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1902 to cap Gold’s upside despite stronger than expected rebound

    By
    ActionForex
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    Gold’s rebound from 1810.07 was stronger than expected and broke 1863.51 resistance. The development suggests that the first leg of the fall from 1959.15 has completed and stronger recovery could be seen to 61.8% retracement of 1959.16 to 1810.07 at 1902.20. But upside should be limited there to bring another fall.

    We’re still holding on to the view that corrective pattern from 2075.18 is not completed yet. Below 1832.40 minor support will turn bias to the downside for 1810.07, and then 1764.31 support and below.

    BoJ Kuroda: Risk of sliding back into deflation is not high

      By
      ActionForex
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      In the post meeting press conference, BoJ Governor Haruhiko Kuroda admitted that “output gap is worsening sharply at present”. However, they won’t have a “huge immediate negative impact on medium- and long-term inflation expectations”. “I don’t think the risk of Japan sliding back into deflation is high,” he added.

      Also, “it’s too early to exit from our massive monetary easing programme at this point. Western economies have been deploying monetary easing steps for a decade, and none of them are mulling an exit now.”

      Regarding the march policy review, Kuroda maintained that yield curve control is “working properly”. In the review, ” we will seek how best to balance the need to curb the side-effects of yield curve control (YCC) while making it more effective … We also need to make our framework sustainable and be able to respond flexibly as needed.”

      ECB preview; EUR/AUD to break 1.5591 support

        By
        ActionForex
        -

        ECB meeting is a focus today but it’s likely to be non-eventful. Monetary policy should be left unchanged. Following the recalibration in December, ECB would leave the size of the Pandemic Emergency Purchase Program (PEPP) at EUR 1850B and that of the Asset Purchase Program (APP), its traditional QE program, EUR 20B per month. The deposit rate will also stay unchanged at -0.5%. Some attention will be on policymakers’ view on recent Euro strength, discussions on QE tapering and economic impacts of renewed lockdown.

        Here are some previews:

        Euro is under some pressure this week along with Dollar, Yen and Swiss Franc. It’s clearly overwhelmed by the power in commodity currencies, on broad based risk-on sentiment. EUR/CAD has taken out 1.5313 support yesterday to resume the decline from 1.5978. EUR/AUD is a focus today, on when (more than whether) it would break through 1.5591 support to resume the down trend from 1.9799. Next near term target is 161.8% projection of 1.6827 to 1.6144 from 1.6420 at 1.5315.

        BoJ kept policy unchanged, raised growth fiscal 2021, 2022 growth forecasts

          By
          ActionForex
          -

          BoJ left monetary policy unchanged today as widely expected,. Under the yield curve control framework, short-term policy interest rate is held at -0.1%. The central bank will continue to purchase unlimited amount of JGBs to keep 10-year yield at around 0%, with some fluctuations allowed. Goushi Kataoka dissented again in a 7-1 vote, pushing for further strengthening monetary easing.

          In the Outlook for Economic Activity and Prices, BoJ raised fiscal 2021 growth forecasts to 3.3-4.0% (median at 3.9%), up from October’s projection of 3.0-3.8% (median at 3.6%). Fiscal 2022 growth forecasts was also raised to 1.5-2.0% (median at 1.8%), from 1.5-1.8% (median at 1.6%).

          Core CPI forecasts for fiscal 2021 was revised to 0.3-0.5% (median at 0.5%), from 0.2-0.6% (median at 0.4%). Fiscal 2022 core CPI was projected at 0.7-0.8% (media 0.7%), from 0.4-0.7% (median at 0.7%).

          Full statement here.

          Outlook for Economic Activity and Prices,

          Japan posted first annual export growth since 2018

            By
            ActionForex
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            In non seasonally adjusted terms, Japan’s exports rose 2.0% yoy in December to JPY 6.71T, slightly below expectation of 2.4% yoy rise. But that’s still the first annual growth since November 2018. Imports dropped -11.6% yoy to JPY 5.96T, above expectation of -14.0% yoy. Trade came in at JPY 751B, small than expectation of JPY 943B.

