Forex-novosti i prognoze od 06-01-2021

The U.S. Commerce Department reported on Wednesday that the value of new factory orders rose 1.0 percent m-o-m in November, following a revised 1.3 percent m-o-m gain in October (originally a 1.0 percent m-o-m advance). That marked the seventh consecutive month of gains in factory orders.

Economists had forecast a 0.7 percent m-o-m increase.

According to the report, orders for transportation equipment surged 2.1 percent m-o-m in November. Gains also occurred in orders for machinery (+1 percent m-o-m) and electrical equipment and appliances (+0.7 percent m-o-m). These gains, however, were partially offset by declines in orders for computers and electronics (-0.2 percent m-o-m) and fabricated metals (-0.9 percent m-o-m).

Meanwhile, total factory orders excluding transportation, a volatile part of the overall reading, rose 0.8 percent m-o-m in November (compared to an upwardly revised 1.3 percent m-o-m gain in October), while orders for nondefense capital goods excluding aircraft, a measure of business spending plans, increased 0.5 percent m-o-m instead of advancing 0.4 percent m-o-m as reported last month. The report also showed that shipments of core capital goods advanced 0.5 percent m-o-m in November, rather than gaining 0.4 percent m-o-m as previously reported.

The U.S. Energy Information Administration (EIA) revealed on Wednesday that crude inventories plunged by 8.010 million barrels in the week ended January 1. Economists had forecast a decline of 2.133 million barrels.

At the same time, gasoline stocks surged by 4.519 million barrels, while analysts had expected a build of 1.525 million barrels. Distillate stocks climbed by 6.390 million barrels, while analysts had forecast a jump of 2309 million barrels.

Meanwhile, oil production in the U.S. remained unchanged at 11.000 million barrels a day.

U.S. crude oil imports averaged 5.4 million barrels per day last week, up by 43,000 barrels per day from the previous week.

The latest report by IHS Markit revealed on Wednesday the seasonally adjusted final IHS Markit U.S. Services Business Activity Index (PMI) stood at 54.8 in December, down from 58.4 in November and lower than the earlier released “flash” estimate of 55.3. The latest reading pointed to the slowest expansion in business activity across the U.S. service sector since September.

Economists had forecast the index to stay unrevised at 55.3.

According to the report, new business saw the slowest growth for four months amid increased coronavirus cases, while job creation expanded at a more modest pace than in November and the level of optimism was down notably from that seen in November and the lowest for three months.

Markets were broadly expecting the Brexit trade deal we got

We are already seeing that certain amount of financial services business is having to migrate to EU 

Around 5,000-7,000 finance jobs have migrated to EU because of Brexit

Sensible that UK and EU are both transparent about financial services rule changes

U.S. stock-index futures fell on Wednesday, as investors assessed disappointing ADP’s data on private sector employment and prospects of the Democrat-controlled Senate.

Global Stocks:

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

Bank of America (BAC) initiated with a Neutral at Daiwa Securities; target $31

Citigroup (C) initiated with a Buy at Daiwa Securities; target $75

Goldman Sachs (GS) initiated with an Outperform at Daiwa Securities; target $300

JPMorgan Chase (JPM) initiated with an Outperform at Daiwa Securities; target $139

Morgan Stanley (MS) initiated with a Neutral at Daiwa Securities; target $71

Coca-Cola (KO) downgraded to Hold from Buy at Deutsche Bank; target lowered to $55

Barrick (GOLD) upgraded to Overweight from Equal Weight at Barclays; target raised to $28

MasterCard (MA) upgraded to Buy from Neutral at BofA Securities; target $400

Germany's Federal Statistical Office (Destatis) reported on Wednesday the country’s consumer price index (CPI) is expected to increase 0.5 percent m-o-m in December after dropping 0.8 percent m-o-m in the previous month.

On the y-o-y basis, Germany’s CPI is seen to fall 0.3 in December, the same pace as in November. This represents the largest decline since January 2015.

