Forex-novosti i prognoze od 29-01-2021

According to ActionForex, analysts at RBC Financial Group note that Canada's monthly GDP estimates surprised on the upside in November (+0.7% m/m) and December flash estimate (+0.3% m/m).

"The Canadian economy grew 0.7% in November and surprisingly posted another 0.3% gain in December according to Statistics Canada’s flash estimate. Those increases were despite escalating COVID-19 containment measures over that period."

"The pace of improvement still slowed in December with containment measures reportedly starting to bite more significantly in the hard-hit accommodation & food services industry, as well as lower retail sales as restrictions on in-store sales at non-essential retailers ramped up."

"Lockdowns have been more targeted by industry through the second wave. The manufacturing sector has continued to recover as has activity in service-sector activity like professional services. Oil & gas output has been recovering. GDP was still down almost 3% from a year ago in November, but roughly half of that weakness comes from the accommodation & food services, recreation, and ‘other’ services sectors."

"Virus containment measures likely bit more significantly on overall growth in January – but the Nov/Dec numbers clearly flag upside risk to our Q4 GDP growth forecast (closer to an 8% annualized GDP increase compared to RBC and BOC’s ~4 1/2% projections). And slowing virus spread means that January restrictions could begin to be gradually eased as early as February that may be enough to prevent a decline in overall GDP in Q1 as well."

The final reading for the January Reuters/Michigan index of consumer sentiment came in at 79.0 compared to a preliminary reading of 79.2 and the December final reading of 80.7. 

Economists had forecast the index to remain unrevised at 79.2.

According to the report, the index of consumer expectations slipped 0.8 percent m-o-m to 74.0 from December’s final reading of 74.6, while the index of the current economic conditions fell 3.7 percent m-o-m to 86.7 from December’s final reading of 90.0.

“Consumer sentiment remained largely unchanged in the last half of January from earlier in the month,” noted Richard Curtin, the Surveys of Consumers chief economist. “The overall stability of consumer confidence has benefitted from wearing masks and social distancing, the quick substitution of home for office work, and the prompt distribution of generous federal benefits. These factors helped to absorb the pandemic's negative impact on the economy as well as on personal finances.”

U.S. pending home sales drop slightly more than forecast in December

The National Association of Realtors (NAR) announced on Friday its seasonally adjusted pending home sales index (PHSI) slipped 0.3 percent m-o-m to 125.5 in December, after a revised 2.5 percent m-o-m drop in November (originally a 2.6 percent m-o-m decline). This marked the fourth consecutive monthly drop in the value of the index.

Economists had expected pending home sales to edged down 0.1 m-o-m in December.

On y-o-y basis, the index surged 21.4 percent, following a revised 16.6 percent jump in November (originally a 16.4 percent m-o-m climb).

According to the report, two of all four regional indices recorded month-over-month increases in December, but all four regions rose at double-digit rates from one year ago.

The index in the Midwest dropped 3.6 percent m-o-m to 111.7 last month, up 13.9 from December 2019. Meanwhile, the index in the West was flat m-o-m in December, holding at 111.3, which was up 18.9 percent from a year ago. The Northeast PHSI went up 3.1 percent m-o-m to 112.0 in December, a 22.1 percent surge from a year ago. Pending home sales in the South edged up 0.1 percent m-o-m to an index of 150.6 in December, up 26.6 percent from December 2019.

"Pending home sales contracts have dipped during recent months, but I would attribute that to having too few homes for sale," noted Lawrence Yun, NAR's chief economist. "There is a high demand for housing and a great number of would-be buyers, and therefore sales should rise with more new listings."

MNI Indicators’ report revealed on Friday that business activity in Chicago expanded in January 2021 at a faster pace than in December 2020, recording its seventh straight month of growth.

The MNI Chicago Business Barometer, also known as Chicago purchasing manager's index (PMI) came in at 63.8 in January, slightly up from a revised 58.7 in December (originally 59.5). This was the highest reading since July 2018.

