Economic Data Puts the EUR and the Greenback in Focus

Earlier in the Day:

It’s was a busier start to the Day on the economic calendar this morning. The Aussie Dollar was in action, with economic data from the UK also in focus.

For the Aussie Dollar

In January, the NAB Business Confidence Index rose from an upwardly revised 5 to 10. Economists had forecast the index to come in at 5.

According to the January Survey,

  • While business confidence improved, business conditions fell back from 16 to 7. In December, the business conditions index had risen from 8 to 16.
  • Trading conditions weighed on the business conditions index, with profitability and employment also weaker.
  • The trading sub-index slid from 22 to 11 in January, with the employment sub-index falling from 10 to 3.
  • In January, the profitability sub-index saw a more modest decline from 13 to 9.

The Aussie Dollar moved from $0.77088 to $0.77122 upon release of the figures. At the time of writing, the Aussie Dollar was up by 0.21% to $0.7718.

Elsewhere

At the time of writing, the Japanese Yen was up by 0.10% to ¥105.12 against the U.S Dollar, with the Kiwi Dollar up by 0.14% to $0.7233.

The Day Ahead:

For the EUR

It’s another relatively quiet day ahead on the economic calendar.

German trade data for December is due out going into the European open.

With economic data on the lighter side, industrial production figures for Italy will also draw attention later in the day.

Away from the economic calendar, Draghi’s progress in forming government will also need tracking.

At the time of writing, the EUR was up by 0.09% to $1.12061.

For the Pound

It’s another quiet day ahead on the economic calendar, with no material stats due out of the UK.

The lack of stats will continue to leave the Pound in the hands of COVID-19 news updates and market risk sentiment.

Earlier in the day, retail sales figures were in focus.

According to the BRC Retail Sales Monitor, retail sales rose by 7.1%, year-on-year, picking up from a 4.8% rise in December.

At the time of writing, the Pound was up by 0.13% to $1.3759.

Across the Pond

It’s a relatively quiet day ahead on the economic calendar. JOLTs job openings for December are due out later today.

Following disappointing nonfarm payroll figures for January, we can expect increased market sensitivity to the figures.

Away from the economic calendar, chatter from Capitol Hill will continue to influence.

At the time of writing, the Dollar Spot Index was down by 0.04% to 90.900.

For the Loonie

It’s another quiet day on the economic data front, with no material stats to provide the Loonie with direction.

The lack of stats will leave the Loonie in the hands of market risk sentiment on the day.

At the time of writing, the Loonie was up by 0.08% to C$1.2729 against the U.S Dollar.

For a look at all of today’s economic events, check out our economic calendar.

AUD/USD and NZD/USD Fundamental Weekly Forecast – Investors Eyeing US Economy after Disappointing Jobs Report

The Australian and New Zealand Dollars finished higher last week with both currencies helped by a weaker-than-expected U.S. Non-Farm Payrolls report on Friday. Throughout much of the week, the Aussie was pressured by a somewhat dovish Reserve Bank of Australia (RBA) monetary policy statement, while the Kiwi was boosted by stronger-than-expected employment data.

There are no major economic releases from Australia or New Zealand, while in the United States investors will be eyeing a speech by Federal Reserve Chairman Jerome Powell.

Last week, the AUD/USD settled at .7678, up 0.0036 or +0.47% and the NZD/USD closed at .7202, up 0.0020 or +0.27%.

Australian Dollar

The Reserve Bank of Australia (RBA) held its cash rate at a record low 0.1% at its first policy meeting of the year last Tuesday and surprised the market by extending its bond buying program by another A$100 billion ($76 billion). The local dollar fell on the news.

Policymakers also said Australia will need to maintain “very significant monetary support” for several years, with the cash rate set to stay near zero for “as long as is necessary” in the wake of the COVID-19 pandemic.

