Forex-novosti i prognoze od 06-05-2021

ActionForex reports that analysts at Wells Fargo Securities discuss the Bank of England's (BoE) latest policy update.

"The Bank of England (BoE) kept its key policy parameters at today’s announcement, keeping the Bank Rate at 0.10% and maintaining its asset purchase target at £895 billion. However, in a modest tweak towards less accommodative monetary policy the BoE reduced the pace of its weekly asset purchases by £1 billion per week to £3.44 billion per week."

"The central bank now sees an earlier economic recovery, lifting its GDP growth forecast for 2021, but lowering its GDP growth forecast for 2022. So long as the economy continues to improve we believe a further moderate tapering of asset purchases is likely at the August announcement. At this time, however, we do not expect an initial policy interest rate increase until the first half of 2023."

"We view today’s announcement as a modest upside to our outlook for the pound. At the same time, we also view the announcement as broadly consistent with our medium-term profile which already anticipates modest gains in the pound versus the U.S. dollar over time, and a stronger pound versus the euro."

• Sees U.S. GDP will grow 6.5% this year with risk to the upside
• Unemployment could fall below 4% this year
• Some factors pushing up on inflation near-term will get resolved within 12 months
• Expects PCE inflation to end this year at 2.25%
• Since December, when Fed set the substantial further progress bar for taper, we have seen more vaccine rollout and more fiscal aid
• It is clear Fed will meet the bar for tapering sooner than he thought in January
• Says he doesn't want to be preemptive but doesn't want to be late either
• Fed's bond-buying can create excesses and imbalances
• Will want to give advance notice of bond buy taper and do it gradually
  
• Will be much healthier as an economy when we can start weaning from QE
• Won't prejudge whether taper should be complete before Fed raises rates
• Expecting to meet standards for Fed rate liftoff sometime in 2022

• We have not yet completed our review into the sequencing of policy tightening
• We have not reached any conclusion on reducing the stock of QE
• The world has changed hugely since 2018 when BoE last looked at this

FXStreet notes that oil has staged an impressive recovery, although has been mostly range-bound over the last month, with ICE Brent struggling to break above $70. There are several factors that appear to be holding the market back for the moment, however, strategists at ING expect Brent Oil to hover around $70 through the second half of 2021.

“OPEC+ is set to increase output by 2.1MMbbls/d over the next three months. Iran has been increasing output for much of this year, despite US sanctions, and this is a trend which is likely to continue for the remainder of the year, regardless of whether we see a quick lifting of sanctions or not.” 

“The latest COVID-19 wave across India is a big worry for the oil market, given it is the third-largest oil consumer in the world. Therefore there are concerns that if the situation deteriorates further, we may see a significant hit to global demand.”

“We continue to believe that prices will edge higher as we move through the year, and still expect that ICE Brent will average US$70/bbl over the 2H21. Despite rising OPEC+ output, and also accounting for larger Iranian supply, the market is still set to draw down inventories throughout the year.”

U.S. stock-index futures traded flat on Thursday, despite better-than-expected data on U.S.  jobless claims.

Global Stocks:

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

The preliminary data from the U.S. Labour Department showed on Thursday that nonfarm business sector labor productivity in the United States rose 5.4 percent q-o-q in the first quarter of 2021, as output surged 8.4 percent q-o-q and hours worked increased 2.9 percent q-o-q (seasonally adjusted). This was better than economists’ forecast for a 4.3 percent q-o-q advance after a revised 3.8 percent q-o-q drop in the fourth quarter of 2020 (originally a 4.2 percent q-o-q decline).

In y-o-y terms, the labor productivity jumped 4.1 percent in the first quarter, reflecting a 1.1-percent gain in output and a 2.9-percent fall in hours worked.

Meanwhile, unit labor costs in the nonfarm business sector in the first quarter edged down 0.3 percent q-o-q compared to a revised 5.6 percent q-o-q climb in the prior quarter (originally a 6.0 percent q-o-q surge). Economists had forecast a 0.8 percent drop in first-quarter unit labor costs.

