Forex-novosti i prognoze od 21-01-2020

The report provided by ActionForex reveals that analysts at Wells Fargo Securities note the FOMC's first meeting of the year means that there will also be new voting members as part of its regular rotation of regional presidents. 

"Rotating off as voting members will be two “hawks” – Eric Rosengren (Boston) and Esther George (Kansas City). The committee is also losing two “doves,” however, in Charles Evans (Chicago) and James Bullard (St. Louis).

On balance, the new crop of voters looks to be slightly more hawkish. Loretta Mester (Cleveland) and Patrick Harker (Philadelphia) tend to be on the “hawkish” end of the spectrum, although neither dissented in their last steads as voters, albeit then the Fed was raising rates (Mester in 2018 and Harker in 2017). Neel Kashkari, probably the most “dovish” member of the FOMC, will also be a voter this year, but the fourth new voter, Robert Kaplan (Dallas) tends to be fairly middle-of-the-road in his policy views.

It is worth noting that the regional Fed presidents who rotate on and off as voters account for only four of the ten votes that are currently cast at each meeting.3 In other words, they remain a minority and are unlikely to sway the final vote outcome. Moreover, all of the regional Fed presidents are always part of FOMC discussions, giving them the chance to influence the direction of policy even if they are not currently voters. We therefore do not see the makeup of voters in 2020 as a significant factor in our outlook for FOMC policy this year, and we continue to expect the FOMC to remain on hold not just at its January meeting, but for the foreseeable future."

• Says France is pausing on internet tax
• Says he threatened 100% tariffs on French wine
• Says he's planning middle-class tax cut in next budget

• Does not think trade concerns held back growth last year
• Says that peoples' growth projection for the U.S. in 2020 is too low

FXStreet reports that Josh Nye, Senior Economist at the Royal Bank of Canada (RBC), offered his take on Tuesday's disappointing Canadian Manufacturing Sales data, which fell for the third consecutive month in November.

“It's hard to get a clean read on how the manufacturing sector fared in November. A rail strike reportedly held back shipments in some sectors. Statistics Canada pointed specifically to a big drop in primary metal shipments which shaved 0.8 ppts off headline volumes in the month. But a rebound in the transportation sector following earlier labour disruptions in the US—an increase that likely won't be repeated—provided some positive offset.”

“Transitory factors aside, the second half of 2019 wasn't kind to Canadian manufacturers. What looked like the sector's resilience in early-2019—while factory output in other countries declined—clearly faded as the year wore on. And the near-term outlook is mixed. External trade headwinds appear to be easing, but a survey of purchasing managers points to muted growth in the sector heading into 2020, an inventory overhang needs to be worked off, and the closure of GM's Oshawa plant will permanently reduce motor vehicle output.”

U.S. stock-index futures fell on Tuesday, as concerns about a deadly virus outbreak in China and the IMF's downgrade of global growth outlook stopped a rally on Wall Street.

Global Stocks:

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

American Intl (AIG) initiated with a Neutral at Citigroup; target $55

Travelers (TRV) initiated with a Neutral at Citigroup; target $146

Advanced Micro (AMD) target raised to $60 from $47 at Cowen

Bank of America (BAC) downgraded to Neutral from Overweight at Atlantic Equities

Morgan Stanley (MS) downgraded to Neutral from Buy at Citigroup

Intel (INTC) upgraded to Hold from Underperform at Jefferies; target $64

Caterpillar (CAT) upgraded to Outperform from Neutral at Daiwa Securities; target raised to $165

Statistics Canada released its Monthly Survey of Manufacturing on Tuesday, which showed that the Canadian manufacturing sales fell 0.6 percent m-o-m in November to CAD57.02 billion, following a revised 0.2 percent m-o-m declined in October (originally a 0.7 percent m-o-m drop).

Economists had forecast a 0.3 percent m-o-m decrease for November.

According to the survey, sales decreased in 11 of 21 industries, representing 55.0 percent of total manufacturing sales. Lower sales in the primary metal (-11.7 percent m-o-m), chemical (-3.6 percent m-o-m) and food (-1.7 percent m-o-m) industries were partly offset by higher sales in the transportation equipment (+4.2 percent m-o-m) and fabricated metal (+4.7 percent m-o-m) industries.

