased in 23 out of the 27 census metropolitan areas (CMAs) surveyed in March, with Charlottetown (+3.4 percent m-o-m) recording the largest monthly gain in new home prices, as house prices in this area remained relatively affordable compared with other hot markets in Canada.

In y-o-y terms, NHPI surged 7.9 percent in March, following a 7.0 percent climb in the previous month. This was the largest y-o-y increase since May 2007. All 27 CMAs surveyed saw accelerated new home prices on y-o-y basis for the first time since December 2017.

The data from the Labor Department revealed on Thursday the number of applications for unemployment unexpectedly decreased last week, hitting its lowest level in more than a year.

According to the report, the initial claims for unemployment benefits dropped by 39,000 to 547,000 for the week ended April 17. This was the lowest reading since March 2020.

Economists had expected 617,000 new claims last week.

Claims for the prior week were revised upwardly to 786,000 from the initial estimate of 576,000.

Meanwhile, the four-week moving average of jobless claims fell to 651,000 from a downwardly revised 678,750 in the previous week.

Continuing claims declined to 3,674,000 from a downwardly revised 3,708,000 in the previous week.

Freeport-McMoRan (FCX) reported Q1 FY 2021 earnings of $0.51 per share (versus -$0.18 per share in Q1 FY 2020), being in line with analysts’ consensus estimate of $0.51 per share.

The company’s quarterly revenues amounted to $4.850 bln (+73.3% y/y), beating analysts’ consensus estimate of $4.738 bln.

FCX fell to $35.72 (-0.50%) in pre-market trading.

EUR advanced against its major rivals in the European session on Thursday, following the release of the European Central Bank’s (ECB) monetary policy statement, which, in general, offered little new information. 

At the April meeting, the ECB’s officials decided to leave its ultra-easy policy unchanged, as widely expected. The Bank’s main refinancing rate, marginal lending facility rate and the deposit facility rate were maintained at  0.00 percent, 0.25 percent and -0.50 percent, respectively. The policymakers also repeated that they will continue the purchases under the pandemic emergency purchase program (PEPP) with a total envelope of EUR1,850 billion until at least the end of March 2022, and that the purchases under the PEPP over the current quarter are expected to continue to be conducted at a significantly higher pace than during the first months of the year.

Market participants’ attention is now turning towards the press conference by the ECB’s President Christine Lagar (due at 12:30 GMT), during which she is to comment on the considerations underlying the ECB’s latest decisions.

The European Central Bank (ECB) left its main refinancing rate unchanged at 0.00 percent on Thursday, as widely expected. Its interest rates on the marginal lending facility and the deposit facility were also left unchanged at 0.25 percent and -0.50 percent, respectively.

In its policy statement, the ECB said:

• Governing Council decided to reconfirm its very accommodative monetary policy stance at the meeting;
• Governing Council expects key ECB interest rates to remain at their present or lower levels until it has seen inflation outlook robustly converge to level sufficiently close to, but below, 2% within its projection horizon;
• Governing Council will continue to conduct net asset purchases under the pandemic emergency purchase programme (PEPP) with total envelope of EUR1,850 billion until at least the end of March 2022 and, in any case, until it judges that the coronavirus crisis phase is over;
• Governing Council expects purchases under PEPP over the current quarter to continue to be conducted at significantly higher pace than during the first months of the year;
• Governing Council will purchase flexibly according to market conditions and with view to preventing tightening of financing conditions;
• Governing Council will continue to reinvest the principal payments from maturing securities purchased under PEPP until at least the end of 2023;
• Net purchases under the asset purchase programme (APP) will continue at monthly pace of EUR20 billion;
• Governing Council will continue to provide ample liquidity through its refinancing operations;
• Governing Council stands ready to adjust all of its instruments, as appropriate, to ensure that inflation moves towards its aim in sustained manner, in line with its commitment to symmetry

FXStreet reports that according to Jack Manley, Global Market Strategist at JP Morgan, the post-covid global recovery should help to sustain commodity performance in the near term, a boon for investors looking to hide from inflation or diversify portfolios.

