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GBP/CAD trapped in medium and long term range pattern

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    ActionForex.com
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    GBP/CAD is bounded inside both medium and long term sideway pattern after last week’s rebound. For the near term, firm break of 1.7674 resistance is needed to be the first sign of underlying bullishness. Retest of 1.8052 high could be seen next in this case. However, break of 1.6768 would indicate that whole rise from 1.5875 has completed at 1.8052. Deeper fall could then be seen through 1.6542 support to confirm this bearish case.

    In the bigger picture, it’s staying well inside long term patter that started at 1.5746 (2016 low). With this in mind, in case of the a near term upside breakout through 1.8052, upside could be capped by 1.8415 resistance, at least for first attempt. Meanwhile, any decline should be contained by 1.5875 support too.

    GBP/CHF upside capped despite last minute Brexit trade deal

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      ActionForex.com
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      Sterling is so far having very little reaction to the last minute trade deal between the UK and EU. Overall outlook is mixed for now. Details were published in a 1246-page document titled “Draft EU-UK Trade and Cooperation Agreement“. European Parliament is expected to meet today to discuss the agreement, while the UK Parliament will vote on December 30.

      GBP/CHF staged a strong rebound last week but upside is capped below 1.2203/59 resistance zone. Range trading could still continue between 1.1598/2259 for the near term. Resumption of rebound from 1.1102 is now mildly in favor. Firm break of 1.2259 would pave the way back to 1.3301 medium term structural resistance.

      However, break of 1.1598 support will confirm rejection by falling 55 week EMA, which should then keep the long term down trend intact for another low through 1.1102 at a later stage.

      Canada GDP rose 0.4% mom in Oct, 6th consecutive rise

        By
        ActionForex.com
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        Canada GDP rose 0.4% mom in October, above expectation of 0.3% mom. That’s the sixth consecutive month of increase. Overall, total economic activity was about -4% below February’s pre-pandemic level. Goods-producing industries rose 0.1% mom. Services-producing industries rose 0.5%. Activity rose in 16 of 10 industrial sectors.

        Full release here.

        US personal income dropped -1.1% in Nov, spending dropped -0.4%

          By
          ActionForex.com
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          US personal income dropped -1.1% mom to USD 221.8B in November, worse than expectation of -0.3%. Spending dropped -0.4%, worse than expectation of -0.2% mom. Headline PCE index slowed to 1.1% yoy, below expectation of 1.2% yoy. Core PCE index was unchanged at 1.4% yoy, below expectation of 1.5% yoy.

          Full report here.

          US durable goods orders rose 0.9% in Nov, ex-transport orders rose 0.4%

            By
            ActionForex.com
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            US durable goods orders rose 0.9% mom to USD 244.2B in November, above expectation of 0.6%. That’s also the seven consecutive months of increase. Ex-transport orders rose 0.4%, below expectation of 0.5%. Ex-defense orders rose 0.7%. Transportation equipment rose 1.9%.

            Full release here.

            US initial jobless claims dropped to 803k, continuing claims dropped to 5.3m

              By
              ActionForex.com
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              US initial jobless claims dropped -89k to 803k in the week ending December 19, below expectation of 900k. Four-week moving average of initial claims rose 4k to 818.25k.

              Continuing claims dropped -170k to 5337 in the week ending December 12. Four-week moving average of continuing claims dropped -118k to 5538k.

              Full release here.

              Asian business sentiment improved, with sense of optimism going forward

                By
                ActionForex.com
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                The Reuters/INSEAD Asian Business Sentiment Index rose to 62 in Q4, up from 53 in Q3. That’s the best reading since Q4 2019, signalling more positive outlook.

                “There’s a sense of optimism going forward,” said Antonio Fatas, Singapore-based economics professor at global business school INSEAD. “Things are getting better but they are getting better with still a dose of uncertainty. The effect of the crisis is very different across sectors,” he added, noting the weakness in the transport sector due to curbs on global travel.

                BoJ discussed impacts of prolonged pandemic impacts

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                  ActionForex.com
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                  In the minutes of October 28-29 BoJ meeting, one member said the bank should “avoid bringing a premature end” to the pandemic policy responses, as the impact “might be prolonged”.

