Forex-novosti i prognoze od 20-01-2020

USD kept firm against major rivals on Monday as last week’s run of macroeconomic data confirmed the health stance of the U.S. economy. 

Meanwhile, GBP fell against its major counterparts amid growing expectations of a 25bps rate cut by the Bank of England (BoE) at its upcoming monetary policy meeting on 30 January. Additional pressure on the pound had the statements of the UK's Chancellor Sajid Javid. In an interview with the Financial Times, he stated that there would not be alignment with EU regulations in the future and urged businesses to adjust with changes. "There will not be alignment, we will not be a rule-taker, we will not be in the single market and we will not be in the customs union - and we will do this by the end of the year," Javid said, adding: "It will mean businesses will have to adjust to costly new checks, processes and procedures, that will act as a barrier to frictionless trade with the EU and may well result in price rises."

Elsewhere, the release of German producer prices for December had little impact on EUR. The Federal Statistical Office (Destatis) reported the producer price index (PPI) decreased by 0.2% y/y in December 2019, following a 0.7% y/y decline in November. In m/m terms, the PPI edged up 0.1 percent. Economists had expected the indicator to increase 0.2% m/m and to fall 0.2% y/y. Over 2019, the PPI rose by 1.1% on an annual average from the preceding year.

Investors await the monetary policy decisions from the policymakers of two central banks later this week - the Bank of Japan (BoJ)  on Tuesday and the European Central Bank (ECB) on Thursday.

The BoJ is unlikely to change its monetary policy at its January 20-21 meeting, but it may slightly improve the economic outlook for the current fiscal year, taking into account the stimulus measures announced at the end of last year.

The ECB is not expected to make any changes to its policy stance this week, but the market participants wait for information about the strategic review of the ECB's monetary policy, which was previously mentioned by its President Christine Lagarde.

Says that China's market distortions pose "serious challenge"

Says that EU is still analysing the U.S.-China trade deal

FXStreet reports that Karen Jones, the Team Head FICC Technical Analysis Research at Commerzbank, believes that in light of the recent price action, EUR/USD could extend the leg lower to the 1.1066 level.

“EUR/USD came under increasing downside pressure on Friday and we would allow for a deeper sell off to the uptrend at 1.1066. Given that the intraday Elliott wave signals have turned negative, the risk has increased for a break lower this would target the 1.0981 29th November low and neutralise the immediate outlook.”

“Overhead the market is facing tough resistance at 1.1184-1.1240 – namely the 55 week ma, the 2019-2020 down channel and the recent high. This guards the 200 week ma at 1.1359, which continues to represent a critical break point medium term.”

FXStreet reports that FX strategists at UOB Group suggested that Cable faces extra downside risks and could drop to the 1.2950 region.

24-hour view: “Our view for GBP to ‘continue to advance towards 1.3105’ last Friday was not wrong as it rose to a high of 1.3120. However, the subsequent sharp sell-off that hit a low of 1.3007 was not expected. The weak opening this morning suggests further decline is likely even though oversold conditions suggest the major 1.2955 support could be out of reach (minor support at 1.2980) for today. Resistance is at 1.3030 and the next level at 1.3060 is expected to be strong enough to cap any intraday rebound.”

Next 1-3 weeks: “We highlighted last Friday (17 Jan, spot at 1.3075) that only a break of the ‘strong resistance’ level of 1.3130 would indicate that a short-term bottom is in place. We added, ‘until then, there is still a slim chance of GBP moving below 1.2955’. GBP subsequently popped to a high of 1.3120 before staging a surprisingly sharp decline and ended the day markedly lower at 1.3007 (-0.53%). While the price action suggests that downside risk remains intact, downward momentum has not improved by much. To look at it another way, while GBP could dip below 1.2955, the next support at 1.2900 may not come into the picture. On the upside, the ‘strong resistance’ level has moved lower to 1.3090 from last Friday’s level of 1.3130.”

FXStreet reports that according to Carsten Brzeski, Chief Economist at ING Germany, this week's European Central Bank meeting should be rather uneventful regarding monetary policy but the official start of the strategy review should be the highlight.