In a speech in Canberra on Wednesday, RBA Governor Lowe reiterated interest rates will stay low for quite a while yet even though Australia’s A$2 trillion economy has performed far better than expected after largely controlling its coronavirus outbreak.

“Before increasing the cash rate, the Board wants to see inflation sustainably within the 2% to 3% target range,” said Lowe.

Meeting its goal would require a tighter labor market and stronger wages growth than the RBA has forecast, Lowe said.

“It is difficult to determine exactly when this condition might be met but…we do not expect it to be before 2024, and it is possible that it will be later than this,” Lowe added.

New Zealand Dollar

New Zealand’s unemployment rate unexpectedly dropped in the fourth quarter as the economy’s V-shaped rebound from recession encouraged hiring, Bloomberg reported.

The jobless rate fell to 4.9% from 5.3% in the third quarter, Statistics New Zealand said Wednesday in Wellington. Economists expected to increase to 5.6%. Employment rose 0.6% from the previous three months, much more than the 0.1% median forecast. The local currency rallied on the news.

Weekly Forecast

The tone in the AUD/USD and NZD/USD changed on Friday when the U.S. released disappointing jobs data that caused some investors to scale back bets on a rebound in the greenback.

The condition of the U.S. economy will be watched closely this week since speculators have been reducing short positions in the greenback, but better U.S. economic data and continued progress in fighting the COVID-19 pandemic will be needed for further U.S. Dollar gains.

With investors going home on Friday wondering whether the greenback can rise any further against the Aussie and Kiwi, the next move will depend on the coronavirus, but also whether Congress passes President Joe Biden’s fiscal stimulus package.

This week, investors will be looking for clues in the U.S. consumer inflation and consumer sentiment report as to whether a recent rise in inflation expectations and Treasury yields was justified.

For a look at all of today’s economic events, check out our economic calendar.

Economic Data Puts the EUR in the Spotlight, with U.S Stimulus News also in Focus

Earlier in the Day

It’s was a quiet start to the week on the economic calendar this morning. There were no material stats for the markets to consider in the early part of the Asian session.

For the Majors

At the time of writing, the Japanese Yen was down by 0.08% to ¥105.47 against the U.S Dollar, with the Aussie Dollar down by 0.07% to $0.7673. The Kiwi Dollar was up by 0.01% to $0.7199.

The Day Ahead:

For the EUR

It’s a relatively quiet day ahead on the economic calendar.

German industrial production figures for December are due out ahead of the European open.

Following some dismal factory order figures, disappointing industrial production figures will weigh on the EUR.

Later tonight ECB President Lagarde is scheduled to speak. Expect any chatter on the economic outlook and monetary policy to also influence.

During the ECB Press Conference, Lagarde had taken a more cautious stance as a result of extend lockdown measures.

At the time of writing, the EUR was down by 0.08% to $1.2036.

For the Pound

It’s a quiet day ahead on the economic calendar. There are no material stats due out of the UK to provide the Pound with direction.

The lack of stats will leave the Pound in the hands of COVID-19 news updates and market risk sentiment on the day.

At the time of writing, the Pound was down by 0.04% to $1.3730.

Across the Pond

It’s a quiet day ahead on the economic calendar.

There are no material stats to provide the U.S Dollar with direction. The lack of stats leaves the market focus on Capitol Hill.

At the time of writing, the Dollar Spot Index was up by 0.05% to 91.089.

For the Loonie

It’s also a quiet day on the economic data front, with no material stats to provide the Loonie with direction.

The lack of stats will leave the Loonie in the hands of market risk sentiment on the day.

At the time of writing, the Loonie was down by 0.07% to C$1.2765 against the U.S Dollar.

For a look at all of today’s economic events, check out our economic calendar.

The Week Ahead – The UK Economy, Central Bank Chatter, and U.S Stimulus in Focus

On the Macro

It’s a quieter week ahead on the economic calendar, with 35 stats in focus in the week ending 12th February. In the week prior, 70 stats had been in focus.

