Forex-novosti i prognoze od 20-04-2021

ECB: No change expected in monetary policy – UOB

FXStreet reports that Lee Sue Ann, Economist at UOB Group, believes that the ECB will keep the monetary conditions unchanged at its event on Thursday.

“The ECB’s latest announcement - that purchases under the Pandemic Emergency Purchase Programme (PEPP) over the next quarter will be conducted at a significantly higher pace than during the first months of this year - reinforces our view that it will remain highly accommodative for longer.”

By eFXdata reports that analysts at Citi discuss their expectations for tomorrow's BoC April policy meeting.

"While we continue to hold the view that Bank will taper its QE program at its April meeting, risks for a dovish taper have risen as we anticipated. We believe, in addition to the BoC’s decision to taper it QE program, there will be an increased focus on the Bank’s rate guidance which is directly linked to their inflation guidance." 

"Combined with the heavily long CAD positioning and Canadian optimism largely priced into the currency, we like owning tactical USDCAD topside over the event." 

• These events should be listed as very rare side effects of the vaccine
• Overall benefits of COVID-19 Vaccine Janssen in preventing COVID-19 outweigh the risks of side effects

EMA's full release 

eFXdata reports that analysts at Barclays Research discuss their expectations for this week's ECB policy meeting on Thursday.

"We expect the Governing Council to make no changes to its monetary policy stance and the President to reiterate the determination to maintain favourable financing conditions, but not offer more details on the framework. We forecast QE expansion will be announced before year-end."

"To conclude, we do not anticipate that the meeting will bring any change to the monetary policy stance, nor more clarity on the policy framework."

Bert Colijn, Senior Economist at ING, reports that the latest Eurozone bank lending survey suggests a decreased demand for borrowing and tightening credit standards for businesses. This implies a subdued start to the economic recovery from an investment perspective and is in line with the ECB's low tolerance of rising yields, he adds.

"Eurozone's bank lending survey showed that demand for borrowing among eurozone firms has decreased in the first quarter."

"Banks indicated the weakness among firms’ demand was mainly related to delayed fixed investment plans due to protracted lockdowns."

"Banks also tightened credit standards for businesses and plan to do so again in 2Q, which means that investment recovery could take a while to pick up even when businesses indicate interest in borrowing once economies reopen."

"Today’s bank lending survey results will make it to Christine Lagarde’s desk ahead of Thursday’s ECB meeting and add to the picture of an accommodative ECB for now."

"Tightened credit standards for businesses make for a slightly more modest rebound outlook for now, which puts the eurozone further away from a quick recovery to pre-pandemic output levels. That is in line with the ECB's low tolerance of increasing bond yields until growth prospects recover."

FXStreet reports that economists at Credit Suisse discusses S&P 500 Index prospects.

“The S&P 500 rally is showing signs of stalling as looked for from essentially our Q2 objective of 4200 with the market seen at its ‘typical’ extreme – 15% above its 200-day average – and with Volume/OnBalanceVolume also still not confirming the new highs.” 

“Near-term support moves to 4140, then the lower of the recent gap and price support at 4125/21 next. Beneath here would mark a near-term top to add weight to our view for a consolidation/corrective phase with support then seen next at 4097/96, then 4068.” 

“Should strength directly extend above 4200 on a closing basis though, we see resistance next at 4225/30, then 4259/60.”

FXStreet reports that economists at Capital Economics doubt it will be long before daily aluminium production starts to creep higher again.

“According to the International Aluminium Institute (IAI), global aluminium production grew by 5.0% YoY in March. However, given the virus-related disruption to output last year, we think the monthly change in daily production offers a better steer on the underlying trend. Here, we find that daily production in March both in and outside of China was a little lower than in February.” 

“Given the huge premiums currently being paid for aluminium in the US, Europe, and Japan, we doubt last month’s decline is a sign of things to come. Instead, we think that aluminium production both in and outside of China will push higher over the course of this year, which should cause the price of aluminium to underperform that of other base metals.”

FXStreet reports that Goldman Sachs (GS) economists wrote in their latest client note released on Tuesday that the Chinese economy is likely to return to trend growth after its V-shaped recovery saw a record pace of expansion last quarter.

“The economy appears to have passed a turning point.”