Economists had predicted inflation would rise 0.6 percent m-o-m but decline 0.3 percent y-o-y in December.

According to the report, food price rose 0.5 percent y-o-y in December after a 1.4 percent y-o-y gain in November. Services costs grew 1.1 percent y-o-y in December, the same pace as in the previous month Energy prices dropped 6.0 percent y-o-y after a 7.7 percent y-o-y decline in November.

Meanwhile, the harmonized index of consumer prices for Germany (HICP), which is calculated for European purposes, is expected to rise 0.6 percent m-o-m and drop 0.7 percent y-o-y.

The employment report prepared by Automatic Data Processing Inc. (ADP) and Moody's Analytics showed on Wednesday the U.S. private employers shed 123,000 jobs in December. This marked the first monthly decrease in private-sector employment since April.

Economists had expected an increase of 88,000.

The November number saw a light downward revision to 304,000 from the originally reported 307,000.

“As the impact of the pandemic on the labor market intensifies, December posted the first decline since April 2020,” noted Ahu Yildirmaz, vice president and co-head of the ADP Research Institute. “The job losses were primarily concentrated in retail and leisure and hospitality.

GBP fell against most of its major rivals, in the European session on Wednesday, weighed down by raised expectations that the Bank of England (BoE) would provide more policy easing to cushion the damage to the UK's economy from a new national lockdown, which was announced by Prime Minister (PM) Boris Johnson earlier this week. 

While addressing the House of Commons on Wednesday, Boris Johnson noted that the end of the lockdown won't be “a big bang” but a gradual unraveling. He also promised MPs that schools will be the first to reopen when the lockdown is lifted, adding that this could happen some time in mid-February.

Many market participants now believe that the BoE could take benchmark interest rates into negative territory at its May meeting.

Investors also digested the final release of the UK December services PMI, which showed that the activity in the service sector fell more than forecast in December. According to the latest survey from IHS Markit, the final IHS Markit/Chartered Institute of Procurement & Supply (CIPS) services Purchasing Managers' Index (PMI) rose to 49.4 in December from 47.6 in November. A score below 50 indicates contraction in the sector. The reading was below a “flash” estimate of 49.9. Economists had forecast the reading to remain unrevised. 

The Mortgage Bankers Association (MBA) reported on Wednesday the mortgage application volume in the U.S. rose 1.7 percent in the week ended January 1, following a 5.9 percent plunge in the previous week.

According to the report, refinance applications jumped 3.0 percent, while applications to purchase a home decreased 1.6 percent.

Meanwhile, the average fixed 30-year mortgage rate fell to 2.86 from 2.90 percent.

“The record-low rates for fixed-rate mortgages is good news for borrowers looking to refinance or buy a home, as around 98% of all applications are for fixed-rate loans,” noted Joel Kan, MBA’s associate vice president of economic and industry forecasting.

FXStreet reports that FX Strategists at UOB Group think that further upside to the 0.7800 area in AUD/USD is now likely.

24-hoour view: “Yesterday, we held the view that AUD is likely to ‘trade sideways between 0.7640 and 0.7720’. However, AUD surged to 0.7778 before closing on a strong note at 0.7760. Further AUD strength appears likely but overbought conditions suggest that a sustained rise beyond 0.7800 is unlikely. Support is at 0.7730 followed by 0.7700.”

Next 1-3 weeks: “Upward momentum has improved considerably and the next level to focus on is at 0.7800 followed by 0.7840. Overall, the current positive phase in AUD is deemed as intact as long as AUD does not move below 0.7670 (‘strong support’ level was at 0.7630 yesterday).”

• It will be a "slow unravelling"
• Schools will be first thing to reopen

• Germany will receive more than 130 million doses of BioNTech/Pfizer and Moderna's COVID-19 vaccines
• We are expecting Moderna's coronavirus vaccine to be approved today
• First deliveries of Moderna's vaccine are expected next week
  

FXStreet reports that in the opinion of FX Strategists at UOB Group, USD/JPY could recede further and visit the 102.00 zone in the near-term.

