Forex-novosti i prognoze od 25-01-2021

• Senate is due to receive articles of impeachment against former president Trump 90 minutes later

• Does not think that ECB is going to overshoot below but close to 2% inflation target unintentionally
• But it is possible that in future ECB may follow the U.S. Fed in allowing overshooting at times to maintain target average rate
• It's one of the issues we are looking at
• Sees current glut in savings as temporary
• Says there are no plans to change regulatory capital requirements
• Consumer demand surge in H2 is possible

James Knightley, Chief International Economist at ING, does not expect the Fed to make changes to its policy stance at this week's meeting, but its governor Jerome Powell will provide an update on how the Bank's policymakers see the outlook for the economy in the wake of new fiscal stimulus and the vaccine roll-out.

"At the last FOMC meeting on December 16th, two days after Covid vaccinations started in the US, the Fed remained cautious on the economic outlook. They stated that the pandemic “poses considerable risks to the economic outlook over the medium term” and their updated forecasts continued to suggest that interest rates wouldn’t likely rise until 2024."

"The newsflow since that meeting has been positive on the medium to longer term, but undoubtedly more negative in the very near-term given clear signs of a loss of economic momentum."

"The medium-term outlook has improved though with the Democratic Party winning both Senate seats in the Georgia run-off elections, emboldening President Biden to go big with a proposed $1.9tn fiscal support package following hot on the heels of the $900bn December deal."

"Meanwhile, the vaccination program is making progress with, as of January 22nd, nearly 5% of the population having received at least one dose of the Covid-19 vaccine. With more resources and better planning this will be stepped up with a realistic possibility of a re-opening getting underway in the second quarter."

"Inflation is also becoming a more significant theme with both market and consumer inflation expectations having pushed higher in recent months."

"We believe the Fed will leave monetary policy unchanged on Wednesday with the Fed funds target rate range staying at 0-0.25% with the Quantitative Easing program maintained at $80bn of Treasuries and $40bn of Mortgage-Backed Securities. However, it will be interesting to see how the Fed interprets the outlook."

"A greater probability of substantial fiscal stimulus and robust asset markets and clear progress with more resources being devoted to the Covid-19 vaccination program should be taken positively. Then throw in the increase in inflation expectations and the Fed will be encouraged that perceptions of the economic outlook are improving."

"We suspect the Fed will retain a cautiously optimistic tone at the press conference while seeking to downplay the prospect of any meaningful change in Fed policy anytime soon."

• Money supply growth to be in line with nominal GDP
• We will adjust to new economic developments in timely manner
• At the same time, we will be looking to maintain policy stability to avoid policy cliff
• We are aiming to keep yield curve upward sloping

• If favourable financing conditions can be maintained with asset purchase flows that do not exhaust the PEPP envelope, the envelope need not be used in full
• Focus on credit conditions in the banking system on one side and bond markets on other is consistent with main methods used by central banks
• We consider that the best way to achieve aims is to preserve favourable financing conditions throughout the pandemic period

U.S. stock-index futures were mixed on Monday, as investors prepared for the busiest week of earnings, which would include reports from mega-cap technology companies.

Global Stocks:

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

Apple (AAPL) target raised to $175 from $160 at Wedbush

Tesla (TSLA) target raised to $728 from $488 at Robert W. Baird

Salesforce (CRM) upgraded to Hold from Sell at Loop Capital; target $225

The Chicago Federal Reserve announced on Monday the Chicago Fed national activity index (CFNAI), a weighted average of 85 different economic indicators, came in at 0.52 in December, up from an upwardly revised 0.31 in November (originally 0.27), pointing to faster growth in economic activity than in the previous month. 

At the same time, the index’s three-month moving average increased to +0.61 in December from +0.59 in November.

According to the report, three of the four broad categories of indicators used to construct the index made positive contributions in December, but three categories declined from November.

Production-related indicators made a contribution of +0.44 to the CFNAI in December, up from +0.13 in November. Meanwhile, employment-related indicators contributed +0.13 to the CFNAI in December, down from +0.15 in the previous month. The contribution of the sales, orders, and inventories category to the CFNAI reduced to +0.05 in December from +0.09 in November. The contribution of the personal consumption and housing category to the CFNAI worsened to -0.09 in December from -0.06 in November.