“Waiting for more guidance on growth and inflation developments, the highlight of this week’s meeting should be the announcement of the official start of the strategy review. A lot has been said and speculated, both by market participants and ECB officials. Now, with all changes in the ECB’s Executive Board behind us, it is time to set out some parameters like, for example, scope and timing of the review. Christine Lagarde already gave some ideas at the December meeting, also stating that in her view the review should be concluded before the end of the year.”

“In this regard, decisions to include external parties, be it academics, politicians, ‘ordinary people’ or other interest groups would have a clear impact on the length of the process, making the deadline of end-2020 more ambitious than it currently sounds. According to Lagarde, the review would also look at the monetary policy instruments. A recent working paper of more than 300 pages by influential ECB officials already gives an idea of where the ECB currently stands.”

“In our view, the most important part of the review will be an assessment of the definition of price stability and how to reach it. We still think that eventually, a new definition (of “around 2%) would institutionalise symmetry while at the same time provide maximum flexibility; more than any point range would offer.”

January 21

After the Close:

IBM (IBM). Consensus EPS $4.69, Consensus Revenues $21621.89 mln

Netflix (NFLX). Consensus EPS $0.52, Consensus Revenues $5448.87 mln

United Airlines (UAL). Consensus EPS $2.64, Consensus Revenues $10884.31 mln

January 22

Before the Open:

Johnson & Johnson (JNJ). Consensus EPS $1.87, Consensus Revenues $20827.67 mln

January 23

Before the Open:

American Airlines (AAL). Consensus EPS $1.18, Consensus Revenues $11330.29 mln

Comcast (CMCSA). Consensus EPS $0.76, Consensus Revenues $28189.27 mln

Freeport-McMoRan (FCX). Consensus EPS $0.01, Consensus Revenues $3692.89 mln

Procter & Gamble (PG). Consensus EPS $1.37, Consensus Revenues $18362.98 mln

Travelers (TRV). Consensus EPS $3.25, Consensus Revenues $7287.82 mln

After the Close:

Intel (INTC). Consensus EPS $1.25, Consensus Revenues $19229.04 mln

January 24

Before the Open:

American Express (AXP). Consensus EPS $2.01, Consensus Revenues $11373.06 mln

FXStreet reports that economist Ho Woei Chen, CFA, at UOB Group assesses the recent GDP figures in China and prospects for this year.

"In line with our forecast, China's 4Q19 GDP growth stabilized at 6.0% y/y (3Q19: 6.0%) while q/q SA growth edged higher to 1.5% from 1.4% in 3Q19. For the full year, the Chinese economy expanded by 6.1% in 2019, down from 6.6% in 2018. China's GDP growth has remained in line with the government's target of 6%-6.5% through 2019."

"While secondary industry growth rebounded to 5.8% y/y in 4Q19 from 5.2% in 3Q19, the slowdown in tertiary industry growth to 6.6% (3Q19: 7.2%) which is the lowest on record (data series from 1992) has cast a pall on the outlook."

"We continue to expect China's economic growth to slow further in 2020 due to the structural reforms and ongoing supply chain diversification. We are maintaining our growth forecast for 2020 GDP growth at 5.9% (1Q20F and 2Q20F: 5.9%y/y). This would be the slowest growth pace since the low of 3.9% in 1990."

"Against this backdrop of growth moderation, we expect counter-cyclical measures including accommodative monetary policy, acceleration in infrastructure spending and potential reductions in government tax and fees to be maintained."

FXStreet reports that in opinion of Karen Jones, Team Head FICC Technical Analysis Research at Commerzbank, the pair could attempt a move to the 0.9710 region.

"USD/CHF is seeing a short-term bounce off its current January low at .9613 with positive divergence being seen on the daily RSI. This reflects a loss of downside momentum. It looks capable of challenging the two month downtrend line at .9710. A break above here will target the .9762 10th January peak."

"Were the .9613 recent low to be slipped through in the days ahead, however, the September 2018 low at .9543 would be in focus. Slightly longer term we look for a fall back to the 2018 low at .9188, this is also the 38.2% retracement of the same move from 2015."

There's a 50% chance the U.S.-China "phase one" trade deal could survive its first year - but that probability falls to 25% in the second year, a business consultant said.

Richard Martin, managing director at management consulting firm IMA Asia, said there are two reasons why the agreement could fall apart within those time frames: Limited success stories of government-mandated trade in the past, and provisions that allow the U.S. and China to walk away from their deal.

