Forex-novosti i prognoze od 12-01-2021

According to ActionForex, analysts at TD Bank Financial Group note that the NFIB’s small business optimism index declined by 5.5 points to 95.9 in December, coming in considerably lower than market expectations of 100.5.

• "Beneath the surface, the declines were broad-based, with nine of the ten subcomponents falling on the month. Expectations for the economy to improve over the next 6 months spearheaded the declines, plunging by 24 points to a net negative 16%. This was followed by expectations for higher real sales (-14 points to -4%) and earnings trends (-7 points to -14%)."
• "Similarly, the view that now is a good time to expand and plans to make capital expenditures in the near-future retreated by 4 points apiece to 8% and 22%, respectively. Meanwhile, the share of small businesses viewing current inventory stocks as too low increased by 2 points to an all-time high of 7%."
• "Confidence among American small businesses took a serious hit in December. While a contraction was largely expected given a sharp increase in new COVID-19 infections and the reintroduction of restrictions across the U.S. toward the end of last year, the severity of the decline came as a surprise. In fact, the December pull-back was one of the steepest in the index’s history."
• "Economic and business conditions will likely get worse before they get better. New COVID-19 cases have picked up again in early January, while reports of strained hospitals in several states have multiplied in recent weeks. Other downside risks include new variants of the coronavirus, which appear to spread more easily. The good news is that vaccine distribution, which was slowed by logistical hurdles early on, should accelerate over the coming months."

• We will be watching how strongly inflation rebounds
• Hoping that U.S. gets to 2% inflation faster

The Job Openings and Labor Turnover Survey (JOLTS) published by the Labor Department on Wednesday revealed a 1.6 percent m-o-m decrease in the U.S. job openings in November after a revised 2.1 percent m-o-m gain in October (originally a 2.4 percent m-o-m advance).

According to the report, employers posted 6.527 million job openings in November compared to the October figure of 6.632 million (revised from 6.652 million in the original estimate) and economists’ expectations of 6.400 million. The job openings rate was 4.4 percent in November, down from an unrevised 4.5 percent in the prior month. The report showed that the number of job openings fell in durable goods manufacturing (-48,000), information (-45,000), and educational services (-21,000).

Meanwhile, the number of hires rose 1.1 percent m-o-m to 5.979 million in November from a revised 5.912 million in October. The hiring rate was 4.2 percent in November, unchanged from a revised 4.2 percent in October. Hires rose in professional and business services (+175,000) and mining and logging (+13,000), but these gains were partially offset by declines in accommodation and food services (-73,000), other services (-67,000), and information (-43,000).

The separation rate in November was 5.413 million or 3.8 percent, compared to 5.142 million or 3.6 percent in October. Within separations, the quits rate was 2.2 percent (flat m-o-m), and the layoffs rate was 1.4 percent (+0.2 pp m-o-m).

FXStreet notes that COVID-19 infection rates remain elevated across Europe after the festive period while high-frequency data suggest a sharp fall in economic activity in Q1 as many countries are forced to reintroduce strict social distancing measures. According to economists at Standard Chartered, euro-area countries will have to accelerate vaccinations if they are to re-open their economies by the second quarter.

“We expect euro-area GDP growth to have contracted by 7.7% in 2020 before recovering to 4.0% in 2021 on the back of mass vaccine rollouts and an end to covid-related restrictions. However, rising infection rates, the reintroduction of lockdowns, and weakening economic activity, as suggested by high-frequency data, pose downside risks to our 2021 forecast. There is a significant risk of negative GDP in Q4-2020 and Q1-2021, leading to a double-dip recession after the downturn in H1-2020.”

“The European Commission has so far authorized two vaccines, Pfizer and Moderna, in the fight against COVID-19. While this has provided the continent with some much needed new year optimism, the light at the end of the tunnel is still far ahead. The EU currently lags the US and the UK in vaccination rollout. A strong H2-2021 rebound would require greater coordination and urgency among members of the bloc.”