• Global recovery is rather shaky; outlook remains uncertain
• The north-south gap risks further widening and even perpetuation
• International community should provide necessary support to developing countries and safeguard their legitimate development interests
• World needs to strengthen macro economic coordination
• It is necessary to consolidate the position of G20 as main platform for global economic governance
• Public health governance needs to be enhanced
• We need to maintain stability of global industrial chain and supply chain, maintain stable operation of global financial system, promote structural reforms, expand global total demand
• Scientific and technological achievements should benefit all mankind, not means to restrict or contain the developments of other countries
• It is not in interests of any party to de-globalize and decouple because of the epidemic

Carsten Brzeski, the Global Head of Macro for ING Research, notes that the January Ifo index shows a worsening of both the current assessment and the expectations component, signaling a very weak start to the new year for the German economy.

"Germany’s most prominent leading indicator took a hit in January. The Ifo index dropped to 90.1, from 92.1 in December, and stands at its lowest level since June. The monthly drop was the worst since April. Both the current assessment and the expectations component worsened significantly, with expectations now back at their June levels after several disappointing months."

"Today’s Ifo index shows the full impact of the stricter lockdown measures put in place in mid-December, signalling a very weak start to the new year for the German economy."

"We will only know for sure on Friday, but there is compelling evidence that the German economy avoided a double dip in the fourth quarter... The fact that the lockdown measures until mid-December were relatively light should have brought some relief as well."

"With the current lockdown measures in place until mid-February and no significant easing in the offing immediately afterwards, the short-term outlook for the German economy is anything but rosy. As so often heard over the last year, it will take more momentum in the vaccination schemes and a further reduction in the number of infections before the economy can take off again. It currently looks as if it will take at least until spring time before this will be the case."

FXStreet reports that Karen Jones, Team Head FICC Technical Analysis Research at Commerzbank, suggested EUR/JPY risks a probable move to 123.87.

“EUR/JPY saw a strong bounce higher from the October and November highs at 125.13/09. The bounce from here has reached the 55 day ma and should now start to struggle. Failure at 125.09 targets the 61.8% retracement at 123.87 and the 7 month uptrend at 123.10 and the November 19 low at 122.85.”

EUR fell slightly against most of its major rivals in the European session on Monday, weighed down by a bigger-than-forecast decline in German business morale, political uncertainty in Italy and worries over slow vaccine rollout in the EU.

The survey from ifo Institute revealed that German business confidence fell to a six-month low in January as the second wave of coronavirus halted an economic recovery. According to the report, the ifo Business Climate indicator for Germany decreased to 90.1 in January 2021 from an upwardly revised 92.2 in the previous month. This was the lowest reading since July 2020 and below economists' forecast of 91.8. Companies assessed their current situation as worse than last month (89.2 versus 91.3) and their expectations were also more pessimistic (91.1 versus 93).

The situation in Italy's politics remains uncertain ahead of, possibly, a key vote in the Italian Senate later this week. There is also the risk that Prime Minister Giuseppe Conte can resign in an effort to form a stronger government that can count on a broader majority.

The Financial Times (FT) reported that the EU’s vaccine procurement strategy was under scrutiny as the region's member states struggled to roll out rapid vaccinations in the first weeks of 2021. According to FT data, the block is languishing at under two doses per 100 residents compared to 10.2 doses per 100 residents in the UK and 6.6 per 100 in the U.S. Overall, at least 65 828 776 doses of coronavirus vaccines have been administered around the world, data from 64 countries show. The widening gap has raised anxiety in the EU, especially as already strained supplies of vaccine have suffered further delays. 