“With the global economy on the mend and a large cyclical upswing anticipated over the coming years, it makes sense that the potential of a super-cycle should be raised. However, a number of trends seem to suggest that this thesis may not hold water.”

“On the energy front, further upward price pressure seems dubious. Both the US and OPEC have an enormous amount of spare capacity, allowing production to increase in the face of rising prices; moreover, coordinated global efforts to address climate change will result in lower demand for fossil fuels in the decades ahead.”

“The sharp increase in both lumber and copper prices is due to a housing boom. The question, therefore, must be about the durability of this surge.”

“Food and precious metals round out the commodities group. A reacceleration in economic growth should temporarily boost demand for food, but poor demographics point to a slowdown in longer-term population growth; and while gold and other precious metals would typically be beneficiaries of easy global monetary policy and inflationary concerns, the rise of cryptocurrencies has taken some appetite away from this sector.”

“The post-COVID-19 global recovery should help to sustain commodity performance in the near-term, a boon for investors looking to hide from inflation or diversify portfolios. However, it seems premature to call this anything more than a strong recovery.”

FXStreet reports that April’s ECB meeting is not expected to bring any headline-grabbing changes in policy or economic forecasts, but there is plenty of potential for nuances from today’s meeting to keep market commentators busy for days. According to economists at Rabobank, the EUR could draw some influence from the press conference that followed today’s ECB policy announcement. Caution from the ECB President could curtail any additional attempts on the upside in EUR/USD today.

“The position of US treasury yields has been the overwhelming influence for EUR/USD this year and with these currently on the back foot, there is potential for EUR/USD to sustain levels above 1.20 in the near-term.

“It will be no surprise to see hints that weekly asset purchases through the PEPP may be rolled back to pre-March meeting levels in H2. That said, Lagarde is likely to be guarded against appearing too optimistic. COVID-19 is currently raging in India and in various S.American countries and, with given new variants, she will be mindful that another wave in Europe cannot be ruled out.” 

“The 100-day SMA should offer resistance at EUR/USD 1.2057.” 

Dow (DOW) reported Q1 FY 2021 earnings of $1.36 per share (versus $0.59 per share in Q1 FY 2020), beating analysts’ consensus estimate of $1.06 per share.

The company’s quarterly revenues amounted to $11.882 bln (+21.6% y/y), beating analysts’ consensus estimate of $11.017 bln.

DOW rose to $65.00 (+0.28%) in pre-market trading.

AT&T (T) reported Q1 FY 2021 earnings of $0.84 per share (versus $0.84 per share in Q1 FY 2020), beating analysts’ consensus estimate of $0.79 per share.

The company’s quarterly revenues amounted to $43.900 bln (+2.6% y/y), beating analysts’ consensus estimate of $42.692 bln.

T rose to $30.70 (+1.96%) in pre-market trading.

FXStreet notes that AUD/USD at 0.7750 it is up only 0.25% on the week, a clear underperformance within the G10. Earlier this week, AUD/USD traded with the 0.7800 handle for the first time since 18 March but economists at Westpac do not expect the aussie to trade above this level in the short-term.

“The price action seems somewhat at odds with the 10 year highs on spot iron ore prices. It is more than just iron ore too, with our measure of Australia’s commodity export basket reaching highs since the January peak. More hefty trade surpluses appear to be on the way.”

“The domestic momentum also continues, even if the fortnightly payrolls series due Wed will provide the first data on the impact of JobKeeper’s end.” 

“Our preference is to buy AUD/USD on dips below 0.7700, with 0.7900 our late Q2 target. Still, the aussie would have been down on the week without a squeeze in sympathy with CAD as the BoC confirmed QE tapering and an earlier potential rate hike. The mixed global mood should limit the amount of trade above 0.7800 near-term.”

FXStreet notes that the latest Bank of Canada policy update proved even more hawkish than expected triggering the Canadian dollar’s best daily performance since June. BoC’s increased confidence in the economic outlook has led Lee Hardman, Currency Analyst at MUFG Bank, to think the USD/CAD will fall to 1.23 sooner than expected.