            In seasonally adjusted terms, exports dropped -0.1% mom to JPY 5.98T. Imports rose 1.3% mom to 5.50T. Trade surplus narrowed to JPY 477B, below expectation off JPY 760B.

            Full release here.

            Australia employment grew 50k in Dec, unemployment rate dropped to 6.6%

              By
              ActionForex
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              Australia employment grew 50k in December, or 0.4% to 12.9m, matched expectations. Full time employment rose 35.6k to 8.76m. Part-time employment rose 14.3k to 4.15m. Over the year to December 2020, employment dropped by -0.5% or -63.9k. Unemployment rate dropped to 6.6%, down from 6.8%, better than expectation of 6.7%. Participation rate rose 0.1% to 66.2%.

              Bjorn Jarvis, head of labour statistics at the ABS, said, “Although employment has recovered 90 per cent of the fall from March to May, the recovery in part-time employment has outpaced full-time employment. While part-time employment was higher than March, full-time employment was 1.3 per cent below March.”

              Full release here.

              NASDAQ and S&P 500 hit new record high on strong stock rallies

                By
                ActionForex
                -

                US stocks open sharply higher today with S&P 500 and NASDAQ hitting new record highs. NASDAQ is clearly leading the way higher. It’s staying well inside near term rising channel, without clear upside acceleration so far. But as long as the channel holds, we’d expect further rise to 61.8% projection of 6631.42 to 12074.06 from 10822.57 at 14186.12 in the medium term.

                Similarly, S&P 500 is also staying well indicate near term rising channel, without clear upside acceleration. But as long as the channel holds, further rally would be seen to 61.8% projection of 2191.86 to 3588.11 from 3233.94 at 4096.82 next.

                EUR/CAD breaks 1.5313 key support after BoC, heading to 1.5118 projection level

                  By
                  ActionForex
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                  Canadian Dollar surges after BoC left interest rate unchanged at the “effective lower bound” of 0.25% and painted an upbeat picture. EUR/CAD’s strong break of 1.5313 support now confirms resumption of whole decline from 1.5978. Near term outlook will stay bearish as long as 1.5477 resistance holds. EUR/CAD should now target 100% projection of 1.5978 to 1.5313 from 1.5783 at 1.5118.

                  We’d tentatively look for bottoming signal between 1.5054 and 1.5118 to contain downside and bring rebound. But decisive break would open up deep medium term fall to 161.8% projection at 1.4704.

                  BoC kept rate at ELB of 0.25%, expects strong Q2 rebound

                    By
                    ActionForex
                    -

                    BoC left overnight rate at “effective lower bound” of 0.25% widely expected. Bank rate and deposit rate are held at 0.50% and 0.25% respectively. It will continue with the QE program with CAD 4B per week. BoC expects no rate hike until into 2023, while QE will continue until recovery is “well underway”.

                    Globally BoC said “the arrival of effective vaccines combined with further fiscal and monetary policy support have boosted the medium-term outlook for growth”. Global GDP growth is projected to average just over 5% in 2021 and 2022, then slow to 4% in 2023.

                    For Canadian, Growth in Q1 of 2021 is now “expected to be negative” due to resurgence of coronavirus infections and lockdowns. Though, BoC expects a “strong second-quarter rebound” assuming that restrictions are lifted later in Q1. It projects Canadian economy to growth 4% in 2021, almost 5% in 2022, and around 2.5% in 2023. Canada CPI is expected to rise temporarily to around 2% in H1 and return sustainably to 2% target in 2023.

                    Full statement here.