24-hour view: “Our expectation for the ‘rebound in USD to edge above 103.30’ was incorrect as it slumped to 102.59 before closing on a soft note at 102.72 (-0.37%). While downward momentum has not improved by all that much, the risk is for USD to weaken further even though 102.30 could be out of reach. Resistance is at 102.90 followed by 103.15.”

Next 1-3 weeks: “Downward momentum has improved and there is room for USD to weaken to 102.30, possibly 102.00. Overall, downward pressure has increased as long as USD does not move above 103.35 (‘strong resistance’ level previously at 103.65).”

According to the report from the Society of Motor Manufacturers and Traders (SMMT), the UK new car market fell by almost a third (-29.4%) in 2020, with annual registrations dropping to 1,631,064 units. A -10.9% decline in December wrapped up a turbulent 12 months, which saw demand fall by 680,076 units to the lowest level of registrations since 1992

Against a backdrop of Covid restrictions, an acceleration of the end of sale date for petrol and diesel cars to 2030 and Brexit uncertainty, the industry suffered a total turnover loss of some £20.4 billion

Private vehicle demand fell by -26.6% overall, amounting to a £1.9 billion loss of VAT to the Exchequer. The year also saw -31.1% fewer vehicles joining large company car fleets.

In an atypical year, demand fell across all segments bar specialist sports, which grew by 7.0%, although Britain’s most popular class of car remained the supermini, retaining a 31.2% market share despite a -25.9% decline in registrations. Meanwhile, although falling by a combined -32.9%, petrol and mild hybrid (MHEV) petrol cars made up 62.7% of registrations, while diesel and MHEV diesels, down -47.6%, comprised almost a fifth (19.8%) of the market.

eFXdata reports that Bank of America Global Research discusses its expectations for FOMC minutes. 

"The minutes from the December 16th FOMC meeting will have two main areas of focus: 1) specifics on the new qualitative outcome-based guidance for asset purchases; and 2) potential triggers to prompt a change to the parameters of the balance program which could include duration extension or size," BofA notes. 

"On the former, we think there will be a general agreement that asset purchases should continue until there is substantial progress in reaching the mandate, with "substantial" meaning approaching the targets. We don't expect a mention about tapering in the minutes as Fed officials will be very careful not to send a misleading signal about the end of the program," BofA adds.

According to the report from Eurostat, in November 2020, industrial producer prices rose by 0.4% in both the euro area and the EU, compared with October 2020. Economists had expected a 0.1% increase in the euro area. In October 2020, prices increased by 0.4% in the euro area and by 0.3% in the EU. 

In November 2020, compared with November 2019, industrial producer prices decreased by 1.9% in the euro area and by 1.8% in the EU. Economists had expected a 2.2% decrease in the euro area.

Industrial producer prices in the euro area in November 2020, compared with October 2020, increased by 1.3% in the energy sector, by 0.3% for intermediate goods and by 0.1% for durable consumer goods, while prices remained stable for capital goods and non-durable consumer goods. Prices in total industry excluding energy increased by 0.1%.

In the EU, industrial producer prices increased by 1.4% in the energy sector, and by 0.2% for intermediate goods and durable consumer goods, while prices remained stable for non-durable consumer goods and decreased by 0.1% for capital goods. Prices in total industry excluding energy increased by 0.1%.

According to the report from IHS Markit/CIPS, UK service providers recorded a sustained drop in overall activity during December, with the downturn overwhelmingly linked to business disruptions, restrictions on trade and temporary closures due to the coronavirus disease 2019 (COVID-19) pandemic. At the same time, margins were under pressure from sharply rising input costs and ongoing price discounting across the service economy. On a more positive note, business expectations for the next 12 months strengthened in December and were the most optimistic for almost six years. Around 59% of the survey panel forecast a rise in activity over the course of 2021, while only 13% predict a decline.