For the Dollar:

It’s a quiet week ahead.

Key stats include December’s JOLT’s job openings and January inflation figures on Tuesday and Wednesday.

Expect any pickup in inflationary pressures to support the Greenback and weigh on riskier assets.

The focus will shift to the weekly jobless claims on Thursday, ahead of consumer sentiment figures on Friday.

On the monetary policy front, FED Chair Powell is scheduled to speak late on Wednesday. Expect any chatter on the economic outlook and monetary policy to influence. At the last FOMC press conference, the FED Chair had failed to assure the markets on bond purchases.

The Dollar Spot Index ended the week up by 0.51% to 91.042.

For the EUR:

It’s also a quieter week ahead on the economic data front, with the German economy in the spotlight.

German industrial production and trade figures for December are due out on Monday and Tuesday.

Expect both data sets to influence both the EUR and the European majors.

On Friday, industrial production figures for the Eurozone will also provide direction.

Ahead of the Eurozone figures, Italian and French industrial production figures will also draw interest on Tuesday and Wednesday.

Finalized January inflation figures for Germany and Spain should have a muted impact on the markets, however.

On the monetary policy front, ECB President Lagarde is scheduled to speak late on Monday and again on Wednesday.

The EUR ended the week down by 0.74% to $1.2046.

For the Pound:

It’s a busy week ahead on the economic calendar.

In the 1st half of the week, January retail sales figures will draw attention in the early hours of Tuesday. The BRC Retail Sales Monitor will likely reflect the effects of lockdown measures introduced in late December.

The focus will then shift to 4th quarter GDP figures and December industrial and manufacturing production figures due out on Friday.

On the monetary policy front, BoE Gov. Bailey is scheduled to speak late on Wednesday. Any further talk of negative rates could peg back the Pound.

The Pound ended the week up by 0.20% to $1.3735.

For the Loonie:

It’s a particularly quiet week ahead on the economic calendar.

There are no material stats due out of Canada to provide the Loonie with direction.

A lack of stats will leave the Loonie in the hands of COVID-19 news and crude oil prices.

The IEA’s monthly report is due out in the week ahead. Expect the EIA and API inventory numbers to also influence.

The Loonie ended the week up by 0.16% to C$1.2756 against the U.S Dollar.

Out of Asia

For the Aussie Dollar:

It’s a relatively quiet week.

January business confidence and February consumer sentiment figures are due out on Tuesday and Wednesday.

Business investment and consumer spending remain key to a sustainable economic recovery.

With little else for the markets to consider, expect plenty of influence from the numbers.

The Aussie Dollar ended the week up by 0.44% to $0.7678.

For the Kiwi Dollar:

It’s a busy week ahead on the economic calendar.

In the 1st half of the week, inflation expectation figures will draw interest.

Through the 2nd half of the week, the focus will then shift to electronic card retail sales and Business PMI figures for January.

Retail sales figures are due out on Thursday, with PMI numbers due out on Friday. We would expect greater Kiwi Dollar sensitivity to any disappointing sales figures.

The Kiwi Dollar ended the week up by 0.07% to $0.7198.

For the Japanese Yen:

It is a particularly quiet week ahead.

There are no material stats due out of Japan, leaving the Yen in the hands of market risk sentiment.

COVID-19 and U.S politics remain key drivers near-term.

The Japanese Yen ended the week down by 0.68% to ¥105.39 against the U.S Dollar.

Out of China

It’s a quieter week ahead, with stats limited to January inflation figures due out on Wednesday.

With little else to consider in a shortened week, any rise in U.S – China tensions would also need monitoring.

The Chinese Yuan ended the week down by 0.58% to CNY6.4658 against the U.S Dollar.

Geo-Politics

U.S Politics

Stimulus talk and foreign policy moves by U.S President Joe Biden remain key in the week.

The markets will need delivery of the $1.9tn relief package to support riskier assets after some gloomy labor market numbers.