“Compared to 2019 to avoid distortions from last year’s activity collapse, exports and property sales are clear outperformers, while housing starts and manufacturing investment underperformed.”

“With meaningful slack remaining, household consumption should play catch-up, but probably at a measured pace given the weight of uncertainties and the long way toward herd immunity.”

GBP fell slightly against most of its major rivals in the European session on Tuesday, as an initial wave of investors’ optimism over upbeat labour market data out of Britain ebbed. 

The official data showed on Tuesday a surprise drop in the UK unemployment rate in the three months to February, adding further signs the UK’s economy is recovering from its worst recession in more than 300 years.

According to the Office for National Statistics (ONS), the UK’s unemployment rate fell to 4.9 percent in the three months to February from 5 percent in three months to January, while economists had forecast the rate to increase to 5.1 percent. The upbeat jobs data were supported by the British government's furlough scheme, which was extended last month until the end of September. 

The ONS also announced that average earnings including bonus increased 4.5 percent y/y in three months to February, slower than the expected gain of 4.8 percent. Meanwhile, excluding bonus, earnings grew 4.4 percent y/y, exceeding economists forecast of a 4.2 percent y/y advance.

It was also reported that the claimant count rate held steady at 7.3 percent in March. The number of people claiming unemployment benefits increased by 10,100 in March, following an 86,600 climb in February.

Market participants now look for UK's manufacturing and services PMI survey data, reports on inflation, retail sales, and consumer confidence, which are to be released later this week, hoping to receive further signs of the British economy’s recovery.

FXStreet reports that the USD/CHF pair has broken the 55-day average at 0.9200/9185, which suggests scope for 0.9116/9094, then 0.9047/31, where analysts at Credit Suisse would look for a floor.

“USD/CHF has closed below key support at 0.9200/9185, which is the 38.2% retracement of the Q1 upmove, an important psychological inflection point and the rising 55-day average. This suggests a much deeper move lower is beginning, with scope for the 50% retracement next at 0.9116, then the 200-day average at 0.9100/9094. Whilst we would look for an attempt to hold here, we note that the next support is seen at 0.9047/27, where we would have more confidence in a floor.”

“Our base case is that this is still a corrective move lower, with resistance seen initially at 0.9246, above which would confirm a small base for a reversal back higher, with the next initial level at 0.9282/89.”

FXStreet reports that Axel Rudolph, Senior FICC Technical Analyst at Commerzbank, notes that copper (LME) is heading up towards the 9617.00 February high above which lies the 9905.00/10190.00-region.

“As long as the 9617.00 high isn’t overcome further sideways trading around the 9000.00-mark should take place.” 

“A rise and daily chart close above the 9617.00 February high would make us bullish again and engage the February and August 2011 highs at 9905.00/10190.00.” “Potential support above the 8570.00 March low comes in along the 55-day moving average at 8804.37 and also at the 8695.00 late March low.”

“While the contract stays above the 7705.00/7673.00 late December and January lows we will stay overall bullish.”

Travelers (TRV) reported Q1 FY 2021 earnings of $2.73 per share (versus $2.62 per share in Q1 FY 2020), missing analysts’ consensus estimate of $3.01 per share.

The company’s quarterly revenues amounted to $7.386 bln (+2.2% y/y), roughly in line with analysts’ consensus estimate of $7.446 bln.

TRV rose to $156.55 (+1.41%) in pre-market trading.

FXStreet reports that EUR/USD maintains its break above 1.1990/97 and large bullish “outside day” and analysts at Credit Suisse look for further strength to 1.2103/13, with scope for the potential downtrend from early January, today seen at 1.2130.

“EUR/USD maintains its break above key resistance from its 55-day average and mid-March highs at 1.1992/97 completing a large bullish ‘outside day’ in the process and this suggests a more important low has indeed been established near the 1.1695 key retracement support/target (38.2% of the 2020/2021 uptrend).” “We look for further strength to resistance at the March high and 61.8% retracement of the 2021 fall at 1.2103/13, with the potential downtrend from the 2021 high just above at 1.2127/30. We would look for this latter area to then ideally cap for a pullback into what we look to be a broader sideways range.” 

“Support moves to 1.2033 initially, then 1.2015, with 1.1995/90 ideally holding to keep the immediate risk higher."