The headline seasonally adjusted UK Services PMI posted 49.4 in December, up from 47.6 in November but still below the 50.0 no change threshold. Moreover, the downturn in service sector output recorded on average in the final quarter of 2020 (49.5) contrasted with a solid pace of recovery during the third quarter (57.1).

Companies reporting a decline in business activity in December almost exclusively cited shrinking client demand and restrictions on trade due to the COVID-19 pandemic. Where growth was reported, this was mostly confined to residential property, business-to-business services (especially e-commerce), and providers of digital consumer services. December data indicated a fall in total new business across the UK service sector for the third consecutive month, reflecting a general reluctance to spend among clients. That said, the latest decline in new work was only modest and much softer than seen during the initial lockdown period in the first half of 2020.

At 50.4 in December, the UK Composite Output Index edged up from 49.0 in November and registered slightly above the 50.0 no-change threshold. The overall rise in UK private sector output reflected a strong contribution from manufacturing production (index at 55.9 in December). In contrast, service sector activity decreased again in the latest survey period (49.4).

According to the report from IHS Markit, the eurozone private sector economy contracted for a second successive month in December, albeit at a much slower rate. 

After accounting for seasonal factors, the Eurozone PMI Composite Output Index rose from 45.3 in November to 49.1 in December. The final result was lower than the earlier flash reading (49.8).

Services remained the principal drag on economic output, with activity here falling for a fourth successive survey period. In line with the recent trend, manufacturing remained the principal bright spot of eurozone economic performance, expanding for a sixth successive month and at a faster rate than in November.

The latest fall in regional economic output was linked to a similar sized drop in incoming new business, which declined for a third month running. Social distancing measures and restrictions were reported to have weighed on demand, especially in nations such as Italy and Spain. On a more positive note, growth of new export business was recorded for the third time in the past four months.

As the downturn in overall levels of incoming new business continued, companies were able to comfortably keep on top of workloads as evidenced by a drop in levels of work outstanding for the twenty second successive month. With overall workloads down, job losses continued in line with the trend since March. The rate of contraction was, however, marginal. 

Amid recent news of vaccine developments, private sector companies were noticeably more optimistic about activity in 12 months’ time. Overall, optimism was at its highest level since April 2018.

FXStreet reports that according to the FX Strategists at UOB Group, USD/CNH remains offered and could ease to the 6.3800 region in the next weeks. 

Next 1-3 weeks: “While our expectation for USD to weaken was correct, we did not quite anticipate the pace of the decline as it dropped sharply to a low of 6.4127. As highlighted yesterday (05 Jan, spot at 6.4500), the next support is at 6.4300 followed by 6.4000. In view of the vastly improved momentum, a break of 6.4000 would not be surprising and would open up the way for a move lower to 6.3800. All in, USD is expected to remain weak as long as it does not move above 6.4950 (‘strong resistance’ level was at 6.5100 yesterday).”

During today's Asian trading, the US dollar continued to decline against the euro and was almost unchanged against the yen.

Traders are waiting for the results of the US Senate election in Georgia. According to Fox News, after counting 77% of the vote, Democrat Jon Ossoff trails Republican David Perdue with 49% of the vote to 51%. Republican Kelly Leffler wins 50.6% of the vote. Her opponent, Raphael Warnock, has 49.5%.

In addition, on Wednesday, the final data on the PMI indices of Germany, the eurozone and Britain for December will be published, as well as the report on the German consumer price index for December.

The Chinese yuan traded steadily against the US dollar, despite the data on China. The purchasing managers ' index (PMI) for services in China, calculated by Caixin Media Co. and Markit, fell to 56.3 points in December from 57.8 points in November.

Meanwhile, US President Donald Trump on Tuesday signed an executive order banning transactions with Chinese payment apps including Alipay, WeChat Pay and QQ Wallet.