"There's a very poor track record on government-mandated trade flows working out and that's what we got right now," he told CNBC's "Squawk Box Asia."

Martin added that if there are disputes between the two sides, the deal allows the U.S. Trade Representative, currently Robert Lighthizer, to "pretty much determine when China's breaking the rules and inflict any penalty he wants." In return, China could walk away from the agreement, he explained.

"So that's not a very robust adjudication process. It says that if there's a problem, it could well end in the phase one package being dead," he said.

FXStreet reports that the Danske Bank Research Team highlights key macroeconomic events of note in the week ahead, with the central bank likely to hog the limelight.

"Central banks will take centre stage this week with the meetings at Norges Bank and the ECB (both Thursday) and Bank of Japan (Tuesday); see previews of the former two in box.

We will also get more news on the pace of the global recovery with the release of flash PMIs for the euro area, the US, Japan and the UK (all Friday).

Equity markets will continue to focus on the earnings season, which is off to an encouraging start.

Today looks set to be a quiet start to the week calendar-wise with only Norwegian industrial confidence for Q4 due for release."

The US dollar fell slightly against the euro, while the pound fell against all major currencies on growing expectations of an interest rate cut by the Bank of England next week. China's yuan edged 0.16% higher to a fresh six-month top, while the Australian and New Zealand dollars also edged ahead. However caution remained as investors look to Australian jobs data due on Thursday for a crucial clue to the next move for Australian interest rates.

Moves were slight and volumes thin as Chinese New Year approaches in Asia and with U.S. markets closed for Martin Luther King day on Monday.

This week, traders will focus on meetings of the Bank of Japan and the European Central Bank (ECB).

The Bank of Japan will probably not change its monetary policy settings at the January 20-21 meeting, but it may slightly improve the economic Outlook for the current fiscal year, taking into account the stimulus measures announced at the end of last year.

Economists also do not expect a change in policy by the European Central Bank, but will wait for information about the" strategic review " of policy, which was previously mentioned by ECB President Christine Lagarde.

According to the report from Federal Statistical Office (Destatis), in December 2019, the index of producer prices for industrial products decreased by 0.2% compared to the corresponding month of the preceding year. In November 2019 the annual rate of change all over had been -0.7%.

Compared with the preceding month November 2019 the overall index slightly rose by 0.1% in December 2019. Economists had expected a 0.2% increase.

In 2019, the index rose by 1.1% on an annual average from the preceding year.

In December 2019, energy prices as a whole decreased by 2.4% compared to December 2018 (-0.4% compared to November 2019). The overall index disregarding energy was 0.4% up on December 2018 and 0.2% on November 2019. Prices of intermediate goods decreased by 1.8% compared to December 2018. Compared to November 2019 they slightly rose by 0.1% in December 2019. Prices of durable consumer goods were up 1.1%, prices of capital goods increased by 1.4%. Prices of non-durable consumer goods increased by 3.6% compared to December 2018 (+0.9% on November 2019). Food prices were 5.1% up on December 2018.

EUR/USD

Resistance levels (open interest**, contracts)

$1.1259 (3503)

$1.1218 (3197)

$1.1184 (1823)

Price at time of writing this review: $1.1099

Support levels (open interest**, contracts):

$1.1037 (2729)

$1.0995 (1867)

$1.0947 (926)

Comments:

- Overall open interest on the CALL options and PUT options with the expiration date February, 7 is 53183 contracts (according to data from January, 17) with the maximum number of contracts with strike price $1,1350 (4684);

GBP/USD

Resistance levels (open interest**, contracts)

$1.3189 (973)

$1.3155 (1704)

$1.3102 (1114)

Price at time of writing this review: $1.2990

Support levels (open interest**, contracts):

$1.2964 (1165)

$1.2938 (3199)

$1.2907 (1035)

Comments:

- Overall open interest on the CALL options with the expiration date February, 7 is 24635 contracts, with the maximum number of contracts with strike price $1,3600 (3944);

- Overall open interest on the PUT options with the expiration date February, 7 is 21002 contracts, with the maximum number of contracts with strike price $1,3000 (3199);

- The ratio of PUT/CALL was 0.85 versus 0.87 from the previous trading day according to data from January, 17

* - 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.