Procter & Gamble (PG) reported Q3 FY 2021 earnings of $1.26 per share (versus $1.17 per share in Q3 FY 2020), beating analysts’ consensus estimate of $1.20 per share.

The company’s quarterly revenues amounted to $18.100 bln (+5.1% y/y), roughly in line with analysts’ consensus estimate of $18.002 bln.

PG rose to $136.70 (+0.07%) in pre-market trading.

Johnson & Johnson (JNJ) reported Q1 FY 2021 earnings of $2.59 per share (versus $2.30 per share in Q1 FY 2020), beating analysts’ consensus estimate of $2.33 per share.

The company’s quarterly revenues amounted to $22.300 bln (+7.8% y/y), beating analysts’ consensus estimate of $21.997 bln.

The company also announced that its Board of Directors declared a 5.0% increase in the quarterly dividend, from $1.01/share to $1.06/share.

In addition, it tightened guidance ranges for FY 2021, projecting EPS of $9.42-$9.57 versus prior guidance of $9.40-$9.60 and analysts’ consensus estimate of $9.52 and revenues of $90.6-$91.6 bln versus prior guidance of $90.5-$91.7 bln and analysts’ consensus estimate of $92.03 bln.

JNJ fell to $162.50 (-0.12%) in pre-market trading.

FXStreet notes that UK virus concerns and a bounce in the EUR recently brought EUR/GBP to the highest level since early March. Nevertheless, economists at Danske Bank still expect a stronger pound despite the bump.

“The UK is gradually reopening supported by fast vaccinations, which, combined with businesses getting used to the new EU-UK trading relationship, means that the outlook for the UK economy looks much brighter. We expect the UK economy will outperform the euro area this year.”  

“EU-UK trade recovered in February after a sharp drop in January although trade is not all the way back to more normal levels.” 

“We have seen a significant repricing of the Bank of England (BoE) in Q1. It is not long ago a negative BoE Bank Rate was a theme, but now the first 15bp rate hike is priced already in November 2022, which would take the Bank Rate back to 0.25%. We think this is slightly to the aggressive side, as we do not expect any hikes through 2022, at the moment. Eventually, the BoE is likely to tighten monetary policy earlier than the ECB.”

“We think the recent EUR/GBP increase closer to 0.87 is a bump in the road and remain bullish on GBP, as we are still more upbeat on the UK than on the euro area. Near-term, we expect EUR/GBP to trade around the current levels before the cross starts to move lower again. We still forecast EUR/GBP will trade at 0.83 in 12M.”

IBM (IBM) reported Q1 FY 2021 earnings of $1.77 per share (versus $1.84 per share in Q1 FY 2020), beating analysts’ consensus estimate of $1.62 per share.

The company’s quarterly revenues amounted to $17.730 bln (+0.9% y/y), beating analysts’ consensus estimate of $17.354 bln.

IBM rose to $137.05 (+2.95%) in pre-market trading.

FXStreet reports that the Credit Suisse analyst team notes that USD/JPY has completed a top below 108.41/33 to turn the risk lower, with support seen next at the 38.2% retracement of the Q1 rally and 55-day average at 107.82/77, with the “measured top objective” a lot lower at 106.05.

“We see support at the 38.2% retracement of the Q1 rally and 55-day average at 107.82/77, which we would look to hold at first. This though would be seen as a temporary hold ahead of a move to the uptrend from January at 107.56 next. Below this latter level should then further reinforce the change of trend lower with support seen next at 106.78 and with the ‘measured top objective’ seen a lot lower at 106.05.” 

FXStreet notes that gold rose 0.7% to $1776.51/oz last Friday and is now trading at its highest since late February. Howie Lee, Economist at OCBC bank, turns neutral in the near term, however, he notes XAU/USD could suffer more pressure long-term as US Treasury yields resume their uptrend. 

“Our model suggests a fair value range of $1671-$1775/oz for gold at current inputs, which means at current levels, gold is not too far off its fair value estimation.”

“We close our tactical recommendation of short gold and stay neutral on the precious metal in the short-term.”

“Longer-term, we expect the possible resumption of rising Treasury yields to pressure gold down once more.”

eFXdata reports that Nomura Research discusses the USD outlook.