Unit labor costs quarterly decline reflected a 5.1-percent q-o-q jump in hourly compensation and a 5.4-percent rise in productivity.

Compared to the corresponding period of 2020, unit labor costs rose 1.6 percent, as hourly compensation increased 5.8 percent and productivity grew 4.1 percent.

Pfizer (PFE) downgraded to Neutral from Buy at Mizuho; target $42

The data from the Labor Department revealed on Thursday the number of applications for unemployment fell more than expected last week, hitting a fresh pandemic-era low.

According to the report, the initial claims for unemployment benefits dropped by 92,000 to 498,000 for the week ended May 1. This was the lowest reading since March 2020.

Economists had expected 540,000 new claims last week.

Claims for the prior week were revised upwardly to 590,000 from the initial estimate of 553,000.

Meanwhile, the four-week moving average of jobless claims fell to 560,000 from an upwardly revised 621,000 in the previous week.

Continuing claims rose to 3,690,000 from a downwardly revised 3,653,000 in the previous week.

Moderna (MRNA) reported Q1 FY 2021 earnings of $2.84 per share (versus -$0.35 per share in Q1 FY 2020), beating analysts’ consensus estimate of $2.47 per share.

The company’s quarterly revenues amounted to $1.937 bln, missing analysts’ consensus estimate of $2.480 bln.

MRNA fell to $148.97 (-8.52%) in pre-market trading.

• Risks to forecast are to the downside in the first year
• There is uncertainty about the scale of slack in the UK economy
• Too early to judge short and long term effects of Brexit
• MPC believes that trade will be lower in H1 2020 due to Brexit
• Risks to inflation projection are broadly balanced
• Inflation expectations remain well-anchored
• CPI to rise above 2% at end of the year due to transitory developments
• MPC will focus on medium-term inflation risks, not transitory risks

GBP retreated against most of its major rivals in the European session on Thursday after the announcement of the outcomes of the Bank of England's (BoE) latest monetary policy meeting.

At its May gathering, the BoE's policymakers decided to leave the bank rate unchanged at 0.10% and maintained the asset purchase program at GBP895 billion, as widely expected. The central bankers also provided upbeat economic forecasts but did not send a clear message of trimming the pace of monthly purchases in its quantitative easing (QE) program. This disappointed some market participants, who had expected such a “game-changing” decision from the British central bank that could mark the beginning of the normalizing moves by the central banks around the world.

In a market notice, setting out the details of the BoE’s planned gilt purchases, the Bank said that “the pace of these continuing purchases could now be slowed somewhat”. However, it added that “this operational decision should not be interpreted as a change in the stance of monetary policy” and “as measured by the target stock of purchased assets, that stance remained unchanged”.

The Bank of England (BoE) announced its Monetary Policy Committee (MPC) voted 9-0 to keep the Bank Rate at 0.1 percent at its May meeting, as widely expected.

The MPC also voted unanimously to maintain the stock of sterling non-financial investment-grade corporate bond purchases at GBP20 billion and voted by a majority of 8-1 to continue with the existing programme of UK government bond purchases at GBP875 billion, thus maintaining the total target stock of asset purchases at GBP895 billion.

In its statement, the BoE notes:

• Global GDP growth is likely to have slowed in Q1 2021, as Covid-related restrictions weighed on economic activity, although growth appears to have been stronger than expected in the February Report;
• UK GDP is expected to have fallen by around 1.5% in 2021 Q1, less weak than was assumed in the February Report;
• UK GDP is expected to rise sharply in Q2 2021, although activity in that quarter is likely to remain on average around 5% below its level in Q4 2019;
• UK GDP is expected to recover strongly to pre-Covid levels over the remainder of this year in the absence of most restrictions on domestic economic activity;
• After 2021, the pace of GDP growth is expected to slow;
• MPC also expects medium-term equilibrium rate of unemployment to rise by less than was forecast in February;
• Inflation is projected to rise to close to the target in near term;
• In central projection, CPI inflation rises temporarily above the 2% target towards the end of 2021, owing mainly to developments in energy prices; these transitory developments should have few direct implications for inflation over medium term, however;
• Outlook for the economy, and particularly the relative movement in demand and supply, remains uncertain;
• In central projections of MPC’s May Report, the economy experiences temporary period of strong GDP growth and temporary period of modestly above-target CPI inflation, after which growth and inflation fall back, with inflation around the target two and three years ahead;
• Committee does not intend to tighten monetary policy at least until there is clear evidence that significant progress is being made in eliminating spare capacity and achieving the 2% inflation target sustainably;
• In judging the appropriate stance of monetary policy, Committee will, consistent with its policy guidance and as always, focus on the medium-term prospects for inflation, including the balance between demand and supply, rather than factors that are likely to be transient.
• Committee judged that the existing stance of monetary policy remained appropriate.

FXStreet notes that AUD/USD is about flat over the week but this is a resilient performance, with most G10 currencies lower on the week vs USD. Trade above 0.7800 remains hard work but the renewed commodity price surge supports the preference of economists at Westpac to buy dips under 0.7700. What’s more, the budget should be growth-positive.

“Renewed strength in iron ore and copper prices is producing fair value estimates in the low 0.80s and helping maintain Australia’s trade surpluses.” 

“We expect the government to announce around $40 B in new spending to support growth over 2 years even as the budget deficit narrows to -3.3% of GDP by 2023. Robust growth momentum should keep markets talking about reduced RBA stimulus into the key July meeting.”

“We have been looking to buy dips in AUD/USD for some time and are now long from 0.7680, seeing scope for 0.80 multi-week.”

Uber (UBER) reported Q1 FY 2021 loss of $0.06 per share (versus -$1.70 per share in Q1 FY 2020), being much better than analysts’ consensus estimate of -$0.55 per share.

The company’s quarterly revenues amounted to $2.900 bln (-10.7% y/y), missing analysts’ consensus estimate of $3.259 bln.

UBER fell to $49.30 (-3.67%) in pre-market trading.

FXStreet reports that FX Strategists at UOB Group now see USD/CNH navigating between 6.4650 and 6.5020 in the next weeks.

24-hour view: “Our view for a weaker USD yesterday was incorrect as it popped to 6.4930 before pulling back. The outlook is mixed and USD could trade sideways between 6.4750 and 6.4920 for today.”

Next 1-3 weeks: “...while the recent negative phase in USD has ended, it is too soon to expect a recovery. From here, USD is expected to trade between 6.4650 and 6.5020 for period of time. Looking ahead, a clear break of 6.5020 would indicate that USD is ready for a sustained and sizeable rebound.”

PayPal (PYPL) reported Q1 FY 2021 earnings of $1.22 per share (versus $0.66 per share in Q1 FY 2020), beating analysts’ consensus estimate of $1.01 per share.

The company’s quarterly revenues amounted to $6.033 bln (+30.6% y/y), beating analysts’ consensus estimate of $5.895 bln.

The company also issued upside guidance for Q2 FY 2021, projecting EPS of ~$1.12 versus analysts’ consensus estimate of $1.10 and revenues of ~$6.25 bln versus analysts’ consensus estimate of $6.17 bln.

For the full FY 2021, PayPal guided EPS of ~$4.70 versus analysts’ consensus estimate of $4.56 and revenues of ~$25.75 bln versus analysts’ consensus estimate of $25.69 bln.

PYPL rose to $257.90 (+4.24%) in pre-market trading.