                  Another member warned, “given that monetary easing was expected to be prolonged, the Bank should further look for ways to enhance sustainability of the policy measure so that it would not face difficulty in conducting such purchases when a lowering of risk premia of asset prices was absolutely necessary.”

                  Also, one noted “attention should be paid to the possibility that the more prolonged the crisis response, the more the structural reforms toward sustainable growth would be delayed”.

                  Full minutes here.

                  EU in final push for Brexit trade agreement

                    By
                    ActionForex.com
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                    Brexit trade negotiations are still stuck at fishing, after EU rejected UK’s last offer. It’s believed that progress were made and both sides had political willing. Many issues were close to resolved, except that fisheries remained difficult to bridge.

                    Chief negotiator Michel Barnier said, as he went into a meeting with EU ambassadors: “We are really in the crucial moment. We are giving it the final push. In 10 days the UK will leave the single market and we continue to work in total transparency with the member states right now and with the parliament.”

                    It’s reported that he told the ambassadors, there was “political willing on both sides to get this over the line”, adding that “some things now have to go higher up”.

                    US consumer confidence dropped to 88.6, not foreseeing economy gaining momentum in early 2021

                      By
                      ActionForex.com
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                      US Conference Board Consumer Confidence Index dropped to 88.6 in December, down from 92.9, missed expectation of 97.5. Present Situation Index dropped sharply from 105.9 to 90.3. However, Expectations Index rose from 84.3 to 87.5.

                      Lynn Franco, Senior Director of Economic Indicators at The Conference Board: “Consumers’ assessment of current conditions deteriorated sharply in December, as the resurgence of COVID-19 remains a drag on confidence… Overall, it appears that growth has weakened further in Q4, and consumers do not foresee the economy gaining any significant momentum in early 2021.”

                      Full release here.

                      US Q3 GDP growth revised up to 33.4% annualized

                        By
                        ActionForex.com
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                        According to the third estimate, US GDP grew at an annualized rate of 33.4% in Q3, revised up from 33.1%. The upward revision primarily reflected larger increases in personal consumption expenditures (PCE) and nonresidential fixed investment.

                        Full release here.

                        BoE Haldane: The risks are still with us and the risks are still real

                          By
                          ActionForex.com
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                          BoE Chief Economist Andy Haldane said in a Guardian interview, the central bank would continue to provide monetary policy support to the economy, as “the risks are still with us and the risks are still real.” The right time “to signal and to execute” the reduction of insurance provided by policies is “when you actually see the risks being reduced for people in terms of their jobs and for businesses in terms of their viability.”

                          “We are still in a hole and the hole is still deep. We need to keep climbing out that hole through policy measures and the vaccine. But once we have climbed out – and we will – we mustn’t forget about long-term structural issues: what will give us good work at good pay,” he added.

                          UK Q3 GDP growth revised up to 16.0% qoq, still -8.6% below pre-pandemic level

                            By
                            ActionForex.com
                            -

                            UK Q3 GDP was estimated to have increased by a record 16.0% qoq in Q3, revised up from first estimate of 15.5%. Over the year, GDP dropped -8.6% yoy. The level of GDP was still -8.6% below that at the end of 2019.

                            Full release here.

                            Germany Gfk consumer climate dropped to -7.6, about to enter a very difficult phase

                              By
                              ActionForex.com
                              -

                              Germany Gfk consumer climate for January dropped slightly to -7.3, down from -6.8. In December, economic expectations rose to 4.4, up from -0.2. Income expectations dropped to 3.6, down from 4.6. Propensity to buy rose to 36.6, up from 30.5.

                              Rolf Bürkl, GfK Consumer Expert said: “There is reason to fear that the consumer climate is about to enter a very difficult phase in the coming weeks. Any relaxation or recovery can certainly only come when the infection rates have dropped so far that the strict restrictions can be loosened once more.”

                              Full release here.