                    Canada CPI slowed to 0.7% yoy in Dec, below expectations

                      By
                      ActionForex
                      -

                      Canada CPI slowed to 0.7% yoy in December, down from 1.0% yoy, missed expectation of 1.0% yoy. CPI common dropped to 1.3% yoy, down from 1.5% yoy, missed expectation of 1.5% yoy. CPI median dropped to 1.8% yoy, down from 1.9% yoy, missed expectation of 1.9% yoy. CPI trimmed also dropped to 1.6% yoy, down from 1.7% yoy, missed expectation of 1.7% yoy.

                      Full release here.

                      EUR/GBP breaks 0.8861 key support, targets 0.8670 next

                        By
                        ActionForex
                        -

                        EUR/GBP breaks 0.8861 support in European, as recent decline resumes. The development now suggests that corrective recovery from 0.8670 has already completed. The pattern from 0.9499 has resumed with a third leg. We’ll see if EUR/GBP would sustain below 0.8861 to confirm. In that case, next near term target would be 0.8670 support. There is prospect of even deeper decline to 100% projection of 0.9499 to 0.8670 from 0.9229 at 0.8400.

                        Eurozone CPI finalized at -0.3% yoy in Dec, core CPI at 0.2% yoy

                          By
                          ActionForex
                          -

                          Eurozone CPI was finalized at -0.3% yoy in December, at that level for the fourth consecutive month. CPI core was finalized at 0.2% yoy. The highest contribution came from services (+0.30%), followed by food, alcohol & tobacco (+0.25%), non-energy industrial goods (-0.14%) and energy (-0.68%).

                          EU CPI was finalized at 0.3% yoy, up from prior month’s 0.2% yoy. The lowest annual rates were registered in Greece (-2.4%), Slovenia (-1.2%) and Ireland (-1.0%). The highest annual rates were recorded in Poland (3.4%), Hungary (2.8%) and Czechia (2.4%). Compared with November, annual inflation fell in nine Member States, remained stable in eight and rose in ten.

                          Full release here.

                           

                          Bitcoin eyes 34500 support as recovery faltered

                            By
                            ActionForex
                            -

                            We’re holding on to the view that bitcoin’s price actions from 40000 represents the third leg of the corrective pattern from 41964.0. This is affirmed by the fact that corrective recovery from 34500 to 37936 was limit by the channel support turned resistance. Focus is now back on 34500 support. Break there will further confirm our view and target 30635 support next. Still, even in this case, we’re not expecting and firm break of 30k handle. Meanwhile, break of 37936 resistance will dampen this view and bring strong rebound, probably through 40000 to retest 41964 high.

                            UK CPI rose to 0.60% yoy in Dec, core CPI rose to 1.4% yoy

                              By
                              ActionForex
                              -

                              UK CPI rose to 0.6% yoy in December, up from 0.3% yoy, above expectation of 0.5% yoy. CPI core rose to 1.4% yoy, up from 1.1% yoy, above expectation of 1.3% yoy. RPI also rose to 1.2% yoy, up from 0.9% yoy, above expectation of 1.1% yoy.

                              Full release here.

                              EUR/CAD in recovery ahead of BoC, downside breakout still expected

                                By
                                ActionForex
                                -

                                BoC rate decision is a major focus today. It’s widely expected to keep overnight rate unchanged at 0.25%. The size of the asset purchase program will also be held at CAD 4B per week. Focuses will be on Governor Tiff Macklem’s guidance on the chance of a “micro rate cut” ahead. That is, lowering interest rate to a new effective lower bound, while keeping it positive. Also, BoC will release new economic projections.

                                Here some some previews:

                                Canadian Dollar is outperformed by European majors this week so far. EUR/CAD’s decline halted ahead of 1.5313 support and recovered. Though, the structure suggests that it’s merely a corrective rise, which is in line with our bearish view. We’d expect the recovery to be limited by 1.5534 resistance to bring decline resumption sooner or later. Firm break of 1.5313 will resume whole fall from 1.5978 to 100% projection of 1.5978 to 1.5313 from 1.5783 at 1.5118.