• There has not been any material upside surprise in inflation
• Economic recovery has "significantly exceeded" even most optimistic expectations
• But not the case for wages, inflation in Australia
• Need to see further significant gains in employment, lower unemployment rate
• Need a tighter labour market to lead to higher wage rises
• Does not expect such conditions to be met until 2024 at the earliest
• State of economy is key determinant of policy settings, not the calendar
• There are tools to deal with house prices, monetary policy not one of them

CNBC reports that according to Bank of America, the world risks “running out of copper” amid widening supply and demand deficits, and prices could hit $20,000 per metric ton by 2025.

Bank of America commodity strategist Michael Widmer highlighted inventories measured in tons are now at levels seen 15 years ago, implying that stocks currently cover just over three weeks of demand. This comes as the global economy is beginning to open up and reflate.

“Linked to that, we forecast copper market deficits, and further inventory declines, this year and next,” Widmer said.

“With (London Metal Exchange) inventories close to the pinch-point at which time spreads can move violently, there is a risk backwardation, driven by a rally in nearby prices, may increase.”

Given the fundamental environment and the depleted inventories, Widmer suggested that copper may spike to $13,000/t in the coming years after notching $10,000 last week for the first time in a decade.

Reuters reports that the Bank of England will say on Thursday that Britain's economy is heading for a much stronger recovery this year than it previously expected and it might start to slow its pandemic emergency support.

The BoE forecast in February that the world's fifth-biggest economy would grow by 5% in 2021, having slumped by 10% in 2020.

But many economists say Britain is now set to grow by more than 7% this year, boosted by its fast COVID-19 vaccinations.

The BoE will announce its latest forecasts at 1100 GMT when it is also expected to keep its benchmark interest rate and its bond-buying programme unchanged, for now.

"There's a growing sense that the UK is finally on the way out of the pandemic, and with that comes an increased focus on the Bank of England's future tightening plans," analysts at ING said in a note to clients. "Indeed, we think the Bank may announce some tapering of its quantitative easing programme."

The BoE is spending 4.4 billion pounds ($6.12 billion) a week on its bond-buying programme, having cut the benchmark rate to an all-time low of 0.1% in March last year.

That pace might slow to 3.2 billion pounds a week to allow the quantitative easing programme, currently capped at 895 billion-pounds, to last until the end of the year, analysts at Bank of America said.

According to the report from Eurostat, in March 2021, the seasonally adjusted volume of retail trade rose by 2.7% in the euro area and by 2.6% in the EU, compared with February 2021. In February 2021, the retail trade volume increased by 4.2% in the euro area and by 3.8% in the EU.

In March 2021 compared with March 2020, the calendar adjusted volume of retail trade increased by 12.0% in the euro area and by 11.6% in the EU.

In the euro area in March 2021, compared with February 2021, the volume of retail trade increased by 4.6% for non-food products and by 1.0% for food, drinks and tobacco, while it decreased by 2.9% for automotive fuels. In the EU the volume of retail trade increased by 4.2% for non-food products and by 0.8% for food, drinks and tobacco, while it decreased by 2.3% for automotive fuels.

In the euro area in March 2021, compared with March 2020, the volume of retail trade increased by 25.0% for nonfood products (within this category mail orders and internet increased by 37.2%), and by 17.1% for automotive fuels, while it decreased by 1.1% for food, drinks and tobacco. In the EU, the volume of retail trade increased by 23.6% for non-food products (mail orders and internet increased by 37.4%) and by 14.1% for automotive fuels, while it decreased by 1.2% for food, drinks and tobacco.

According to the report from IHS Markit/CIPS, the performance of the UK service sector strengthened again during April, driven by sharp increases in business and consumer spending. Survey respondents widely attributed the improvement in demand to looser pandemic restrictions and high levels of optimism regarding the near-term economic outlook. Confidence in the sustainability of the recovery was also reflected in greater staff hiring, with employment growth accelerating to its fastest since October 2015.

Adjusted for seasonal influences, the headline UK Services PMI Business Activity Index registered 61.0 in April, up from 56.3 in March and the highest since October 2013. The final reading was also above the earlier 'flash' estimate for April (60.1).