January 26

Before the Open:

3M (MMM). Consensus EPS $2.17, Consensus Revenues $8389.31 mln

American Express (AXP). Consensus EPS $1.30, Consensus Revenues $9318.93 mln

Freeport-McMoRan (FCX). Consensus EPS $0.40, Consensus Revenues $4330.06 mln

General Electric (GE). Consensus EPS $0.09, Consensus Revenues $21620.39 mln

Johnson & Johnson (JNJ). Consensus EPS $1.83, Consensus Revenues $21620.62 mln

Raytheon Technologies (RTX). Consensus EPS $0.69, Consensus Revenues $16074.96 mln

Verizon (VZ). Consensus EPS $1.17, Consensus Revenues $34474.16 mln

After the Close:

Advanced Micro (AMD). Consensus EPS $0.30, Consensus Revenues $3025.37 mln

Microsoft (MSFT). Consensus EPS $1.41, Consensus Revenues $40240.98 mln

Starbucks (SBUX). Consensus EPS $0.55, Consensus Revenues $6917.98 mln

January 27

Before the Open:

AT&T (T). Consensus EPS $0.73, Consensus Revenues $44579.74 mln

Boeing (BA). Consensus EPS -$1.63, Consensus Revenues $15360.93 mln

United Micro (UMC). Consensus EPS $0.41, Consensus Revenues $45240.63 mln

After the Close:

Apple (AAPL). Consensus EPS $1.41, Consensus Revenues $102950.35 mln

Facebook (FB). Consensus EPS $3.20, Consensus Revenues $26410.92 mln

Tesla (TSLA). Consensus EPS $1.03, Consensus Revenues $10400.59 mln

January 28

Before the Open:

Altria (MO). Consensus EPS $1.02, Consensus Revenues $4951.20 mln

American Airlines (AAL). Consensus EPS -$4.14, Consensus Revenues $3855.71 mln

Comcast (CMCSA). Consensus EPS $0.48, Consensus Revenues $26800.28 mln

Dow (DOW). Consensus EPS $0.66, Consensus Revenues $10037.21 mln

MasterCard (MA). Consensus EPS $1.53, Consensus Revenues $4011.95 mln

McDonald's (MCD). Consensus EPS $1.78, Consensus Revenues $5359.88 mln

After the Close:

Visa (V). Consensus EPS $1.28, Consensus Revenues $5518.74 mln

January 29

Before the Open:

Caterpillar (CAT). Consensus EPS $1.48, Consensus Revenues $11237.74 mln

Chevron (CVX). Consensus EPS $0.10, Consensus Revenues $25967.13 mln

Honeywell (HON). Consensus EPS $2.00, Consensus Revenues $8386.16 mln

• ECB has to protect its balance sheet from financial risks caused by climate change
• By performing its own analysis of climate risks, ECB can contribute to the valuation
• These issues are currently being considered as part of our monetary policy strategy review

• Daily we’re looking at data and trying to work out when we’re going to be able to lift restrictions
• Schools obviously will be a priority but I don’t think anybody would want to see the restrictions lifted so quickly while rate of infection is still very high so as to lead to another great spread of infection
• We’ve now got the R down below 1 across the whole of country; that’s great achievement
• We don’t want to see huge surge of infection just when we’ve got vaccination programme going so well and people working so hard
• Government is “definitely looking at” possibility of travellers arriving in UK being required to quarantine in hotels
• We have to realize there is at least theoretical risk of new variant that is vaccine-busting variant coming in, we’ve got to be able to keep that under control
• We want to make sure that we protect our population, protect this country against reinfection from abroad

Bloomberg reports that the United Nations trade agency said that China overtook the U.S. as the largest recipient of foreign direct investment in 2020, a year in which overall global flows cratered by 42% as a result of the coronavirus pandemic.

Flows fell to an estimated $859 billion from $1.5 trillion in 2019, according to the UNCTAD Investment Trends Monitor. It was the lowest level since the 1990s and 30% below the investment trough that followed the 2008-09 global financial crisis.

While the world as a whole struggled, China held on, said UNCTAD, the United Nations Conference on Trade and Development. It became the world’s largest FDI recipient with flows rising by 4% to $163 billion.

A return to positive GDP growth and a targeted investment facilitation program helped stabilize investment in China after the first coronavirus lockdowns there, the agency said.

Flows to North America slid by 46% to $166 billion, and those to the U.S. alone fell 49% to an estimated $134 billion in 2020.

Globally, the UN agency expects foreign direct investment to remain weak in 2021 due to uncertainty over the evolution of the Covid-19 pandemic.