Overall, sales of non-durable goods declined 1.3 percent m-o-m in November, while sales of durable goods were flat m-o-m.

• Says tax cuts and deregulation driving growth
• Critics of U.S. President Trump's trade policy have been proven wrong
• Trump is not an isolationist

A press release published on the ECB's website reveals that the Bank of Canada (BoC), the Bank of England (BoE), the Bank of Japan (BoJ), the European Central Bank (ECB), the Sveriges Riksbank (Riksbank) and the Swiss National Bank (SNB) have formed a group to share experiences as they study the potential cases for central bank digital currency (CBDC) in their home jurisdictions. The Bank for International Settlements (BIS) is also joining this group. 

According to the release, the group will assess CBDC use cases; economic, functional and technical design choices, including cross-border interoperability; and the sharing of knowledge on emerging technologies. It will closely coordinate with the relevant institutions and forums. 

Says U.S. has ignored year-end deadline for nuclear talks

No reason for North Korea to be unilaterally bound to any commitment

U.S. is applying "the most brutal and inhuman sanctions"

Bert Colijn, a senior Eurozone economist at ING, notes that the main takeaway from the ECB bank lending survey is that banks confirm a lower appetite for lending among non-financial corporates. 

"Loan growth to non-financial corporates had already slowed throughout Q4, which indicates that investment growth is set to remain sluggish even though loose financial conditions are still in place in the eurozone. Financial conditions remained about as loose in Q4 as they were in the previous quarter, according to the bank lending survey.

Uncertainty about economic conditions has somewhat ebbed over the past months though as the 'phase one' trade deal between China and the US provides hope for world trade growth recovery. While it is early days and there's still plenty of uncertainty, this could have a somewhat favourable impact on demand, not least because banks also expect credit conditions to remain unchanged in the first quarter.

Households were less cautious in the fourth quarter. Spending growth has been decent and the demand for lending confirms that picture. Demand for both consumer credit and housing loans continued to increase in Q4, which is likely to continue to fuel the housing market and consumer spending at the start of this year. Overall, the BLS confirms a picture of a continuing divide between services and industrial performance for the start of 2020."

GBP appreciated against its major rivals after the UK's employment data indicated that the labor market remained strong despite sluggish economic growth. The Office for National Statistics (ONS) reported the UK employment rate increased by 0.6 percentage points annually to a record 76.3 percent in three months to November, while the unemployment rate remained at 3.8 percent, matching economists' forecast. Meanwhile, average earnings including bonus surged 3.2 percent y/y during three months to November, while that excluding bonus climbed 3.4 percent y/y. Economists had expected the average earnings to rise 3.1% y/y in three months to November. In addition, the claimant count rose slightly to 3.5 percent in December from 3.4 percent in November. The data undermined the case for a Bank of England (BoE) interest rate cut next week.

EUR rose against most major counterparts, following the release of Germany's ZEW economic confidence survey results, which showed that German economic confidence strengthened to the highest level since 2015. According to the survey, the Indicator of Economic Sentiment for Germany came in at 26.7 points in January, 16.0 points higher than in the previous month. That was the highest value since July 2015. Economists had expected an increase to 15.0. The assessment of the economic situation in Germany has also improved considerably in the current survey, with the corresponding indicator climbing to a level of minus 9.5 points, 10.4 points higher than in December.

USD traded mixed against other major currencies. Market participants digested the speech of U.S. President Donald Trump at the World Economic Forum (WEF) in Davos. He boasted that the U.S. is "in the midst of an economic boom, the likes of which the world has never seen before", but criticized the Fed that it had raised rates too fast and lowered them too slowly. He also said that negotiations with China on a Phase Two trade deal would begin shortly, and added that most of the tariffs on Chinese goods would remain in place until a formal agreement is reached. 

• Our relationship with China has never been better
• My relationship with China's President Xi is an extraordinary one
• Phase Two negotiations will start very shortly
• We're being paid billions and billions of dollars

FXStreet reports that in the opinion of FX Strategists at UOB Group, NZD/USD is expected to keep the rangebound theme intact in the 0.6585-0.6680 area for the time being.