Service providers noted that the roadmap for easing COVID-19 restrictions across the UK had been a key factor helping to boost activity. There was a direct boost to output from the reopening of some customer-facing parts of the economy in April, as well as a positive impact on the rest of the service sector due to improving business and consumer confidence.

New order volumes increased for the second month running in April and the rate of expansion was the steepest since December 2013. Service providers reported that the improved pandemic situation and strong optimism towards the UK economic outlook had led to a sharp rise in forward bookings and new projects starts.

Looking ahead, service sector firms overwhelmingly anticipate an upturn in business activity during the next 12 months. Around 65% of the survey panel forecast an expansion, while only 7% predict a decline. The resulting business expectations index was only fractionally lower than March's 14-year peak.

FXStreet reports that Westpac said that the Fed’s resolutely dovish stance and growing Eurozone rebound optimism leave DXY soft in Q2.

“DXY’s near-term fate rests entirely with the April payrolls report. Few will be surprised by a 1.5-2 M payrolls increase, making for an incredibly high bar to resuscitate the US macro outperformance trade, especially with Europe getting her vax act together and reopenings gathering pace. A sub-1mn payrolls print could be devastating for near term USD prospects.” 

“Until there’s further ‘substantial progress’ in clawing back 8mn+ in pandemic job losses a near united dovish Fed front should prevail for some months yet, undercutting DXY upside potential.” 

Reuters reports that U.S. Secretary of State Antony Blinken said the West had to be very careful about the exact nature of Chinese investment in Western economies and think very carefully about investments in strategic assets.

Asked by the BBC if the West should pull back from Chinese investment, Blinken said the United States was not trying to hold China back or contain it but that the West wanted to uphold the rules-based international order formed after World War Two.

"I think we have to be very careful about exactly what the nature is of that investment," Blinken told when asked about huge amounts of Chinese investment in the West.

"If it is investing in strategic industries, strategic assets that's something that countries need to look at very carefully."

He added though: "Another thing is to say: 'We're not doing any business'. That's not what we're saying."

While China's re-emergence has concerned the West, China was for centuries one of the most influential economies on earth.

According to the report from IHS Markit, the Eurozone Construction Total Activity Index was unchanged at 50.1 in April, signalling a fractional expansion in eurozone construction activity for the second successive month. Firms often linked this to a resumption of work on paused projects, although were increasingly concerned about the impact that renewed COVID-19 restrictions had on overall demand in the construction sector. April data pointed to a further rise in home building activity, as well as a softer reduction in commercial construction. Civil engineering work, meanwhile, fell at a faster pace in April.

Work undertaken on housing by eurozone construction firms increased for a second successive month in April. The rate of growth quickened from March and was the strongest recorded since February 2020. 

Commercial construction activity contracted again in the latest survey period, extending the current sequence of decline to 14 months. That said, the pace of the reduction eased from March and was the softest in the sequence.

The downturn in eurozone civil engineering activity continued in April, as work undertaken on infrastructure projects contracted at a modest pace. The rate of the decline quickened from March and was the twenty-first in as many months. 

The degree of optimism regarding the outlook for activity over the coming 12 months eased in April, and was the softest recorded for three months. German constructors signalled renewed pessimism regarding the year ahead outlook, with projections at their weakest since December 2020. French firms indicated a lower level of positive sentiment, though Italian firms signalled the strongest projections since August 2001.

FXStreet reports that Jane Foley, Senior FX Strategist at Rabobank, expects the inflation debate to drag EUR/USD down to 1.19 over the next month.

“With the market consensus pointing to a 995K rise for the April Nonfarm Payroll number and with several forecasters expecting a number well above 1,000K, the USD may continue to find a good level of support in the near-term.” 

“Beyond the end of this week, the USD is likely to continue to respond to the debate about whether or not the Fed’s view that inflation will be transitory is correct. Given the market’s sensitivity to the issue, we see risk that the inflation debate will take EUR/USD back to 1.19 on a one-month view.” 