                              Australia retail sales rose 7% in Nov, Victoria led with large rise

                                By
                                ActionForex.com
                                -

                                Australian retail sales rose 7% mom in November to AUD 2072B, well above expectation of 2.5% mom. In seasonally adjusted terms, sales turnover rose 13.2% yoy.

                                Ben James, Director of Quarterly Economy Wide Surveys, said: “Victoria saw a large rise, up 21 per cent, as retail stores experienced a full month of trade following the easing of coronavirus restrictions in that state. Excluding Victoria, retail sales rose 2.7 per cent.

                                Full release here.

                                US House passed USD 900B pandemic relief bill

                                  By
                                  ActionForex.com
                                  -

                                  US House passed the USD 900B coronavirus relief package late Monday night. Additionally, a USD 1.4T measures was also passed to fund the government through September 30. The Senate is expected to approve the plans together, but the vote might drag late into the night. The White House has also said that President Donald Trump will sign the bill.

                                  Senate Majority Leader Mitch McConnell, a Republican, told reporters at the Capitol that passage of the legislation in the Senate would “probably be late, but we’re going to finish tonight.”

                                  Sterling rebounds on UK’s new fishing proposal to EU

                                    By
                                    ActionForex.com
                                    -

                                    Sterling rebounded overnight on reports that UK has tabled a new proposal regarding fishing rights that could finally reach a comprise with the EU. UK had demanded a 60% reduction in the catch by value in its water by EU. That percentage of reduction was lowered to 35% in the new proposal. That’s much closer to EU’s demanded number of 25%.

                                    Additionally, the UK would accept a five-year phase-in period for the new arrangements, rather than seven. The EU had initially called for 10 years to adjust and the U.K. had proposed three.

                                    Separately, Prime Minister Boris Johnson’s spokesman reiterated that the Brexit transition period will end on December 31. “We’ve said before that we will need to ratify any agreement ahead of 1 January. The leader of the house made it clear that we would recall parliament in order to give MPs a vote on the necessary legislation,” he added.

                                    Gold rally capped by overall risk aversion, but further rise still in favor

                                      By
                                      ActionForex.com
                                      -

                                      Gold edged higher 1906.74 earlier today quickly turned into a deep retreat, follow global risk aversion. Though, downside is contained well above 1819.05 support so far. Thus, near term outlook stays cautiously bullish. We’re holding on to the view that corrective fall from 2075.18 has completed at 1764.31 already. Above 1906.74 will resume the rebound from 1764.31 to 1965.50 resistance next. Firm break there will further affirm this bullish case and target 2075.18 high.

                                      However, break of 1819.05 will keep gold inside near term falling channel. That would also extend the correction from 2075.18 with another fall through 1764.31, before completion.

                                      WTI crude oil in deep retreat, short term top in place ahead of 50

                                        By
                                        ActionForex.com
                                        -

                                        WTI crude oil drops sharply today, following broad based risk aversion. Considering bearish divergence condition in 4 hour MACD, and the proximity to 50 psychological level, a short term top could be formed at 49.25. Break of 45.66 support will confirm this case. Deeper correction would be seen to cluster support level at 43.50, 38.2% retracement of 33.50 to 49.25 at 43.23. Nevertheless, strong support from 45.66 could set the stage for another take on 50 before topping.

                                        PBoC left 1-yr LPR unchanged at 3.85%, USD/CNH recovers in consolidation

                                          By
                                          ActionForex.com
                                          -

                                          China’s PBoC left the one-year loan prime rate (LPR) unchanged at 3.85% today. The five-year LPR was held at 4.65%. These benchmark lending rates for corporate and household loans were kept unchanged for the eight straight months. Some economists saw that with the economic recovery on the right track, PBoC policy focus would gradually shift away from supporting growth. Keeping LPRs unchanged would provide the base for the central bank to hike its policy rates next year.

                                          Offshore Yuan trades a little weaker today, mainly as dollar recovers. USD/CNH continues to consolidate above 6.4968 temporary low. Near term outlook stays bearish, with another fall expected, as long as 6.5968 resistance holds. USD/CNH could have a take on 61.8% retracement of 6.0153 to 7.1953 at 6.4661 before forming a bottom.

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