24-hour view: “We held the view yesterday that NZD ‘could edge lower but any weakness is viewed as a lower trading of 0.6595/0.6640’. We added, “a sustained decline below 0.6595 is not expected”. NZD briefly dipped to 0.6593 before recovering quickly. Downward pressure has eased and the current movement is viewed as part of a consolidation phase. In other words, NZD is expected to trade sideways for today, likely between 0.6595 and 0.6630.”

Next 1-3 weeks: “NZD traded in a quiet manner and closed little changed at 0.6609 yesterday (-0.03%). There is no change to our view from last Friday (17 Jan, spot at 0.6635) wherein NZD is expected to trade sideways between the two major levels of 0.6585 and 0.6680 for now. Looking forward, the bottom of the expected range appears to be more vulnerable. That said, there is another solid support at 0.6555 but this level is unlikely to come into the picture anytime soon.”

• Says U.S. in the midst of an economic boom like never seen before
• Trade deals with China, Mexico represent new model for the 21st century
• U.S. economy was in a dismal state under the previous administration
• Says he is creating the most 'inclusive' economy in the history of the country

FXStreet reports that the Rabobank Research Team is out with its special report on India's economic growth outlook, suggesting a weaker GDP growth rate for the next fiscal year (FY) 2020/21.

"We forecast economic growth in India to be 5.1% for fiscal year 2019/20 and 5.7% for 2020/21.

The relatively weak print for 2020/21 is related to weaker global growth due to recessionary risks in the US (later in 2020). It is unlikely that India will be resistant to these developments but their impact will probably be lower than in many other emerging economies, such as Mexico, Vietnam and the Philippines.

Ongoing structural issues are expected to weigh on India's medium- and longer-term growth potential.

The recent growth slowdown could result in some fiscal slippage by the government. We think the central government's fiscal deficit will end up at -3.7% of GDP for fiscal FY2019/20, a breach of the fiscal deficit target of -3.3%.

Given the weak fiscal metrics, we do not anticipate additional major stimulus programs in the Union Budget on 1 February."

FXStreet reports that FX Strategists at UOB Group hinted at the idea that further gains above the 110.70 region in USD/JPY appears to be losing consensus.

24-hour view: "Our expectation for USD to 'trade sideways' yesterday was not wrong even though the registered range of 110.02/1110.21 was narrower than our expected range of 110.00/110.35. Momentum indicators are still mostly neutral and USD could continue to trade sideways for now. Expected range for today, 110.00/110.35."

Next 1-3 weeks: "After breaking above the major 109.75 resistance earlier last week, the gain made by USD has been relatively modest as it touched 110.28 last Friday. Despite the lack of 'urgency' after breaking a major resistance, the risk is still clearly on the upside. However, the lackluster price action suggests the prospect for a sustained rise above the next strong resistance at 110.67 is not high. On the downside, only a breach of 109.45 (no change in 'strong support' level) would indicate the current USD strength has run its course."

According to the report from Leibniz Centre for European Economic Research (ZEW), Indicator of Economic Sentiment for Germany has again risen sharply at the beginning of 2020. In January, the indicator stands at 26.7 points, 16.0 points higher than in the previous month. This is the indicator's highest value since July 2015. Economists had expected an increase to 15.0. The assessment of the economic situation in Germany has also improved considerably in the current survey, with the corresponding indicator climbing to a level of minus 9.5 points, 10.4 points higher than in December.

"The continued strong increase of the ZEW Indicator of Economic Sentiment is mainly due to the recent settlement of the trade dispute between the USA and China. This gives rise to the hope that the trade dispute's negative effects on the German economy will be less pronounced than previously thought. In addition, the German economy developed slightly better than expected in the previous year. Although the outlook has improved, growth is still expected to remain below average," comments ZEW President Professor Achim Wambach.

Financial market experts' sentiment concerning the economic development of the eurozone has also considerably improved once again, bringing the indicator to a current level of 25.6 points for January, 14.4 points higher than in December 2019. The indicator for the current economic situation in the eurozone also rose again by 4.8 points, climbing to a current reading of minus 9.9 points.