“The BoC brought forward plans to begin raising rates from the second half of next year having previously indicated that hikes would start from 2023. It provides a strong bullish signal for the Canadian dollar in the near-term as it will encourage market participants to continue pricing in more rate hike expectations into next year thereby helping to lift Canadian short rates. 

“The BoC’s decision to bring forward plans for the timing of the first-rate hike into the second half of next year stands in marked contrast to the Fed’s recent dovish update when they reiterated that they still do not plan to hike rates until 2024. In reality, the timing gap is unlikely to be so wide, we expect the Fed to begin raising rates from 2023. Nevertheless, the updated forward guidance from the BoC suggests that they are not overly concerned about encouraging higher rates and a stronger Canadian dollar in the near-term.”

“In light of these developments, our bullish forecast for the Canadian dollar could prove too cautious. Downside risks have increased to our year-end USD/CAD target of 1.2300 which could be reached sooner.” 

The latest survey by the Confederation of British Industry (CBI) revealed on Thursday the UK manufacturers' order books fell in April.

According to the report, the CBI's monthly factory order book balance decreased to -8 in April from -5 in the previous month but remained above its long-run average of -14. Economists had forecast the reading to come in at 2. 

The CBI also reported that output volumes in the three months to April were broadly flat (+3 from +3 in March), while total new orders grew at their quickest pace since April 2019 (+5 from -12 in January). It was also expected that both output (+36) and orders (+20) growth would pick up rapidly in the next quarter.

In other survey results, manufacturing optimism in the three months to April (+38) improved at its quickest pace since April 1973, while investment intentions for the next year saw a strong, broad-based improvement, with firms expecting to spend more on buildings, plant and machinery, product and process innovation, and training and retraining compared to last year. Numbers employed in the three months to April (+10) grew at their quickest pace since July 2018, and are seen to accelerate their growth further next quarter (+19) with expectations at their strongest since April 1974.

Cost pressures continue to temper the outlook for the manufacturing sector, however. Average costs growth in the quarter to April (+48 from +34) accelerated at its quickest pace since April 2011 and costs are forecast to grow at a similarly rapid rate next quarter.

FXStreet reports that economists at Westpac discusses NZD/USD prospects.

“Having broken above the key 0.7100 level last week, NZD/USD is poised to continue higher. First clearing 0.7230, and then 0.7270, to allow a move to 0.7300+. The main drivers recently have been stronger global risk sentiment and a weaker US dollar.

“Multi-month, we remain bullish NZD/USD, expecting 0.7600 by year-end. The main factors are likely to be a weaker US dollar (due to improving global growth relative to the US) and upbeat global risk sentiment.” 

“NZ CPI data was not as dramatic as some market participants had hoped. The headline measure was as expected at 0.8% QoQ and 1.5% YoY. Moreover, core measures were slightly more subdued than expected. It will provide some comfort to the RBNZ’s long-time on-hold stance, ahead of a transitory spike in Q2 and Q3.”

eFXdata reports that Citi discusses its expectations for ECB policy meeting.

"We expect the ECB to sound modestly dovish at today's meeting, given slow progress in vaccination and stalling inflation expectations.  We don’t expect any major policy news as financing conditions remain favorable. The asset purchase pace is likely peaking, while the Review, the potential expiry of the PEPP and the EUR probably are increasingly relevant. We don’t expect much market impact from this Meeting and see upside for EURUSD overall,' Citi adds. 

FXStreet reports that according to economists at ING, prospect of a 2022 rate hike in Canada are set to assist CAD in the medium-term.

“The Canadian dollar rallied after the meeting thanks to the more hawkish 2022 forward guidance and a set of upbeat economic forecasts, while the C$1 B worth of tapering was largely expected. In the short run, however, the loonie may struggle to emerge from the recent soft momentum, as the covid emergency in Canada is forcing some re-rating of domestic growth expectations.”

“Assuming that the current restrictions prove effective in curbing the contagion in Canada – the country has significantly increased the pace of vaccinations – and given that our commodities team believes oil prices will stay supportive in the remainder of the year, CAD may be left without any meaningful short-term dampening factor.”