U.S. stock-index futures rose slightly on Tuesday, as investors prepared for the upcoming Q4 earnings season, while tracking Trump’s impeachment drama and awaiting details on the next package of economic stimulus from Biden’s administration.

Global Stocks:

FXStreet reports that economists at Credit Suisse apprise that the NZD/USD pair has important support at 0.7153/44, which ideally holds to keep the market in a new high-level range.

“NZD/USD saw a deeper setback towards support at the 0.7153/44 lows yesterday, which have held as expected. We look for the market to continue to hold above here to maintain a high-level range, prior to the core bull trend eventually resuming, with the core uptrend still very much intact and a very large ‘head and shoulders’ base still in place.” 

“We see resistance initially at 0.7209, then 0.7281/86, ahead of a test of the April-2018 high at 0.7395, where we would expect to see fresh sellers at first to maintain the new range.”

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

• UK will kick off discussions with EU on memorandum of understanding (MoU) on financial services cooperation this week

Chevron (CVX) resumed with a Buy at Mizuho; target $107

Exxon Mobil (XOM) resumed with a Neutral at Mizuho; target $49

GBP rose against its major rivals in the European session on Tuesday, as the latest comment by the Bank of England’s (BoE) governor Andrew Bailey eased markets' expectations of negative interest rates in the UK.

Speaking to business leaders at a virtual event in Scotland on Tuesday, Bailey said that the negative rates were a controversial subject as there were “lots of issues” with cutting interest rates into negative territory. According to BoE's governor, the negative rates would complicate the banks’ efforts to be profitable and force them to restrict lending. Bailey added, however, that the BoE's policymakers would continue studying negative rates. He also acknowledged that Britain’s economy was in a “very difficult period” due to the recent Covid-19 lockdown, but noted that the impact of the latest coronavirus restrictions appeared less severe than that in spring of 2020.

Bailey's remarks on negative rates dampened some expectations that negative interest rates could be deployed by Britain’s central bank in May. However, gloomy prospects of the UK's economy continued to be the reason for concerns.

FXStreet notes that the AUD/USD pair is stabilizing above the 13-day exponential average and key lows at 0.7696/43 and analysts at Credit Suisse stay biased for further high level ranging below 0.7816/20.

“AUD/USD is stabilizing above the 13-day exponential average and key lows at 0.7696/43 as expected, which ideally continues to hold to see the market shift into a high-level range, before the uptrend eventually resumes, in line with the large ‘head and shoulders’ base that is still in place.” 

“It’s worth stressing though that the risk of a deeper pullback remains high, in particular as a break below .7643 would now complete an intraday top, and we, therefore, stay on a cautious footing. Nevertheless, we see resistance initially at 0.7731/32, then 0.7799. Removal of here would open the door to another test of the pivotal April 2018 high at 0.7816, where we would expect to see initial sellers at first to maintain a new range.”

• It makes no sense to speculate on when lockdown can be lifted
• Nobody can tell for sure when this pandemic will be over
• The impact of current lockdown on economy is not too severe
• Germany has the firepower it needs to tackle the pandemic
• We want to get out of the crisis with growth, this should help to pay back the debt

FXStreet reports that analysts at Credit Suisse note that GBP/USD is expected to see further consolidation but with support at 1.3430 ideally holding for an eventual retest and break above 1.3710/20. 

“GBP/USD weakness has extended to and held support from the late December low at 1.3430 and the (so far) strong recovery from here is seen adding weight to our view weakness is a consolidation/corrective phase ahead of the core uptrend eventually resuming.” 

“The cable needs to break above 1.3636/71 to suggest the setback is already over for a retest of 1.3710/20. Beyond this latter area though is needed to confirm the core uptrend has indeed resumed with resistance then seen next at 1.3804 ahead of our next main objective/resistance at 1.4302/77.” 

“Support is seen at 1.3535 initially, with a move below 1.3505 needed for a retest of 1.3454/1.3430."

Dollar and euro to depreciate against Asian currencies - Natixis

FXStreet notes that the 15 Asia-Pacific countries that have signed the new RCEP free-trade agreement are set to enjoy significantly higher growth than the OECD or other emerging countries. Economists at Natixis expect significant international capital flows to these countries and therefore an appreciation of Asian exchange rates against OECD currencies. 