"At the start of April, we saw scope for US yields to stabilise and USD to soften , a view that has gained further support from the market reactions to recent, stronger-than-expected US macro data.We continue to believe that markets have substantially priced in Fed rate hikes (just over three 25bp hikes by end-2023), higher US inflation expectations (5Y breakeven ~2.16%) and significant upward revisions to US growth forecasts (consensus Q2 US GDP at 8.1% q/q)," Nomura adds. 

FXStreet reports that economists at Danske Bank forecast the EUR/USD at the 1.15 level on a 12-month view.

“The US is likely to experience a very rapid normalization of the labour market and other macro indicators over the next 6-12 months. In markets, these expectations are seen through high levels of equities, low credit spreads, as well as from inflation expectations running at 2.6%. US fiscal policy and a good pace of vaccinations support this.” 

“The Fed has given some sporadic guidance linked to inflation in Q4 and high levels of vaccinations. One should expect talks of tapering to pick up during H2.”  

“We keep our current profile unchanged, in favour of USD. The key risks to watch are 1) the expectations for US recovery must be met, 2) questioning if the EU can surprise on the upside and/or 3) the state of the next leg in US-China tariffs. As has been the case since the onset of COVID-19, the potential outcomes for EUR/USD are very wide, irrespective of us seeing a stronger dollar in our base case.”  

Reuters reports that Britain launched an independent review of capital and proprietary trading rules introduced following the global financial crisis as it seeks to bolster the City of London's global competitiveness after Brexit.

Since the start of 2019 Britain requires HSBC, Barclays and other banks to "ring-fence" the retail arms of their operations with capital to shield them from any losses in their riskier, investment banking arms after taxpayers had to bail out lenders during the financial crisis.

"Over the last decade, UK banks have seen significant changes to the environment in which they operate, including the fallout from the COVID-19 pandemic, the UK's exit from the EU, and wider changes in the UK financial sector," the independent review said in its call for evidence.

The review was called for by the finance ministry and the independent panel is chaired by City veteran Keith Skeoch. The panel includes John Flint, former CEO of HSBC.

Banks also hold multiples of capital in their safety buffers compared with a decade ago, making them far more resilient in the face of shocks.

But any recommendations to ease ring-fencing are likely to face resistance from the Bank of England.

Britain's full departure from the European Union on Dec. 31 means it no longer has to comply with the bloc's financial rules, freeing it up to tailor regulation to UK lenders.

FXStreet reports that economists at HSBC think much of the good news is in the price and GBP/USD now looks high relative to rate differentials.

“We believe that the GBP has capitalised on expectations of a robust cyclical upswing, as a successful COVID-19 vaccination rollout in the UK alongside the government’s fiscal largesse within the 2021 budget have supported the domestic economy.”

“On the monetary policy front, the BoE seems to be relaxed about the rise in UK government bond yields. Market expectations for the BoE have also become less dovish.”

“Much of the good news on the cyclical front is already priced into the GBP, and GBP/USD now looks high relative to its rate differentials, so the risk could be to the downside.” 

“If the cyclical upswing fades, the sizeable UK twin deficits (i.e., deficits on both current account and fiscal balance) will challenge the GBP’s allure.”

CNBC reports that according to the International Energy Agency, the energy-related carbon emissions are on track to surge by nearly 5% this year, reversing most of last year’s decline caused by the coronavirus pandemic.

In the IEA’s Global Energy Review 2021 the group said global energy-related CO2 emissions were on course to rise to 33 billion metric tons this year, up 1.5 billion metric tons from 2020 levels.

It would reflect the single largest increase in emissions since 2010 and the second-largest increase in history.

“This is a dire warning that the economic recovery from the Covid crisis is currently anything but sustainable for our climate,” Fatih Birol, executive director of the IEA, said in the report.

“Unless governments around the world move rapidly to start cutting emissions, we are likely to face an even worse situation in 2022,” he added.

The report comes at a time when policymakers are under intensifying pressure to deliver on promises made as part of the Paris Agreement.

Reuters reports that a European Central Bank lending survey showed that euro zone banks expect to tighten access to credit further in the second quarter, as the bloc's pandemic-induced recession drags on and now threatens to disrupt the coming holiday season.