COVID-19

Vaccination rates and availability of vaccines will continue to be key areas of interest.

An upward trend in vaccination rates and a downward trend on infection rates would support riskier assets in the week.

Corporate Earnings

A number of big names deliver results in the week ahead.

From the U.S, key names include but are not limited to:

Coca-Cola (Wed), General Motors Co. (Wed), and Walt Disney Co. (Thurs).

The Weekly Wrap – Fiscal Stimulus News and a Busy Economic Calendar Drive the Markets

The Stats

It was a relatively busy week on the economic calendar, in the week ending 5th February.

A total of 70 stats were monitored, following 57 stats from the week prior.

Of the 70 stats, 44 came in ahead forecasts, with 25 economic indicators coming up short of forecasts. There was just 1 stat that was in line with forecasts in the week.

Looking at the numbers, 40 of the stats reflected an upward trend from previous figures. Of the remaining 30 stats, 27 reflected a deterioration from previous.

For the Greenback, it was a 2nd consecutive week in the green to mark a 4th weekly gain in 5-weeks. The Dollar Spot Index rose by 0.51% to $91.042. A 0.53% slide on Friday saw the Dollar give some of the gains from earlier in the week, however. In the previous week, the Dollar had fallen 0.38% to 90.584.

Out of the U.S

It was a busy week on the economic data front.

In the 1st half of the week, January private sector PMIs and ADP employment figures were in focus.

The stats were skewed to the positive, with the market’s preferred ISM Non-Manufacturing PMI rising from 57.7 to 58.7.

In January, the ISM Manufacturing PMI slipped from 60.7 to 58.7, the only blemish in the 1st half of the week.

Nonfarm payroll figures were also positive mid-week, with the ADP reporting a 174k increase in nonfarm payrolls. Nonfarm employment had fallen by 78k in December.

In the 2nd half of the week, the focus was on the U.S labor market.

In the week ending 29th January, initial jobless claims came in at 779k, down from a previous week 812k.

At the end of the week, the numbers disappointed, however.

In January, nonfarm payrolls increased by just 49k. Nonfarm payrolls had fallen by 227k in December.

Despite the low rise, the U.S unemployment rate fell from 6.7% to 6.3%. A fall in the participation rate from 61.5% to 61.4% contributed to the fall in the unemployment rate.

Economists had forecast nonfarm payrolls to rise by 50k and for the unemployment rate to hold steady at 6.7%.

Other stats in the week included 4th quarter unit labor costs and productivity figures along with trade data and factory orders. These stats had a relatively muted impact on the Dollar, however.

In the equity markets, the NASDAQ rallied by 6.01%, with the Dow and the S&P500 seeing gains of 3.89% and 4.65% respectively.

Out of the UK

It was another relatively quiet week on the economic data front.

Key stats included finalized January PMI figures and construction PMI numbers.

The stats were skewed to the positive, with finalized PMIs for both manufacturing and services seeing upward revisions.

Ultimately, a services PMI of 39.5 remained a concern, however, as lockdown measures hit.

The construction PMI also reflected the impact of the COVID-19 pandemic, with the PMI falling from 54.6 to 49.2.

While the stats drew interest, the main event was the BoE monetary policy decision.

As expected, however, the BoE left policy unchanged. The hold came amidst BoE expectations that the UK vaccination programme would fuel a rapid recovery in GDP towards pre-pandemic levels in 2021.

The topic of negative rates remained on the table, however, The BoE stated that it would take 6-months to introduce negative rates should the need for further easing arise.

In the week, the Pound gained 0.20% to end the week at $1.3735. In the week prior, the Pound had risen by 0.16% to $1.3708.

The FTSE100 ended the week up by 1.28%, partially reversing a 4.30% slide from the previous week.

Out of the Eurozone

It was a busy week on the economic data front.

In the 1st half of the week, private sector PMIs, GDP, and inflation figures were in focus.