“Growth in Asia (the RCEP countries) will be strong. Over the period 2021-2030, potential growth can be expected to be 4% in Asia, 1% in the OECD and 2% for Latin America + Africa as a whole. This should attract to Asia (the RCEP countries) equity capital and also corporate capital.”

“If Asian countries (the 15 RCEP countries) are attractive for equity investors, companies and bond investors, then their currencies should be expected to appreciate strongly against the dollar and the euro. This is especially the case as these countries have an external surplus.”

FXStreet notes that EUR/USD trades flat in the mid-1.2100 on Tuesday. Economists at Credit Suisse continue to look for a setback with support seen at 1.2129/22, then 1.2065/59. 

“Near-term, we continue to look for a rebound from price support at 1.129/22 as flagged, but our bias is seen for a break in due course and a deeper setback to 1.2065/59 – the December low and 38.2% retracement of the November/January rally – where we then look for an attempt to find a floor. Failure to do so can expose the 55-day average and September high at 1.2020/11, but with this expected to prove a better floor.” 

“Resistance is seen at 1.2174 initially, with the immediate risk seen lower whilst below 1.2231".

• If not "we will have 10 times the number of cases by Easter"

Reuters reports that Bank of England Deputy Governor Ben Broadbent said that Britain's coronavirus pandemic is likely to have limited long-run impact on inflation, and has led to less short-term downward pressure on prices than might have been expected from the slump in headline economic output.

Broadbent said the smaller slowdown in inflation reflected shifts in consumer demand during the pandemic that had led to temporary capacity constraints in businesses, as well as support to household incomes from government furlough schemes.

Broadbent focused on the big gap between the historic fall in British economic output last year - which he said was on track to be the biggest since quarterly records began in 1920 - and a counterintuitive rise in retail spending.

Many households' incomes had been supported by government furlough programmes, and some spending on entertainment had shifted instead to audiovisual goods for people to enjoy at home, Broadbent said.

Unemployment and other labour market developments were likely to offer a better guide to medium-term inflation pressures, Broadbent said.

RTTNews reports that according to the report from statistical office Istat, Italy's retail sales declined at the fastest pace in seven months in November driven by weak demand for non-food products.

Retail sales value decreased 6.9 percent month-on-month in November, reversing a 0.5 percent rise in October. This was the biggest decline since April, when sales were down 10.1 percent.

Sales of food products gained 1 percent, while that of non-food goods declined sharply by 13.2 percent as footwear, leather and travel item sales decline significantly in November.

On a yearly basis, retail sales value was down 8.1 percent, in contrast to October's 2.8 percent increase.

FXStreet reports that strategists at ABN Amro see that the global recovery is becoming more and more widely supported and these conditions will bring support for metal prices in 2021. 

“The copper price continues to break record after record. The list of reasons for the higher prices is long. The weaker dollar, a shortage of copper, the global economic recovery, the start of widescale vaccinations, the continued growth of Chinese industrial activity and supply constraints from Chilean mines. This provides a lot of confidence. As a result, total long positions are high, but this also brings a downside price risk because it increases the likelihood of profit-taking by speculators. The copper price will rise further in 2021 but in a lower gear.” 

“The order books for aluminium sheets are solidly filled for the first quarter of 2021. This will keeps prices relatively high in 2021. Demand for steel-intensive consumer goods, such as cars and white goods, is currently strong in several markets. This year, steel prices will remain relatively high. Demand for good quality iron ore remains high worldwide. Price risks come mainly from the supply side. In any case, the current high price is an invitation for mining companies to produce more.”

Reuters reports that analysts expect a strong turnaround in profits at Asian companies as regional economies see a surge in factory activity and an expansion in exports, helped by approvals for multiple coronavirus vaccines.

Asia's large- and mid-cap companies are expected to post profit growth of 26.4% in 2021, after an estimated 5% growth last year, according to Refinitiv data.