During today's Asian trading, the US dollar declined against the euro and the yen, and was almost unchanged against the pound.

The US dollar index is near a two-week high after US Treasury Secretary Janet Yellen said on Tuesday that the Federal Reserve may have to raise interest rates to avoid overheating the US economy. Later, Yellen noted that she is not trying to make forecasts about the Fed's policy, nor to make recommendations to the Fed.

John Hardy, chief currency strategist at Saxo Bank, notes that interest rate expectations in the market on Tuesday after Yellen's statement almost did not move - the market expects a Fed rate hike sometime at the end of the third or fourth quarter of next year.

The pound is stable against the dollar and the euro. Traders are waiting for the results of the Bank of England meeting, which will be announced on Thursday at 11:00 GMT. Analysts do not predict changes in the parameters of the monetary policy of the Bank of England. At the same time, the Bank of England is expected to improve its economic forecast.

The ICE index, which tracks the dollar's performance against six currencies (euro, swiss franc, yen, canadian dollar, pound sterling and swedish krona), fell 0.11%.

eFXdata reports that Citi outlines its expectations for Thursday’s Scottish Parliamentary election, and BoE policy meeting.

"With no overnight counting, event risk is likely to persist into this weekend. The SNP is likely to be the biggest party, but whether they achieve an outright majority remains relevant for GBP. Concerns about another independence referendum could weigh on GBP into and after the event, but GBP weakness on risk reduction into political uncertainty should be faded," Citi notes. 

"We see a reasonable chance that the BoE do message a technical QE taper. We also see plenty of reasons to wait. We think FX is only going to care if the nature of the ‘taper or no taper’ debate at the April meeting bears much relevance to the overall direction of monetary policy," Citi adds. 

According to provisional results of the Federal Statistical Office (Destatis), real (price adjusted) new orders increased by a seasonally and calendar adjusted 3.0% in March 2021 compared with February 2021. Economists had expected a 1.7% increase. Excluding major orders, real new orders in manufacturing were 1.6% higher than in the previous month.

Compared with February 2020, which was the month before restrictions were imposed due to the corona pandemic in Germany, new orders in March 2021 were 9.1% higher in seasonally and calendar adjusted terms.

Domestic orders increased by 4.9% and foreign orders went up by 1.6% in March 2021 on the previous month. New orders from the euro area increased 0.7%, and new orders from other countries rose by 2.2% compared with February 2021.

In March 2021, the manufacturers of intermediate goods saw new orders increase by 2.8% compared with February 2021. The manufacturers of capital goods saw an increase of 2.5% on the previous month. Regarding consumer goods, new orders rose by 8.5%.

For February 2021, the revision of the preliminary outcome resulted in an increase of 1.4% compared with January 2021 (provisional: +1.2%).

EUR/USD

Resistance levels (open interest**, contracts)

$1.2103 (1963)

$1.2059 (1912)

$1.2029 (3041)

Price at time of writing this review: $1.2006

Support levels (open interest**, contracts):

$1.1980 (1106)

$1.1944 (2217)

$1.1898 (2101)

Comments:

- Overall open interest on the CALL options and PUT options with the expiration date May, 7 is 60597 contracts (according to data from May, 5) with the maximum number of contracts with strike price $1,1700 (3068);

GBP/USD

$1.4011 (965)

$1.3973 (679)

$1.3946 (1218)

Price at time of writing this review: $1.3906

Support levels (open interest**, contracts):

$1.3864 (790)

$1.3832 (276)

$1.3791 (414)

Comments:

- Overall open interest on the CALL options with the expiration date May, 7 is 11309 contracts, with the maximum number of contracts with strike price $1,4200 (2932);

- Overall open interest on the PUT options with the expiration date May, 7 is 19223 contracts, with the maximum number of contracts with strike price $1,3700 (2038);

- The ratio of PUT/CALL was 1.70 versus 1.68 from the previous trading day according to data from May, 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.