The stats were also skewed to the positive, though private sector activity contracted at a quicker pace in January.

The Eurozone’s Composite PMI came in at 47.8, which was revised up from a prelim 47.5, while down from a December 49.1. In December, the Composite had risen from 45.3 to 49.1.

4th quarter GDP numbers fell by less than expected but were also disappointing, however.

In the 4th quarter, the Eurozone economy contracted by 0.7%, following the 3rd quarter’s 12.4% rebound. Economists had forecast a contraction of 1.0%.

Year-on-year, the economy contracted by 5.1%, which was better than a forecasted 5.4% contraction. In the 3rd quarter, the economy had contracted by 4.3%.

In the 2nd half of the week, Eurozone retail sales and German factory orders were mixed.

Retail sales rose by 2.0% in December, partially reversing a 5.7% slide from November.

German factory orders slid by 1.9%, partially reversing a 2.7% jump in November.

The German governments agreement to deliver more COVID-19 relief aid provided some support.

The ECB’s Economic Bulletin tested support, however, with the Bulletin highlighting downside risks.

For the week, the EUR fell by 0.74% to $1.2046, a 0.69% gain on Friday limiting the damage. In the week prior, the EUR had fallen by 0.29% to $1.2136.

For the European major indexes, it was a bullish week, bouncing back from the previous week’s sell-off. The CAC40 and the DAX30 rallied by 4.82% and by 4.64% respectively, with the contracted EuroStoxx600 gaining 3.46%.

For the Loonie

It was a relatively busy week, though the markets had to wait until Friday for any stats.

Key stats included trade and employment figures and the Ivey PMI for January.

In December, Canada’s trade deficit narrowed from C$3.56bn to C$1.67bn. That was of little comfort, however, with employment figures disappointing.

On the employment front, employment tumbled by 212.8k in January, following a 68.2k slide from December. As a result, the unemployment rate jumped from 8.6% to 9.4%.

The Ivey PMI rose from 46.7 to 48.4, in January, providing Loonie support on the day alongside rising crude oil prices.

In the week ending 5th February, the Loonie rose by 0.16% to C$1.2756. In the week prior, the Loonie had declined by 0.35% to C$1.2777.

Elsewhere

A bullish end to the week delivered gains for the Aussie Dollar and the Kiwi Dollar.

In the week ending 5th February, the Aussie Dollar rose by 0.44% to $0.7678, with the Kiwi Dollar ended the week up by 0.07% to $0.7198.

A 1.03% jump in the Aussie Dollar and a 0.59% gain in the Kiwi Dollar on Friday delivered the upside.

For the Aussie Dollar

It was a busy week.

Key stats included manufacturing, trade, business confidence, and retail sales figures.

In January, manufacturing sector activity picked up, with the AIG Manufacturing Index rising from 52.1 to 55.3.

Trade data was also skewed to the positive along with business confidence figures.

In December, the trade surplus widened from A$5.022bn to A$6.785bn.

For the 4th quarter, the NAB Business Confidence Index rose from -8 to +14.

On the negative was a 4.1% fall in retail sales in December. The decline had come off the back of a 7.1 rebound in November, however.

On the monetary policy front, the RBA was also in action in the week.

While holding the cash rate unchanged at 0.1%, the RBA caught the markets by surprise, increasing its bond purchases by A$100bn.

At the end of the week, the RBA’s statement on monetary policy weighed on the Aussie Dollar early in the session. This was in spite of upward revisions to growth and employment forecasts.

Talk of extended policy support and uncertainty over what lies ahead had tested Aussie Dollar support before the Friday rally.

For the Kiwi Dollar

It was a relatively quiet week.

4th quarter employment and December building consents were in focus in the week.

The stats were skewed to the positive, with employment rising by 0.6% in the 4th quarter. Economists had forecast a 0.8% decline following a 0.8% decline in the 3rd quarter.

As a result, the unemployment rate fell from 5.3% to 4.9% versus a forecasted rise to 5.6%.