Economists had forecast the index to drop to 58.5.

A reading above 50 indicates improving conditions, while a reading below this level shows worsening of the situation.

According to the report, Production (+9.9 points, to the highest level since January 2018) and New Orders (+7.9 points, to the highest level since November 2018) registered the largest monthly gains among the main five indicators, while Employment (-4.5 points) recorded the biggest decrease.

U.S. stock-index futures fell on Friday amid lingering concerns about Wall Street battle between hedge funds and retail investors. Investors also assessed Johnson & Johnson’s reports on the effectiveness of its coronavirus vaccine and the latest batch of earnings reports from U.S. companies, including Visa (V), Caterpillar (CAT), Chevron (CVX) and Honeywell (HON).

Global Stocks:

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

Ford Motor (F) downgraded to Underweight from Equal-Weight at Morgan Stanley

Boeing (BA) upgraded to Overweight from Underweight at Morgan Stanley; target $230

The Commerce Department reported on Friday that consumer spending in the U.S. fell 0.2 percent m-o-m in December after a revised 0.7 percent m-o-m decline in November (originally a 0.4 percent m-o-m drop). This marked the second consecutive monthly decrease in consumer spending. Economists had forecast the reading to show a 0.4 percent m-o-m decline.

Meanwhile, consumer income rose 0.6 percent m-o-m in December, following a revised 1.3 percent m-o-m decline in the previous month (originally a 1.1 percent m-o-m decrease). Economists had forecast a 0.1 percent m-o-m advance.

The December gain in personal income reflected primarily reflected increases in government social benefits, compensation, and personal dividend income that were partly offset by a decrease in proprietors’ income.

The personal consumption expenditures (PCE) price index, excluding the volatile categories of food and energy, which is the Fed's preferred inflation measure, increased 0.3 percent m-o-m in December, following an unrevised flat m-o-m reading in the prior month. Economists had projected the index would edge up 0.1 percent m-o-m.

In the 12 months through December, the core PCE increased 1.5 percent, accelerating from 1.4 percent in the 12 months through November. Economists had forecast a climb of 1.3 percent y-o-y. 

Statistics Canada announced on Friday that the country’s gross domestic product (GDP) grew 0.7 percent m-o-m in November, following an unrevised 0.4 percent m-o-m advance in October.

This was above economists’ forecast for a 0.4 percent m-o-m advance and marked the seventh consecutive monthly gain. However, overall economic activity was still about 3 percent below February's pre-pandemic level.

In y-o-y terms, the Canadian GDP fell 2.8 percent in November.

According to the report, both goods-producing (+1.2 percent m-o-m) and services-producing (+0.5 percent m-o-m) industries were up as 14 of 20 industrial sectors posted advances in November.

It was also reported that preliminary data indicates an approximate 0.3 percent m-o-m growth in real GDP for December.

USD pared its earlier advances against its major rivals in the European session on Friday, as risk-on mood returned despite lingering concerns about a retail trading frenzy that had rocked Wall Street throughout the week, forcing investors to pull cash from risky assets.

The U.S. Dollar Index (DXY), measuring the U.S. currency's value relative to a basket of foreign currencies, was little changed at  90.49.

The U.S. currency is weighed down by expectations that it will weaken in 2021 amid massive fiscal stimulus from the U.S. lawmakers, Fed's ultra-easy monetary policy and strong vaccine-fuelled global economic recovery. In addition, Q4 GDP figures from Spain, Germany, and France were better than feared, adding to the positive sentiment.

Chevron (CVX) reported Q4 FY 2020 loss of $0.01. per share (versus earnings of $1.49 per share in Q4 FY 2019), beating analysts’ consensus estimate of $0.08 per share.

The company’s quarterly revenues amounted to $25.246 bln (-30.5% y/y), missing analysts’ consensus estimate of $25.967 bln.

CVX fell to $87.74 (-1.44%) in pre-market trading.