Office for National Statistics said, from September to November 2019 the UK employment rate was estimated at a record high of 76.3%, 0.6 percentage points higher than a year earlier and 0.5 percentage points up on the previous quarter.

The UK unemployment rate was estimated at 3.8%, 0.2 percentage points lower than a year earlier but largely unchanged on the previous quarter. The UK economic inactivity rate was estimated at a record low of 20.6%, 0.4 percentage points lower than the previous year and the previous quarter.

Estimated annual growth in average weekly earnings for employees in Great Britain remained unchanged at 3.2% for total pay (including bonuses) and slowed to 3.4% from 3.5% for regular pay (excluding bonuses); the annual growth in total pay was weakened by unusually high bonus payments paid in October 2018 compared with more typical average bonus payments paid in October 2019. Economists had expected a 3.1% increase.

In real terms (after adjusting for inflation), annual growth in total pay is estimated to be 1.6%, and annual growth in regular pay is estimated to be 1.8%.

GBP/USD rose sharply after data release, updating session high. Currently, the GBP/USD is trading at $1.3038, with an increase of 0.23%.

ECB survey showed that euro zone companies unexpectedly cut their credit applications for the first time in six years last quarter.

Highlights of the euro area bank lending survey:

• Credit standards (i.e. banks' internal guidelines or loan approval criteria) for loans to enterprises and loans to households for house purchase remained broadly unchanged in the fourth quarter of 2019. For loans to enterprises, this was in spite of a continued tightening impact stemming from risk perceptions relating to the economic outlook.

• Meanwhile, credit standards for consumer credit continued to tighten.

• Demand for loans to enterprises declined for the first time since the fourth quarter of 2013, reflecting the slowdown in economic activity that has been observed since 2018.

• In contrast, demand for housing loans and consumer credit continued to increase.

FXStreet reports that Karen Jones, Team Head of FICC Technical Analysis Research at Commerzbank, suggested that the focus of attention in EUR/GBP has now shifted to the 0.8610 level. suggested Karen Jones, Team Head of FICC Technical Analysis Research at Commerzbank.

"EUR/GBP is consolidating below the .8610 resistance. We still believe that it is basing and a close above here is needed to confirm that the market has based. This is likely to act as a trigger on the topside to .8779, the 200 day ma. For now we are relatively neutral."

"While capped by the .8610 resistance, support at .8453 remains exposed. This guards the .8239 recent low and together with the 55 quarter moving average at .8226 this represents key support."

FXStreet reports that according to analysts at INF, the euro should largely look through this week's European Central Bank meeting and risks for EUR/USD remains skewed to the downside.

"The January meeting of the European Central Bank should have a little impact on the euro. No new economic projections will be published and the board is unlikely to change its risk assessment. An official announcement that the bank is launching its strategic review has been well-flagged and is not likely to affect the euro materially either."

"With euro rates deeply negative and little prospect of a turnaround in the near-term, the outlook for the euro remains unattractive and the currency is likely to continue to be used as the funding vehicle of choice for carry trades."

"We continue to see EUR/USD risks as skewed to the downside in coming weeks (towards / modestly below the 1.10 level) should the use of the euro as a funding currency become even more pronounced or global economic data disappoint. Talk of a Republican tax cut 2.0 may also add to a downward EUR/USD trend."

The PwC audit and consulting network has recorded a sharp increase in pessimistic business sentiment about global economic growth. The share of chief executives of major companies expecting the global economy to slow in 2020 has increased to 53% compared to 29% a year ago, according to the results of a traditional PwC survey published at the world economic forum in Davos.

"Never since 2012, when we started asking this question, have there been so many pessimistic respondents among company executives," PwC says.

The increase in negative business expectations does not coincide with the forecasts of leading global institutions: they believe that the world economy has passed the lowest point of the cycle in 2019 and will accelerate slightly in the new year. The forecast of the UN Conference on trade and development is 2.5% growth in 2020 against 2.3% in 2019. The world Bank this month also predicted an acceleration in global growth to 2.5%.

FXStreet reports that Deutsche Bank Macro Strategists noted that US President's Trump speech at the World Economic Forum (WEF) in Davos later on Tuesday is likely to hog the limelight.