The ICE index, which tracks the dollar's performance against six currencies (euro, swiss franc, yen, canadian dollar, pound sterling and swedish krona), fell 0.21%.

According to the provisional estimate from INSEE, over a year, the Consumer Price Index (CPI) should be stable in December 2020 after +0.2% in the previous month. Compared to November, the food prices should be less dynamic and those of manufactured goods should decrease more sharply. The prices of services and those of tobacco should increase at the same rate. The decrease of the energy prices should soften slightly.

Over one month, consumer prices should rise by 0.2%, as in November. The services prices and those of energy should accelerate significantly. The prices of tobacco should be stable after a rebound the previous month. The food prices should fall back and those of manufactured goods should decrease more than in the previous month.

Year on year, the Harmonised Index of Consumer Prices should be stable, after +0.2% in November. Over one month, it should rise by 0.2%, as in the previous month.

Reuters reports that German Finance Minister Olaf Scholz said that Europe's biggest economy can hold out through a coronavirus shutdown for a long time.

Scholz added that he expected a lower level of government debt than after the financial crisis of 2008..

"We can hold out for a long time. Budget legislators in the German parliament have authorised us to provide the aid that is needed," he said.

EUR/USD

Resistance levels (open interest**, contracts)

$1.2417 (2733)

$1.2382 (778)

$1.2355 (2405)

Price at time of writing this review: $1.2330

Support levels (open interest**, contracts):

$1.2267 (211)

$1.2234 (3951)

$1.2193 (2169)

Comments:

- Overall open interest on the CALL options and PUT options with the expiration date January, 8 is 79064 contracts (according to data from January, 5) with the maximum number of contracts with strike price $1,2100 (4878);

GBP/USD

Resistance levels (open interest**, contracts)

$1.3765 (718)

$1.3728 (2014)

$1.3697 (1577)

Price at time of writing this review: $1.3652

Support levels (open interest**, contracts):

$1.3525 (588)

$1.3486 (794)

$1.3443 (791)

Comments:

- Overall open interest on the CALL options with the expiration date January, 8 is 56985 contracts, with the maximum number of contracts with strike price $1,4000 (33148);

- Overall open interest on the PUT options with the expiration date January, 8 is 29826 contracts, with the maximum number of contracts with strike price $1,2800 (2933);

- The ratio of PUT/CALL was 0.52 versus 0.52 from the previous trading day according to data from January, 5

* - 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 TD Research discusses the potential market reaction to US Senate election run-off race in Georgia.

"Democrat control: Should the Democrats succeed in flipping the Georgia Senate seats, markets will need to weigh the risk around a potentially more ambitious policy agenda and additional fiscal stimulus. Taken in conjunction with the easing of notable tail risks, we think this would fuel the USD's downside momentum," TD notes.

"Republican control: Should the Senate remain in the hands of the GOP, we think the USD could find some limitation in terms of the weakness observed across the G10, particularly against EURUSD," TD adds. 

RTTNews reports that survey results from IHS Markit showed that China's service sector continued to recover from the pandemic driven downturn in December.

The Caixin services PMI fell to 56.3 in December from 57.8 in November. A score above 50 indicates expansion.

Although the pace of growth moderated, it remained among the steepest recorded over the past decade and signaled a marked recovery from the Covid-19 outbreak at the start of the year.

The softer rise in overall activity coincided with a slower expansion of total new work at the end of 2020. The slowdown occurred alongside a weaker upturn in foreign demand.

Meanwhile, data pointed to a second successive monthly rise in workforce numbers at Chinese service providers.

Service sector firms generally expect activity levels to rise over the next year. The degree of optimism was the strongest since April 2011 and above the historical average.

The composite output index, which is a weighted average of the manufacturing output index and the services business activity index, fell to 55.8 in December from a more than ten-year high of 57.5 in November.