FOMC: Too soon to taper - UOB

FXStreet reports that  Alvin Liew, Senior Economist at UOB Group, assesses the latest FOMC event.

“The Federal Reserve, as widely expected, kept its policy rate and asset purchase program unchanged at its January 2021 FOMC meeting. It adjusted the wording around the economic recovery, saying that the pace has ‘moderated’ in recent months, and it included ‘the progress of vaccination’ to be considered in the path of the economic recovery.”

“FOMC Chair Jerome Powell reiterated his previous stance, saying that it is too early to discuss tapering asset purchases, and that when the Fed is thinking of starting to reduce the program, it will ‘communicate it well in advance of what will be a gradual taper’. He continued to warn about the highly uncertain recovery path and the importance of fiscal support.”

“Going forward, our base case is for the Fed to stay on hold for most of 2021, at least and the taper discussion will only start in late 2021/early 2022.

Honeywell (HON) reported Q4 FY 2020 earnings of $2.07 per share (versus $2.06 per share in Q4 FY 2019), beating analysts’ consensus estimate of $2.00 per share.

The company’s quarterly revenues amounted to $8.900 bln (-6.3% y/y), beating analysts’ consensus estimate of $8.386 bln.

The company also issued in-line guidance for FY 2021, projecting EPS of $7.60-8.00 versus analysts’ consensus estimate of $7.84 and revenues of $33.4-34.4 bln versus analysts’ consensus estimate of $33.93 bln.

HON rose to $203.00 (+0.08%) in pre-market trading.

France: Lockdown triggers renewed slide in Q4 GDP - Capital Economics

FXStreet reports that Jessica Hinds, Europe Economist at Capital Economics, noted that the 1.3% q/q fall in France's Q4 GDP shows that the country's economy withstood the autumn’s lockdown much better than anticipated, due to the success of more targeted measures.

“The decline in GDP was much less than the 4% drop that both we and the consensus had expected. Notably, it was significantly smaller than Q2 2020’s 13.7% plunge, reflecting both the fact that the autumn’s measures had a narrower focus and also that households and firms have been better able to adapt to the restrictions.”

“Indeed, the breakdown showed that output in both industry and the construction sectors rose in Q4. Even private services output fell by “just” 2.2% q/q, Meanwhile, the breakdown of GDP by expenditure showed that the decline was driven primarily by consumer spending, which was unsurprising given the nature of the restrictions.”

“Investment actually continued to recover, increasing by 2.4% q/q in Q4, with France’s statistics office citing a “remarkably high number of property transactions”. Foreign trade also made a positive contribution to GDP growth in Q4. “

FXStreet reports that FX Strategists at UOB Group suggest that USD/JPY keeps the positive view and could attempt a move to 104.75 in the next weeks.

24-hour view: “We highlighted yesterday USD ‘could move above the month-to-date high near 104.40’. We added, ‘a rise beyond 104.75 is unlikely’. Our view was not wrong as USD eased from 104.46 and closed at 104.21. USD rose sharply after opening this morning and the rapid pick-up in momentum suggests that USD could strengthen further but the odds for sustained advance above 104.75 are not high. For today, the next resistance at 105.00 is unlikely to come into the picture. Support is at 104.25 followed by 104.00.”

Next 1-3 weeks: “The positive outlook is deemed intact as long as USD does not move below 103.75 (‘strong support’ level was at 103.50 yesterday). Looking ahead, the next resistance above 104.75 is at 105.00.”

Caterpillar (CAT) reported Q4 FY 2020 earnings of $2.12 per share (versus $2.63 per share in Q4 FY 2019), beating analysts’ consensus estimate of $1.49 per share.

The company’s quarterly revenues amounted to $11.235 bln (-14.5% y/y), roughly in line with analysts’ consensus estimate of $11.240 bln.

CAT rose to $190.01 (+3.08%) in pre-market trading.

Visa (V) reported Q1 FY 2021 earnings of $1.42 per share (versus $1.46 per share in Q1 FY 2020), beating analysts’ consensus estimate of $1.28 per share.