                                Australia Westpac consumer sentiment dropped -4.5%, still healthy

                                  By
                                  ActionForex
                                  -

                                  Australia Westpac Consumer Sentiment dropped -4.5% to 107 in January, down from 112.0. The fall came in where there was domestic border closures, emergence of coronavirus clusters in some states and the sharp upswing in infections globally. Overall, “it still points to healthy consumer sentiment”.

                                  Regarding RBA’s next meeting on February 2, Westpac said the board “seems almost certain to maintain its current policy stance”. The central bank decided in November the intention to purchase AUD 100B in government and semi-government bonds. Markets would be interested in any guidance in respect to the program, which is set to end at the end of April. Westpac expects a second program of AUD 100B afterwards.

                                  Full release here.

                                  BoE Haldane: Recovery probably at rate of knots from Q2

                                    By
                                    ActionForex
                                    -

                                    BoE Chief Economist Andy Haldane said current tougher lockdown restrictions are threatening to bring the UK economy into a double-dip recession. That next slump could be “shorter, sharper shock” than the last one in 2007. Though, unemployment could be capped as long as Chancellor of the Exchequer Rishi Sunak maintains the furlough wage subsidies until the economy has recovered to with 5-10% of pre-pandemic level. Current tighter

                                    Also, “if we get that recovery that I expect to start coming on stream, probably at the rate of knots from the second quarter, that will hopefully then eat away and improve the prospects of reemploying those million people who have lost their jobs”, Haldane added. “Ultimately there’s a timing question — timing the end of the furlough scheme in such a way that the economy is recovered sufficiently to prevent any losses of jobs.”

                                    Yellen: The world has changed, defeating the pandemic is the most important thing

                                      By
                                      ActionForex
                                      -

                                      US stocks closed higher overnight after Treasury secretary nominee Janet Yellen’s Senate confirmation hearing. “The world has changed,” she said. “In a very low interest-rate environment like we’re in, what we’re seeing is that even though the amount of debt relative to the economy has gone up, the interest burden hasn’t.”

                                      She gave a strong node to President-elect Joe Biden’s fiscal package, to be unveiled next month. “The most important thing we can do is to defeat the pandemic, to provide relief to American people and to make long-term investments that make the economy grow and benefit future generations,” said Yellen.

                                      Yellen described China as the most important strategic competitor with its “abusive, unfair and illegal practices.” She also said China is “guilty of horrendous human rights abuses” in response to a question on whether China had committed “genocide” in treating of Uyghurs.

                                      In a last-minute proclamation, outgoing Secretary of State Mike Pompeo determined China “has committed genocide against the predominantly Muslim Uyghurs and other ethnic and religious minority groups in Xinjiang”, and “this genocide is ongoing”. Biden’s nominee for Secretary of State Antony Blinken also said in his confirmation hearing, “The forcing of men, women and children into concentration camps; trying to, in effect, re-educate them to be adherents to the ideology of the Chinese Communist Party, all of that speaks to an effort to commit genocide.”

                                      US Janet Yellen’s Senate confirmation hearing live stream

                                        By
                                        ActionForex
                                        -
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                                        AUD outperforming NZD and CAD as risk-on mode back

                                          By
                                          ActionForex
                                          -

                                          As markets are back in risk-on mode, Australian Dollar is outperforming other commodity currencies for now. In particular, AUD/NZD extends the rally from 1.0418 today and breaks 61.8% retracement of 1.1043 to 1.0418 at 1.0804. Near term outlook will now stay bullish as long as 1.0756 support holds. Current rise would target a test on 1.1043 high.

                                          AUD/CAD’s rally stalled after hitting 0.9898. Yet, subsequent consolidation is contained by 0.9772 support so far, keeping near term outlook bullish. Break of 0.9898 will resume the rise from 0.8066 to 61.8% projection of 0.8066 to 0.9696 from 0.9247 at 1.0254. Though, break of 0.9772 will indicate short term topping and bring deeper pull back. Canadian Dollar would outperform in this case.

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