Credit standards, or loan approval criteria, already tightened for firms in the first quarter and lenders see further stiffening ahead, combined with possible bounce in demand.

"This reflects banks' uncertainty regarding the severity of the economic impact of the third wave of the pandemic and the progress in the vaccination campaign," the ECB said a quarterly lending survey.

It added that loan demand was also waning as firms were postponing investments while many were living off either liquidity buffers or direct government liquidity support.

Still, business loan demand could rebound in the second quarter, especially among small and medium sized firms as tighter containment measures raise cash needs.

For housing loans, credit standards eased slightly in the first quarter but banks expect to more than reverse this during the second quarter, even as net demand for mortgages rises, the survey showed.

CNBC reports that German Chancellor Angela Merkel’s conservative alliance finally selected a candidate to represent the center-right bloc in the country’s national election later this year, after months of uncertainty and delay.

Up until then, neither the center-right Christian Democratic Union (CDU), nor its Bavarian sister party, the Christian Social Union (CSU), had been able to agree on who should lead the conservatives into the election on Sep. 26. Merkel announced in 2018 that she would not run for a fifth term in office.

At a meeting of the CDU’s board Monday night, however, a majority of senior party members voted to nominate Armin Laschet, the leader of the CDU and state-premier of North Rhine-Westphalia, as the candidate for chancellor for this year’s election.

Some 77.5% (31 members) of the party’s federal executive committee voted in favor of the party leader, according to reports from German news outlet Deutsche Welle and Reuters, citing sources, while his rival Markus Soeder, received just 9 votes.

eFXdata reports that Bank of America Global Research discusses its expectations for this week's BoC policy meeting.

"We expect the Bank of Canada (BoC) to present a significantly more constructive outlook for the Canadian economy on 21 April, but without changing its current monetary policy stance: rates at 0.25%, same forward guidance and purchases of at least C$4bn per week.. We do expect the BoC to announce a roadmap on adjustments to the pace of government bond purchases, to start tapering as soon as in July once it is clearer that the recovery is well under way," BofA notes.

"We continue to expect USDCAD to retrace higher to 1.29 in 2Q, as the result of an additional leg of broad-based USD strength, commodity price consolidation and a modest rebuild in CAD risk premium reflecting moderation in global risk appetite," BofA adds. 

During today's Asian trading, the US dollar declined against the euro and the pound, but rose against the yen.

The ICE index, which tracks the dollar's performance against six currencies (euro, swiss franc, yen, canadian dollar, pound sterling and swedish krona), fell 0.14%.

Since the beginning of April, the euro has gained about 3% against the US dollar after an unfavorable first quarter. At the beginning of this year, traders were betting that the rapid recovery of the US economy would force the Federal Reserve to normalize its policy and raise rates, which contributed to the attractiveness of the dollar.

The focus of the market this week is the meeting of the European Central Bank (ECB), which will be held on Thursday. Traders do not expect the ECB to take any action, but will wait for signals from it regarding the future normalization of policy.

The pound rose moderately against the US dollar on the back of data on the UK labor market. The Office for National Statistics said that the latest figures suggest that the jobs market has been broadly stable in recent months. Data from our Labour Force Survey (LFS), for the three months to February 2021, are little changed on the quarter. Estimates show a small quarterly decrease in the unemployment rate while the economic inactivity rate increased, as it did during the first coronavirus restrictions; the employment rate continued to fall. With the reintroduction of many coronavirus restrictions, total hours worked decreased on the quarter.

FXStreet reports that economists at Capital Economics believe the continued policy divergence is likely to support the US dollar.

“Although the US Treasury’s biannual report refrained from explicitly naming any country a ‘currency manipulator’, it highlighted the growing policy divergence between the US and other major economies. We think that this policy gap will continue to put upward pressure on the US dollar – despite its recent weakness, we think that it will end the year stronger against most other currencies.”

“We expect that US yields will eventually resume their rise, and again outpace those of most other major economies. That would put renewed upward pressure on the dollar.”

“In the longer term, the US’ enduring trade deficits (and the continual deterioration of its external balance sheet that results) point to a weaker dollar. But in the near term, the US’ forceful fiscal approach and resulting upward pressure on long-term US Treasury yields suggest, in our view, that the greenback will strengthen.”