The company’s quarterly revenues amounted to $5.687 bln (-6.1% y/y), beating analysts’ consensus estimate of $5.516 bln.

The company also reported that its board authorized a new $8.0 bln share repurchase program, bringing total funds available for repurchase to over $11 bln.

V rose to $199.45 (+0.62%) in pre-market trading.

FXStreet reports that in the opinion of Karen Jones, Team Head FICC Technical Analysis Research at Commerzbank, Cable could now face some consolidation in the short-term horizon.

“GBP/USD’s recent high has not confirmed by the RSI (this is both the daily and the weekly charts) and we will allow for possibility that the market will consolidate further near term. Below 1.3520 would alleviate immediate upside pressure for losses to the 1.3350 late December low, there is scope for the 1.3277 7 month uptrend.”

Bert Colijn, a Senior Economist at ING, notes that household deposit growth in Eurozone increased at the end of 2020 thanks to the second lockdown.

"The second lockdown is clearly not having the same effect as the first one did. Businesses are not drawing emergency liquidity lines as they did during the first wave."

"While lending to non-financial corporations marginally increased in December from 6.9 to 7% year-on-year, it came nowhere close to the volumes seen in March, April and May. Money lending growth to households remained stable at 3.1% YoY. Households increased deposits at a faster pace, which is probably related to lockdowns across the eurozone."

"The modest lending environment places the increase in broad money growth (M3), from 11 to 12.3% in December in an important light. The increase is mainly related to asset purchases, which is bringing down interest rates across the eurozone but not (yet) resulting in a significant surge in lending."

"The economic outlook is simply too uncertain for businesses to borrow for large investments at the moment."

Reuters reports that five sources told that the ECB is unlikely to cut its already-record low policy rate as this would do little to revive the pandemic-hit euro zone economy.

The sources said Knot had raised the rate cut issue at the ECB's policy meeting last week but the discussion was "marginal" and not considered part of the ECB's policy strategy, which is now focussed on bond purchases and cheap loans to banks.

"Even if you see a much bigger appreciation, I would not infer that the unique answer to that is the interest rate," one of the policymakers said.

The sources noted that the ECB's focus now was on keeping financing conditions, i.e. bond yields and bank lending rates, stable, and said that the exchange rate was a secondary issue.

The sources added there were a number of reasons to oppose a rate cut: their limited impact on the real economy; the euro's exchange rate is still within its historical range; and the limited scope for making rates more negative before they start doing more harm than good.

FXStreet reports that Karen Jones, Team Head FICC Technical Analysis Research at Commerzbank, discuss USD/JPY prospects.

"USD/JPY has recently eroded the 10 month downtrend. This has introduced scope towards the 200 day ma at 105.64. The 55 week ma lies at 106.43. We have for now neutralised our longer term view. In order to adopt a more positive stance longer term the market will need to regain the 55 week ma. Bear term we are positive. Dips should find support at 103.33, the 21st  January low.”

CNBC reports that Morgan Stanley analysts predict that Chinese consumer spending is set to more than double in 10 years, with an emphasis on services rather than goods.

By 2030, China’s private consumption is set to reach $12.7 trillion, about the same amount that American consumers currently spend, the report said. That figure is also up from Morgan Stanley’s forecast three years ago of $9.7 trillion, and the $5.6 trillion Chinese consumers spent in 2019.

Spurring this expected growth are: greater government emphasis on policies to support the domestic Chinese economy, increases in household income, further growth of urban areas, changes in technology and demographic shifts, the report said.

The analysts predict disposable income per capita will likely double from $6,000 a year to $12,000 in 2030 as more people grow older and leave the work force.

• Doesn't see a ECB rate cut coming at the moment, but it is certainly an option if needed

• Uncertainty remains high

• Cautiously optimistic about economic outlook

• Keeping a very close eye on euro strength

eFXdata reports that Societe Generale Research discuss EUR/USD prospects.