Singapore, South Korea and Japanese firms lead the earnings growth for the region this year, boosted by a surge in electronics exports.

The data also showed Chinese firms were to likely record an 18.8% rise in profits this year, compared with 10.5% in 2020.

“China could see further earnings upgrades driven by sustained business activity growth and online/offline retail sales growth albeit at a slower pace,” Goldman Sachs wrote in a report.

“India and Korea are also likely to see earnings revision upgrades helped by sustained strong manufacturing activity data and exports,” it said.

FXStreet reports that according to economists at Mizuho Bank, in January, the USD/CNY is forecast to fluctuate within a narrow range.

“In the times ahead, it is likely that other countries will catch up with China in terms of economic recovery via further economic stimulus measures and advancement in the development of vaccines. Therefore, market participants should remain cautious about the possibility for upward pressure on the Chinese yuan to weaken in the coming month.”

“In 2020, China has taken measures of monetary easing by carrying out large-scale fund provision operations while also partially cutting the LPR (the base lending rate), in order to deal with the current spread of covid. As a result, since the onset of the COVID-19 crisis, China has been achieving steady economic recovery more quickly than any other country.” 

“Since March, the US has held a zero-interest rate policy, and it is expected that this policy will be maintained until 2023. Thus, based on the difference in the monetary policy between the US and China, the Chinese yuan is forecast to appreciate against the US dollar from a medium to long-term point of view.” 

• Impact of latest virus restrictions appears less than that in spring last year

• Our best guess is GDP over Q4 was flat to slightly down

• Mobility indicators are down more than in autumn, but less than in spring

• Expects Q1 output to be weaker than November forecasts

• Negative rates are a controversial issue

• There are a lot of issues with negative rates

• No country has used negative rates in 'retail' end of the financial market

• Transmission of negative rates depends on banking system

• BOE is doing a lot of work on whether negative rates are practical

• There are good reasons to think we're in a world of low interest rates for a long period of time

• Outlook for interest rates hinges on productivity growth

Reuters reports that Finance Minister Bruno Le Maire said that France faces a "challenge" to meet its forecast for 6% economic growth this year, with the outcome depending on how fast COVID-19 vaccines can be rolled out.

Le Maire said if things go well, France could experience a significant economic rebound in the second half of this year.

FXStreet reports that MUFG Bank experts discuss prospects for the pound.

“The positive turnaround for the pound followed a speech yesterday from MPC member Tenreyro on the potential effectiveness of negative rates as a policy tool. She stated that the BoE may need to deliver more stimulus to the UK economy, and it’s important for officials to maintain the option of lowering rates into negative territory. The positive pound reaction appears to reflect some relief that she did not strengthen her call for the use of negative rates.”

“The UK rates market remains skeptical that the BoE will lower their key policy at their next policy meeting in February. In contrast, we have become more confident recently that the BoE will take policy action and lower rates into negative territory which poses downside risks in the coming weeks and months ahead.”

During today's Asian trading, the US dollar was trading steadily against the euro and yen. Experts mainly expect the trend towards weakening of the US currency to continue, but warn that its short-term strengthening may continue in the event of further growth in US Treasury yields.

Rising yields on US Treasury bonds traditionally support the dollar - the higher the rates, the more attractive the US currency is for buyers.

Last week, the yield on ten-year US Treasuries rose above the 1% mark for the first time since March, amid a general increase in risk interest due to expectations of an increase in measures to support the economy by the administration of US President-elect Joe Biden. On Tuesday, it is 1.15% per annum.

However, the long-term outlook for the dollar remains "bearish", as the expected increase in fiscal stimulus will lead to an increase in the US budget deficit and current account, and this will significantly reduce the attractiveness of investment in the US currency.

The ICE index, which tracks the dollar's performance against six currencies (euro, swiss franc, yen, canadian dollar, pound sterling and swedish krona), fell 0.04%.

Bloomberg reports that Morgan Stanley strategists have dropped their expectations of near-term weakening in the dollar amid a regime shift in U.S. rates propelled partly by prospects for meaningful fiscal expansion.