“An improved rate profile, thanks to markets frontloading a rate hike in 2022 and further scaling back of QE this year, all point to further strength in the loonie. In line with our bearish USD profile, we expect USD/CAD to touch 1.20 – and possibly move below those levels – by the end of 2021.”

According to the report from Istat, in February 2021 the seasonally adjusted turnover index increased by 0.2% compared to the previous month (+0.9% the domestic market and -1.3% in non-domestic market); the average of the last three months increased by 2.4% compared to the previous three months (+2.6% in domestic market and +1.9% in non-domestic market).

With respect to the same month of the previous year the calendar adjusted industrial turnover index increased by 0.9% (+2.3% in domestic market and -1.8% in non-domestic market). Calendar working days in February 2021 were 20 as in February 2020.

The seasonally adjusted volume turnover index (only for the manufacturing sector) increased by 0.3% compared to the previous month and the average of the last three months by 1.4% compared to the previous three months. The calendar adjusted volume turnover index increased by 1.0% with respect to the same month of the previous year.

Reuters reports that Japan’s government is expected to issue a third state of emergency on Tokyo and three western prefectures that could last for about two weeks.

Some analysts say the decision, expected to be made as early as Friday, may push Japan back into recession if retailers are asked to close during the Golden Week holidays, which start next week and run through early May. A renewed state of emergency would also cast doubt on whether Tokyo can host the Olympics in July.

“The risk of a double-dip recession has clearly heightened,” said Hiroshi Shiraishi, senior economist at BNP Paribas Securities. “The impact of imposing curbs on Tokyo and Osaka alone would be quite big.”

With thousands of new cases resulting from highly infectious strains of the virus, Suga said on Wednesday the government will decide this week whether to declare the state of emergency for major parts of the country.

FXStreet reports that economists at Natixis discuss the prospects for inflation in the US.

“What matters for inflation is mainly the functioning of the labour market and wage growth, not other potentially inflationary factors (population ageing, fiscal deficits, money creation, rising costs in emerging countries).”

“There is no reason why the Phillips curve (the relationship between unemployment, wages and inflation) would be different today in the US from what it was in 2018-2019. This is not to say that the functioning of the labour market will not change in the long term.”

“Domestic demand stimulus is not inflationary if it is balanced by a deterioration in foreign trade. The COVID-19 crisis is driving companies to make large cost savings, which is disinflationary.”

RTTNews reports that data from the Federal Customs Administration showed that Switzerland's exports grew in the first quarter.

Exports increased 4.9 percent sequentially in the first quarter, following a 13 percent rise in the fourth quarter.

Imports grew 1.9 percent in the first quarter, after a 1.1 percent drop in the previous quarter.

The trade surplus rose to CHF 11.28 billion in the first quarter from CHF 9.405 billion in the previous quarter. In the first quarter of 2020, the trade surplus was CHF 8.422 billion.

In March, exports rose 4.5 percent monthly, after a 1.2 percent fall in February.

Imports increased 3.5 percent month-on-month in March, after a 0.3 percent rise in the prior month.

During today's Asian trading, the US dollar fell slightly against the world's major currencies.

The ICE Dollar index, which shows the value of the US dollar against the six major world currencies, fell by 0.11%.

The focus of traders ' attention is the meeting of the European Central Bank( ECB), the results of which will be announced today at 11:45 GMT. Experts believe that the ECB will refrain from changing the parameters of monetary policy and will confirm its commitment to the current rate against the background of a slow recovery in the eurozone economy.

Investors are waiting for comments from ECB President Christine Lagarde in the hope of getting an indication of what the regulator intends to do with the emergency program of asset repurchase Pandemic Emergency Purchase Program (PEPP) after June.

Talk of a possible curtailment of central bank asset purchases has helped the euro rise this week, and Lagarde may try to curb that speculation . According to analysts at TD Securities, the euro may rise, albeit slightly, against the dollar, if the ECB gives an optimistic assessment of the prospects for the euro zone economy.

Later on Thursday, the US will release data on the number of initial applications for unemployment benefits, as well as data on home sales on the secondary market in March.