Building consents were on the rise at the end of the year, jumping by 4.9%. In November, consents had risen by 1.2%.

For the Japanese Yen

It was a relatively quiet week.

Finalized private sector PMI figures for January were in focus in the 1st half of the week.

Both the manufacturing and services sectors continued to contract at the start of the year.

The Services PMI came in at 46.1, with the Manufacturing PMI coming in at 49.8. In December, the PMIs had stood at 47.7 and 50.0 respectively.

At the end of the week, household spending figures were skewed to the positive, however.

Month-on-month, household spending rose by 0.9%, partially reversing a 1.8% fall from November. Economists had forecast a 1.9% slide.

Year-on-year, however, spending was down by 0.6%. Economists had forecast a 2.4% fall.

The Japanese Yen fell by 0.68% to ¥105.39 against the U.S Dollar. In the week prior, the Yen had declined by 0.87% to ¥104.68.

Out of China

It was a relatively quiet week on the data front.

The market’s preferred Caixin private sector PMIs for January were in focus early in the week.

In January, the manufacturing PMI fell from 53.0 to 51.5, with the services PMI sliding from 56.3 to 52.0.

The PMIs had followed the NBS numbers from the weekend that had also been skewed to the negative.

In the week ending 5th February, the Chinese Yuan fell by 0.58% to CNY6.4658. In the week prior, the Yuan had risen by 0.83% to CNY6.4283.

The CSI300 rose by 2.46%, with the Hang Seng ended the week up by 3.55%.

NZD/USD Forex Technical Analysis – Strengthens Over .7160, Weakens Under .7122

The New Zealand Dollar is under pressure for a second session on Friday, weighed down by a strengthening U.S. Dollar. The greenback is being lifted by growing confidence that the U.S. economic recovery will outpace global peers. The catalyst behind the move is signs of resilience in the labor market, with closely watched Non-Farm Payroll figures due Friday.

At 03:54 GMT, the NZD/USD is at .7145, down 0.0011 or -0.16%.

The greenback is also getting support from a rise in longer-term U.S. Treasury yields, which came as traders positioned for a massive fiscal stimulus package.

Yields on New Zealand 10-year bonds have also shot to their highest since the market mayhem of last March at 1.41%, having climbed almost 25 basis points in just a week.

Yields have been on the rise since the Reserve Bank of New Zealand (RBNZ) trimmed the amount of bonds it would buy this week, and took off on Wednesday when local jobs data proved far stronger than forecast.

On Friday, New Zealand government bonds were little changed with yields up half a basis point across the curve.

Daily NZD/USD

Daily Swing Chart Technical Analysis

The main trend is up according to the daily swing chart, but momentum is trending lower. A trade through .7248 will signal a resumption of the uptrend. The main trend will change to down on a move through .7106. Taking out .7096 will reaffirm the downtrend.

The short-term range is .7316 to .7096. Its retracement zone at .7206 to .7232 is resistance.

The main range is .7003 to .7316. Its retracement zone at .7159 to .7123 is support, and a potential trigger point for an acceleration to the downside.

Daily Swing Chart Technical Forecast

The early price action suggests the direction of the NZD/USD on Friday is likely to be determined by trader reaction to the short-term 50% level .71595.

Bearish Scenario

A sustained move under .7159 will indicate the presence of sellers. If this move creates enough downside momentum then look for a break into .7122, followed by .7106 and .7096.

Taking out .7096 with heavy volume could trigger an acceleration to the downside with .7003 the next major target.

Bullish Scenario

A sustained move over .7160 will signal the presence of sellers. If this move creates enough upside momentum then look for a surge into .7206 to .7232 over the short-term.

For a look at all of today’s economic events, check out our economic calendar.

Nonfarm Payrolls Put the U.S Dollar and the U.S Economy in the Spotlight

Earlier in the Day:

It’s was a relatively busy start to the day on the economic calendar this morning. The Japanese Yen and Aussie Dollar were in action.