"Fundamental market drivers haven’t changed, but positions were crowded. If we can now reduce excess dollar shorts, then we’re setting the stage for a few more very messy days before underlying trends reassert themselves. Our Q1 EUR/USD forecast (1.20) no longer looks outdated, and we hope that level will provide a base for this move. The key issues going on from here may be 1) can the ECB successfully talk the euro down, and 2) does relative growth mater in FX," SocGen adds.

FXStreet reports that UOB Group’s FX Strategists noted USD/CNH is now likely to navigate with the 6.4400-6.5200 range in the next weeks.

Next 1-3 weeks: “We highlighted yesterday that ‘6.5200 appears to be within reach and a break of this level would suggest further USD strength towards 6.5360’. USD subsequently rose to 6.5150 but the sharp sell-off from the high came as a surprise. While our ‘strong support” at 6.4650 is still intact (overnight low of 6.4689), upward momentum has waned considerably. In other words, further USD strength is unlikely. From here, USD is more likely to trade sideways, expected to be within a relatively broad range of 6.4400/6.5200.”

According to the report from the Federal Statistical Office (Destatis), the gross domestic product (GDP) in the fourth quarter of 2020 was almost unchanged compared with the third quarter of 2020 after adjustment for price, seasonal and calendar variations. After the historic 9.7% slump of the gross domestic product in the second quarter of 2020, the German economy was recovering in the summer of the year (+8.5% in the third quarter). In the fourth quarter, however, the recovery process slowed due to the second coronavirus wave and another lockdown imposed at the end of the year. This affected household consumption in particular, while exports of goods and gross fixed capital formation in construction supported the economy. Destatis also reports that the resulting GDP decline was 5.0% for the year 2020 as a whole (calendar-adjusted: -5.3%).

GDP in the fourth quarter of 2020 was down a price-adjusted 2.9% and a price- and calendar-adjusted 3.9% compared with the fourth quarter of 2019, the quarter before the corona crisis began.

Reuters reports that Bank of Japan policymakers discussed the merits of allowing long-term yields to move more flexibly around the bank's target, a summary of opinions at their January meeting showed.

As the coronavirus pandemic forces it to maintain a massive stimulus programme for a prolonged period, the BOJ plans to announce in March ways to make its tools more sustainable.

"With our monetary easing steps to be prolonged, allowing the 10-year government bond yield to move upward and downward to some extent ... will contribute to financial system stability," said one member.

Allowing 10-year yields to move more widely likely won't hurt the economy much, because most money raised by households and companies aren't directly affected by long-term rate moves, another opinion quoted in the summary showed.

The comments are the strongest hints to date that the BOJ will allow long-term rates to deviate further from its 0% target in its March policy review.

During today's Asian trading, the dollar rose moderately against major currencies, and was preparing to record a weekly gain, as continuing concerns about a coordinated attack on short positions of hedge funds in the United States increased demand for safe assets.

At the same time, the introduction of the COVID-19 vaccine worldwide is facing challenges. In Europe, production delays have escalated into a spat between the European Union and drug manufacturers over how best to manage the limited supply available.

Experts note that the more medium-term question is how US fiscal policy will affect US interest rates, the Fed's policy and, consequently, the US dollar.

The ICE dollar index, which tracks its performance against six currencies (euro, swiss franc, yen, canadian dollar, pound sterling and swedish krona), rose 0.29%.

The dollar index has rebounded after falling to a three-year low earlier this month on the grounds that last year's decline happened too quickly.

However, many analysts expect the dollar to return to the downward trend that caused it to lose almost 7% of its value last year, as the new US government implements massive budget spending, while the Federal Reserve maintains its ultra-easy monetary policy.

FXStreet reports that FX Strategists at UOB Group noted EUR/USD faces a potential deeper pullback below the 1.2050 level.