According to the report from INSEE, in April 2021, the business climate has deteriorated after a marked improvement in the previous month. The indicator that synthesizes it, calculated from the responses of business leaders in the main market sectors of activity, has lost two points. At 95, it stands below its long-term average (100).

This moderate decline is the result of the deterioration in the outlook for the tertiary sector, partly offset by a further improvement in the business climate in industry.

In retail trade, the climate has lost 5 points and stands well below its long-term average. In this sector, all forward-looking balances are affected, in connection with the strengthening of health measures at the end of March.

In the services sector, the climate has lost 3 points, due to the fall in most forward-looking balances, and also stands clearly below its average.

On the other hand, in manufacturing, the business climate has gained 5 points. At 104, he has returned above his average (100). In this sector, the balances of opinion on ordering intentions, on personal production prospects and on recent production have increased.

Finally, in building construction, the opinion of business leaders on the recent trend in their activity has improved while that of expected activity has darkened slightly. These two balances remain well above their respective averages.

CNBC reports that with a policy change pretty much off the table this week, European Central Bank watchers will have to closely monitor finer details about its pandemic stimulus program as policymakers wait for more data before taking decisive action.

Recent economic figures do point to a stronger-than-expected economic recovery, and further coronavirus lockdowns across the euro zone won’t likely warrant further action by the central bank.

In the wake of the pandemic, the ECB launched its Pandemic Emergency Purchase Program, or PEPP, which buys bonds in the region to stimulate lending and fuel an economic recovery. It left that program unchanged at its meeting in March, with the target purchase amount still at 1.85 trillion euros ($2.21 trillion) — which is due to last until March 2022. 

However, it decided to accelerate the bond purchases on a monthly basis to alleviate some of the upward pressure of sovereign debt yields in the region — which had meant more expensive refinancing for euro zone countries or a tightening of financial conditions. 

But looking at the minutes of the meeting by the ECB’s Governing Council in March, it’s clear the opposition to rising yields was not as comprehensive as it first appeared.

More and more signs are emerging that the economy will pick up strongly in the second half of this year. The improved outlook has prompted some policymakers to step out already and hint at an exit to the PEPP.  Pierre Wunsch and Klaas Knot, the Belgian and Dutch central bank chiefs respectively, have started the discussion about a possible PEPP exit with the latter suggesting it could come as early as the third quarter of this year.

EUR/USD

Resistance levels (open interest**, contracts)

$1.2137 (1457)

$1.2107 (1351)

$1.2084 (3341)

Price at time of writing this review: $1.2031

Support levels (open interest**, contracts):

$1.1985 (908)

$1.1958 (634)

$1.1925 (732)

Comments:

- Overall open interest on the CALL options and PUT options with the expiration date May, 7 is 51288 contracts (according to data from April, 21) with the maximum number of contracts with strike price $1,2000 (3341);

GBP/USD

$1.4025 (796)

$1.4001 (1861)

$1.3982 (912)

Price at time of writing this review: $1.3927

Support levels (open interest**, contracts):

$1.3827 (674)

$1.3761 (402)

$1.3722 (1876)

Comments:

- Overall open interest on the CALL options with the expiration date May, 7 is 12345 contracts, with the maximum number of contracts with strike price $1,4200 (2962);

- Overall open interest on the PUT options with the expiration date May, 7 is 17600 contracts, with the maximum number of contracts with strike price $1,3700 (1909);

- The ratio of PUT/CALL was 1.43 versus 1.27 from the previous trading day according to data from April, 21

* - 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.

eFXdata reports that Bank of America Global Research highlights the importance of the ECB Strategy Review for the EUR direction over the remainder of the year.

"The ECB communication remains problematic. Recent comments by ECB hawks point to risks of early policy normalization.For now, we have to wait for the Strategy Review, in order to get some clarity. As we have argued before, the Review itself can go either way. It is succeeds, it should clarify how an open-ended QE program can continue after the PEPP ends early next year. In the other extreme, the end of the PEPP will signal the end of QE. Where we end up in the middle of these extremes will determine the EUR impact," BofA adds.