"In terms of what's on in Davos today, the highlight will be an early address from Mr Trump (11am CET) which will no doubt attract plenty of headlines. Apparently for security, snippers are on the rooftop so I'll be wearing my bullet proof bobble hat.

Away from Mr Trump, Greta Thunberg's lunchtime panel will attract interest. Later BoE Governor Carney will be speaking on a panel which may also be interesting ahead of a delicate interest rate decision next week and the U.K. leaving the EU a few days later.

He is going to be the climate finance adviser to the U.K. government ahead of the COP 26 summit in Glasgow in November so he may have things to say on that, especially given the focus in Davos this year."

FXStreet reports that analysts at Danske Bank offered a brief overview of Tuesday's important market-moving releases - the UK labour market report for November and the German ZEW economic survey.

"We have a couple of tier-two data on the agenda today. Most interesting will be the UK labour market report for November as it will provide more input for the possibility of policy easing later this month. We look for an unchanged unemployment rate of 3.8%, while we expect wage growth (excl. bonuses) to moderate to 3.4% y/y from 3.5% y/y in October. 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)."

"The German ZEW expectations index has increased a lot in recent months and is one of the indicators that signals a turn in the cycle. We expect the index for January to continue this picture. Otherwise global markets await the ECB meeting later this week."

During today's Asian trading, the US dollar was almost unchanged against the major currencies, while the yen rose in price.

The ICE Dollar index, which shows the value of the US dollar against six major world currencies, fell by 0.04% compared to the previous day.

The Bank of Japan maintained ultra-soft monetary policy parameters, as most experts predicted, following the meeting that ended on Tuesday. At the same time, he said that the government's financial incentives will help accelerate the economic recovery in the country.

The interest rate on deposits of commercial banks is currently minus 0.1% per annum. The target yield on ten-year Japanese government bonds is set at around zero (plus or minus 0.2 percentage points).

The Bank of Japan now expects GDP to grow by 0.8% in the current fiscal year, which ends in March 2020, against the 0.6% forecast in October. In the next fiscal year, it is expected to increase by 0.9% compared to the previous estimate of 0.7%.

The Bank of Japan's optimism about the economic situation will justify maintaining the previous course of its monetary policy for the foreseeable future, experts say.

Experts of the International monetary Fund (IMF) revised upward the forecast of world oil prices for 2020 - by $0.09 to $58.03 per barrel, according to the January report of the IMF.

At the same time, the average price of a barrel of oil for 2021 is expected to be $55.31 per barrel, and last year, according to the Fund, it was $60.62.

Earlier in January, the World Bank (WB) suggested that the average price of oil will "slightly decrease" in 2020 and reach $59 per barrel in 2021. As indicated in the organization's January report, in 2019, the average cost of oil was $61 per barrel.

The Bank of Japan again kept the interest rate at a negative level-minus 0.1%, the financial regulator said in a statement following the January meeting.

The decision coincided with analysts ' expectations. Seven members of the Bank of Japan supported maintaining a negative interest rate, and two opposed it. The Bank of Japan introduced a negative interest rate of minus 0.1% in January 2016.

At the same time, the Bank confirmed its decision to continue targeting the yield of 10-year government bonds at a level close to 0%. The yield of securities may increase or decrease depending on economic activity and the price level. The monetary base will continue to increase by about 80 trillion yen a year, the Bank of Japan said in a release.

The Bank said it plans to maintain a "soft" monetary policy aimed at achieving 2% inflation for as long as necessary.

At the same time, the Bank of Japan raised its forecasts for GDP growth. According to the new estimate, in the 2019-2020 fiscal year, which ends in March 2020, the Japanese economy will grow by 0.8%, which is higher than the October forecast by 0.2 percentage points. In the 2020-2021 fiscal year, growth is expected to accelerate to 0.9% instead of 0.7% as previously expected. Inflation in Japan is forecast to be 0.4% in the current fiscal year, compared to the 0.5% expected in October.

EUR/USD

Resistance levels (open interest**, contracts)

$1.1259 (3503)

$1.1218 (3197)

$1.1184 (1823)

Price at time of writing this review: $1.1096

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: $1.3011

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.