Reuters reports that Bank of Japan Governor Haruhiko Kuroda said that Japan's economy will likely recover to levels before the coronavirus pandemic as early as March next year.

Kuroda also said a combination of expansionary fiscal and monetary policies have successfully stabilised Japan's economy, signalling that the BOJ has offered sufficient stimulus for now to cushion the economic blow from the health crisis.

"Both fiscal and monetary policies have been successful in preventing corporate failures and unemployment," Kuroda told.

"We expect, probably by the end of fiscal 2021 or early fiscal 2022, that Japan's economy would recover and come back to levels before the pandemic started," he said.

In its latest quarterly projections released last week, the BOJ expects the world's third-largest economy to expand 3.9% in the fiscal year beginning in April, followed by a 1.8% increase in fiscal 2022.

FXStreet reports that in the opinion of Karen Jones, Team Head FICC Technical Analysis Research at Commerzbank, cable could now attempt some consolidation.

“GBP/USD did not sustain the break of 1.3712 last week and has eased back. It is possible that this was a false break but for now we are regarding it merely as premature, although we also note that the RSI did not confirm the break higher and suspect that the market will consolidate. The recent close above 1.3712 on a daily chart closing basis pushes the 1.3836 February 2016 low to the fore. Longer term the 2018 peak at 1.4377 is being targeted. Currently while dips hold over 1.3520, the market is remains bid.”

Reuters reports that ECB President Christine Lagarde said that the ECB is setting up a climate change centre to coordinate the bank’s thinking on how to best incorporate climate issues into monetary policy and banking supervision.

“We are now launching a new climate change centre to bring together more efficiently the different expertise and strands of work on climate across the bank,” Lagarde said in a speech.

FXStreet reports that Karen Jones, Team Head FICC Technical Analysis Research at Commerzbank, discusses EUR/USD outlook.

“EUR/USD last week sold off and bounced off the 55-day ma at 1.2086. It is possible that this was an ‘a -b-c’ correction lower that has completed and we will have to neutralise, as it is possible that the markets next move will be on the topside, however the Elliott wave counts remain neutral or even negative and for now we are side lined. Below the market we have 1.2014 the September high and the 1.2003 2020-2021 uptrend, which we suspect will hold.”

According to the report from ifo Institute, German Business Climate Index drops sharply in January - to 90.1 from 92.2 in December. Economists had expected a decrease to 91.8. The Current Economic Assessment declined to 89.2 compared to last month's 91.3 and 90.6 anticipated. The IFO Expectations Index – indicating firms’ projections for the next six months, eased to 91.1 from the previous month’s 93.0 reading and worse than the market expectations of 93.2.

Following the release, the institute’s Economist Klaus Wohlrabe said that the economy is starting the new year with little confidence.

“We expect GDP stagnation in Q1. Industry continues to be well-positioned, wants to make more, export expectations have risen. Many service providers are also affected by lockdown, including transport and logistics.”

CNBC reports that World Economic Forum President Borge Brende said that the Joe Biden administration’s latest moves to rejoin global pacts and organizations are likely to be welcome ones for the Davos community. Still, the U.S. is far from “out of the woods” on its own domestic challenges and its battle with the coronavirus pandemic.

“Already, there are new signals from the U.S. administration on the climate side, re-entering the Paris Agreement, but also looking at how the U.S. can be turned into a low carbon economy are major, major steps. These plus the administration’s decision to halt the country’s withdrawal from the World Health Organization are “well received,” Brende said. 

“But we are still in a situation where there (are) geopolitical confrontations,” the former Norwegian minister said, speaking ahead of the WEF’s Davos Agenda summit this week, which is being held virtually. “There is a fractured world, we’ll see how the U.S.-China relationship will develop in the years to come.”

FXStreet reports that FX Strategists at UOB Group discusses USD/JPY outlook.

24-hour view: “We highlighted last Friday that ‘there is room for USD to edge higher but any advance is viewed as part of a 103.35/103.75 range’. We added, ‘a clear break of 103.75 is unlikely’. The subsequent USD strength exceeded our expectations as it soared to 103.88 before closing on a firm note at 103.77 (+0.28%). While the advance appears to be running ahead of itself, there is room for USD to test 104.00 first before a pull-back can be expected. For today, USD is unlikely to challenge the strong resistance at 104.20. On the downside, a break of 103.50 would indicated the current upward pressure has eased (minor support is at 103.65).”