Next 1-3 weeks: “We have held the same view since last Friday where we expect EUR to ‘trade between 1.2080 and 1.2250 for a period of time’. Since then, EUR has traded mostly sideways but it dropped sharply to 1.2056 yesterday. Shorter-term downward momentum is improving and the risk is shifting to the downside. That said, EUR has to close below 1.2050 before a sustained decline can be expected. The odds for such a move are quite high unless EUR moves above 1.2180 within these few days. Looking ahead, the next support below 1.2050 is at 1.2000.”

EUR/USD

Resistance levels (open interest**, contracts)

$1.2220 (832)

$1.2190 (271)

$1.2169 (630)

Price at time of writing this review: $1.2100

Support levels (open interest**, contracts):

$1.2075 (1035)

$1.2037 (1574)

$1.1993 (3449)

Comments:

- Overall open interest on the CALL options and PUT options with the expiration date February, 5 is 47758 contracts (according to data from January, 28) with the maximum number of contracts with strike price $1,2000 (3449);

GBP/USD

Resistance levels (open interest**, contracts)

$1.3812 (1573)

$1.3790 (1582)

$1.3763 (1126)

Price at time of writing this review: $1.3699

Support levels (open interest**, contracts):

$1.3582 (763)

$1.3494 (1885)

$1.3446 (1034)

Comments:

- Overall open interest on the CALL options with the expiration date February, 5 is 11305 contracts, with the maximum number of contracts with strike price $1,4000 (1627);

- Overall open interest on the PUT options with the expiration date February, 5 is 20918 contracts, with the maximum number of contracts with strike price $1,2500 (2183);

- The ratio of PUT/CALL was 1.85 versus 1.84 from the previous trading day according to data from January, 28

* - 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.

According to the report from Insee, in Q4 2020, GDP in volume terms fell back: –1.3% after +18.5% in Q3 2020. Economists had expected a 4.0% decrease. The loss of activity this quarter was marked by the lockdown in effect from the end of October to mid-December and by the curfews put in place during the months of October and December. Nevertheless, the total loss of activity was much more moderate than during the first lockdown in March-May 2020: in Q4 2020, GDP was 5.0% below its level a year earlier (year-on-year change), whereas the year-on-year decline was of 18.8% in the second quarter. Over the full year 2020, GDP fell sharply (–8.3%, after +1.5% in 2019).

The effects of the second lockdown were mainly reflected in household consumption expenditure, which fell back sharply (–5.4% in Q4 after +18.2% in the previous quarter). On the other hand, gross fixed capital formation (GFCF) continued its recovery (+2.4% after +24.0%). Overall, total domestic demand (excluding changes in inventories) fell again, contributing – 2.7 points to GDP growth this quarter after +19.4 points in the previous quarter.

Foreign trade also pursued its recovery. For the second quarter in a row, exports increased more than imports (+4.8% after +21.9% for exports and +1.3% after +16.2% for imports). Overall, the foreign trade made a positive contribution to GDP growth this quarter: +0.9 points, after +0.8 points in Q3 2020. Finally, changes in inventories made a positive contribution to GDP growth (+0.4 points after – 1.7 points).

As reported by the Federal Statistical Office (Destatis), the index of import prices decreased by 3.4% in December 2020 compared with the corresponding month of the preceding year. In November and in October 2020 the annual rates of change were -3.8% and -3.9%, respectively. From November 2020 to December 2020 the index rose by 0.6%.

On an annual average in 2020 the index of import prices was 4.3% lower than the average index of 2019 (2019: -1.0% compared with 2018).

The index of import prices, excluding crude oil and mineral oil products, decreased by 1.0% in December 2020 compared with December 2019 and in comparison with November 2020 it slightly rose by 0.1%.

On an annual average in 2020 it was 2.0% under the level of a year earlier.

The index of export prices decreased by 0.6% in December 2020 compared with the corresponding month of the preceding year. In November and in October 2020 the annual rates of change were -0.6% and -1.0%, respectively. From November 2020 to December 2020 the index slightly rose by 0.1%.

On an annual average it decreased by 0.7% in 2020 compared with 2019.