“It’s no longer attractive to be positioned for a weaker dollar from here given the uncertainties around the fiscal policy outlook, the monetary policy outlook and the growth in inflation outlook,” Matthew Hornbach, global head of macro strategy, said.

Morgan Stanley, which Hornbach describes as an “out-of-consensus dollar bear” for much of the past nine months, has now exited short positions on the dollar versus the euro and Canadian dollar. Instead, the firm recommends shorting the British pound versus the Norwegian krone, and suggests pivoting toward being short the Swiss franc versus the loonie.

Two key factors are behind the revised call on the dollar. Democrats’ victory in the Georgia runoffs last week suggests as much as $1 trillion in additional Covid-19 relief may be coming as soon as this quarter, the strategists said. There’s also the possibility of discussions by the Federal Reserve about normalizing policy, which could begin as early as June.

FXStreet reports that analysts at Goldman Sachs discuss Brent prospects.

“With vaccines being rolled out across the world, the likelihood of a fast-tightening market from 2Q21 is rising as the rebound in demand stresses the ability of producers to restart production.“

“While higher prices pose the risk of a shale response - as WTI spot prices are now at $50/bbl allowing for higher activity and positive free cash flows - we see this response remaining muted in the first instance, as higher capital costs and producer discipline curtail the US E&P's reaction function. “

“Moreover, OPEC+ March production level will still be near the recent lows just as global demand starts rebounding sharply driven by warmer weather and rising vaccinations.” 

“We continue to recommend a long Dec-21 Brent trade (currently trading at $53/bbl vs. our $65/bbl forecast) and expect sustained backwardation and lower implied volatility.”

EUR/USD

Resistance levels (open interest**, contracts)

$1.2280 (508)

$1.2255 (198)

$1.2236 (591)

Price at time of writing this review: $1.2156

Support levels (open interest**, contracts):

$1.2120 (1501)

$1.2099 (2299)

$1.2074 (997)

Comments:

- Overall open interest on the CALL options and PUT options with the expiration date February, 5 is 43165 contracts (according to data from January, 11) with the maximum number of contracts with strike price $1,2000 (3144);

GBP/USD

Resistance levels (open interest**, contracts)

$1.3758 (1027)

$1.3724 (566)

$1.3693 (1122)

Price at time of writing this review: $1.3556

Support levels (open interest**, contracts):

$1.3439 (778)

$1.3390 (1663)

$1.3327 (1371)

Comments:

- Overall open interest on the CALL options with the expiration date February, 5 is 10096 contracts, with the maximum number of contracts with strike price $1,4000 (1710);

- Overall open interest on the PUT options with the expiration date February, 5 is 18904 contracts, with the maximum number of contracts with strike price $1,2500 (2185);

- The ratio of PUT/CALL was 1.87 versus 1.75 from the previous trading day according to data from January, 11

* - 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.

FXStreet reports that in opinion of FX Strategists at UOB Group, NZD/USD could shed further ground and shift the attention to sub-0.7100 levels in the near-term.

Next 1-3 weeks: “We highlighted yesterday that the recent positive phase has ended and the near-term bias is on the downside. We added, ‘any weakness is viewed as part of a 0.7130/0.7270 range’. While there is no change in our view, we did not quite expect the sharp drop of -1.09% (NY close of 0.7160). Downward momentum has improved and would continue to improve as long as 0.7250 is not taken out. Looking ahead, a clear break of 0.7130 would shift the focus to 0.7080.”

RTTNews reports that data released by the British Retail Consortium (BRC) showed that UK retailers logged the worst year on record for sales growth due to the Covid-19 pandemic.

In 2020, total retail sales decreased 0.3 percent, the worst annual change since records began in 1995, the BRC said.

Food sales grew 5.4 percent and non-food product sales were down 5 percent from the last year.

In December, total sales advanced 1.8 percent and like-for-like sales grew 4.8 percent on a yearly basis.

Household related and food item purchases were top of Christmas shopping lists with historic growth rates in contrast to fashion, accessories and beauty products which experienced double-digit declines, Paul Martin, UK head of retail, KPMG said.