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

The Finance Committee of the US Senate on Friday unanimously supported the candidacy of the former head of the Federal Reserve System Janet Yellen for the post of Treasury Secretary. Earlier, Yellen called on lawmakers to "act on a large scale" to prevent a prolonged economic downturn, and dismissed concerns about the growing volume of the US national debt.

The pound rose against the dollar. The proportion of people vaccinated against coronavirus in the UK is about five times higher than in the EU, causing the pound to jump to an eight-month high against the euro last week.

According to the investment director of Aberdeen Standard Investments, James Etey, for this reason, the pound will continue to overtake the euro. He predicts that the pound will gain about 20% against the single European currency in the coming years and reach the level at which it was before the Brexit referendum in 2016.

Support for the pound was also provided by the Bank of England, whose head Andrew Bailey recently signaled that, although the regulator is considering the possibility of negative interest rates, it has not yet begun to discuss their introduction.

The Australian dollar rose 0.26% against the US dollar after the Australian medical regulator approved the use of a coronavirus vaccine made by Pfizer and BioNTech.

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%.

Reuters reports that according to the La Repubblica newspaper, Italy’s Prime Minister Giuseppe Conte is close to resigning to then later form a new government that can count on a wider majority.

“My aim is to find an agreement that gives a clear political perspective to the government until the end of the term”, Conte said.

After surviving a vote in the Senate on Tuesday, Conte appealed to centrist and unaligned Senate lawmakers outside the coalition to join his minority government’s ranks but few have responded.

eFXdata reports that CIBC Research discusses USD/JPY outlook.

"We remain wary of extrapolating the trend, as Japanese investors are likely to continue to look towards other liquid fixed income markets in the same time zone. Indeed, Japanese appetite for Australian bonds is part of the reason for ongoing AUD momentum. The latest quarterly Tankan business survey, while taken before the full impact of the second wave, showed a modest improvement in sentiment, for the second consecutive quarter. Against a still structurally compromised USD, we expect cautious JPY gains and targets the USD/JPY at 102 in Q1 and at 100 by year-end. Expect the MoF to push back should the JPY advance too quickly," CIBC adds.

RTTNews reports that preliminary estimates from the Australian Bureau of Statistics showed that Australia's trade surplus increased in December as exports logged a monthly growth amid falling imports.

The trade surplus increased to A$8.96 billion from A$1.53 billion in November.

Exports increased 16 percent on month to A$34.93 billion, while imports dropped 9 percent to A$25.97 billion. Exports to China grew 21 percent and that to Japan gained 24 percent. Shipments to US surged 58 percent.

Year-on-year, exports gained 3 percent and imports remained flat in December.

EUR/USD

Resistance levels (open interest**, contracts)

$1.2248 (998)

$1.2223 (282)

$1.2206 (596)

Price at time of writing this review: $1.2182

Support levels (open interest**, contracts):

$1.2133 (2257)

$1.2108 (1437)

$1.2075 (1120)

Comments:

- Overall open interest on the CALL options and PUT options with the expiration date February, 5 is 47582 contracts (according to data from January, 22) with the maximum number of contracts with strike price $1,2050 (2910);

GBP/USD

Resistance levels (open interest**, contracts)

$1.3806 (1703)

$1.3778 (1575)

$1.3735 (1126)

Price at time of writing this review: $1.3721

Support levels (open interest**, contracts):

$1.3551 (784)

$1.3516 (309)

$1.3476 (1686)

Comments:

- Overall open interest on the CALL options with the expiration date February, 5 is 11444 contracts, with the maximum number of contracts with strike price $1,3750 (1703);

- Overall open interest on the PUT options with the expiration date February, 5 is 19740  contracts, with the maximum number of contracts with strike price $1,2500 (2183);

- The ratio of PUT/CALL was 1.72 versus 1.70 from the previous trading day according to data from January, 22

* - 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.