EUR/USD

Resistance levels (open interest**, contracts)

$1.2180 (928)

$1.2146 (1842)

$1.2118 (1356)

Price at time of writing this review: $1.2050

Support levels (open interest**, contracts):

$1.1985 (792)

$1.1957 (718)

$1.1923 (739)

Comments:

- Overall open interest on the CALL options and PUT options with the expiration date May, 7 is 51661 contracts (according to data from April, 19) with the maximum number of contracts with strike price $1,2000 (3388);

GBP/USD

$1.4087 (1128)

$1.4045 (2259)

$1.4020 (528)

Price at time of writing this review: $1.3992

Support levels (open interest**, contracts):

$1.3848 (669)

$1.3773 (392)

$1.3687 (1893)

Comments:

- Overall open interest on the CALL options with the expiration date May, 7 is 13467 contracts, with the maximum number of contracts with strike price $1,4200 (3755);

- Overall open interest on the PUT options with the expiration date May, 7 is 17066 contracts, with the maximum number of contracts with strike price $1,3700 (1893);

- The ratio of PUT/CALL was 1.27 versus 1.26 from the previous trading day according to data from April, 19

* - 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 the Federal Statistical Office (Destatis), in March 2021, the index of producer prices for industrial products increased by 3.7% compared with March 2020. This was the highest increase compared to the corresponding month of the preceding year since November 2011 (+4.6%). Economists had expected a 3.3% increase. Compared with the preceding month February 2021 the overall index increased by 0.9% in March 2021. Economists had expected a 0.6% increase.

Mainly responsible for the increase of producer prices compared to March 2020 were the prices of energy and of intermediate products.

Energy prices as a whole increased by 8.0% compared to March 2020 and by 0.9% compared to February 2021. The price increase from March 2020 to March 2021 is mainly due to the increase of electricity prices (+9.6%), furthermore to the national CO2-pricing that has been introduced in January 2021 on several energy products. 

Prices of intermediate goods increased by 5.7% compared to March 2020. This was the highest price increase compared to the previous year since July 2011 (+5.8%). Compared to February 2021 these prices were up 1.6 %. Compared to March 2020 intermediate goods’ prices increased especially regarding metallic secondary raw material (+46.8%), prepared feeds for farm animals (+15.9%), sawn and planed wood (+13.9%) and metals (+12.9%). 

Prices of durable consumer goods increased by 1.4% compared to March 2020, capital goods, such as machines and vehicles, by 0.9%. 

Prices of non-durable consumer goods decreased by 1.4% compared to March 2020 but increased by 0.9% compared to February 2021. Food prices decreased from March 2020 to March 2021 by 2.5%, mainly driven by price decreases of pork by 20.8%, however these prices increased from February to March 2021 by 13.3%.

The Office for National Statistics said that the latest figures suggest that the jobs market has been broadly stable in recent months.

Data from our Labour Force Survey (LFS), for the three months to February 2021, are little changed on the quarter. Estimates show a small quarterly decrease in the unemployment rate while the economic inactivity rate increased, as it did during the first coronavirus restrictions; the employment rate continued to fall. With the reintroduction of many coronavirus restrictions, total hours worked decreased on the quarter.

The number of job vacancies in January to March 2021 fell by nearly 23% on the year; arts, entertainment and recreation, and accommodation and food service activities continue to be the worst affected. 

56,000 fewer people were in payrolled employment in March 2021 when compared with February 2021.

The UK employment rate was estimated at 75.1%, 1.4 percentage points lower than a year earlier and 0.1 percentage points lower than the previous quarter.

The UK unemployment rate was estimated at 4.9%, 0.9 percentage points higher than a year earlier but 0.1 percentage points lower than the previous quarter.

The UK economic inactivity rate was estimated at 20.9%, 0.7 percentage points higher than a year earlier and 0.2 percentage points higher than the previous quarter.

There were an estimated 607,000 job vacancies in January to March 2021, which is a 22.7% fall compared with a year ago.

Growth in average total pay (including bonuses) among employees for the three months December 2020 to February 2021 was 4.5%, and growth in regular pay (excluding bonuses) was 4.4%; it is estimated that by removing the compositional effect, the underlying wage growth is around 2.5% for total and regular pay.