For the Japanese Yen

Household spending figures were in focus early in the day.

In December, household spending rose by 0.9%, month-on-month, partially reversing a 1.8% decline in November. Economists had forecast a 1.9% fall.

Year-on-year, household spending fell by 0.60%, partially reversing a 1.1% increase from November. Economists had forecast a 2.4% slide.

According to the Statistic Bureau,

  • Spending surged on education (+16.4%), housing (+15.4%), and furniture & household utensils (+13.6%).
  • There was also a 2.9% increase in spending on fuel, light, & water charges.
  • Spending on clothing & footwear (-11.8%) and culture & recreation (-11.4%) saw heavy falls, however.
  • There were also declines in spending on transportation & communication (-9.0%) and medical care (-2.6%).

The Japanese Yen moved from ¥105.551 to ¥105.553 upon release of the figures. At the time of writing, the Japanese Yen was up by 0.03% to ¥105.51 against the U.S Dollar.

For the Aussie Dollar

Retail sales and the RBA’s monetary policy statement were in focus this morning.

In December, retail sales slid by 4.1% month-on-month, upwardly from a prelim 4.2% fall. In November, retail sales had jumped by 7.1%.

According to the ABS,

  • Following November’s rebound, 5 of the 6 industries saw sales decline in December.
  • Household goods retailing (-8.3%), clothing, footwear & personal accessory retailing (-9.4%), and department stores (-12.5%) saw heavy declines.
  • Food retailing (-1.7%) and other retailing (-4.4%) saw relatively modest declines in percentage terms.
  • Cafes, restaurants, and takeaway food services saw sales rise by 3.2% to buck the trend.
  • Despite the decline, retail turnover was up by 9.6% compared with December 2019.
  • In the December quarter, retail sales volumes rose 2.5%, following a 6.5% increase in the 3rd quarter.

Salient points from the RBA’s statement on monetary policy included:

  • Growth in Australia’s major trading partners is expected to be a little stronger than at the time of the November statement.
  • China and a few advanced east Asian economies stronger outlook than the rest of the world, as a result of more successful suppression of the COVID-19 pandemic.
  • The Australian economy is forecasted to contract by 2% in 2020 and expand by 3.5% in 2021.
  • Unemployment is expected to fall gradually to end 2021 at 6%.
  • Both forecasts were revised upwards, with both expected to reach pre-pandemic levels 6-12 months earlier than previously forecast.
  • The economy is now transitioning beyond the initial ‘snapback’ phase supported by the faster easing of restrictions and policy support.
  • Uncertainty remains, however, over the nature and the speed of the next phase of the domestic recovery.

The Aussie Dollar moved from $0.76018 to $0.76028 upon release of the data. At the time of writing, the Aussie Dollar was down by 0.04% to $0.7597.

Elsewhere

At the time of writing, the Kiwi Dollar was down by 0.04% to $0.7153.

The Day Ahead:

For the EUR

It’s a relatively quiet day ahead on the economic calendar.

German factory orders for December and French nonfarm payrolls for the 4th quarter will be in focus.

With lockdown measures in France expected to weigh on labor market conditions, German factory orders will likely have the greatest impact.

At the end of the year, Germany’s Manufacturing PMI survey for December had reported a continued rise in new orders.

New order growth, reportedly unchanged from November, was among the quickest seen since data collection began in 1996.

This should therefore translate into a further rise in factory orders from November’s 2.3% increase. Economists have forecasted a 1.2% decline, however.

At the time of writing, the EUR was up by 0.01% to $1.1965.

For the Pound

It’s a quiet day ahead on the economic calendar. There are no material stats due out of the UK to provide the Pound with direction.

The lack of stats will leave the Pound in the hands of COVID-19 news on the day. Expect vaccination rates and infection rates to be the main areas of focus. A fall in infection rates amidst the ongoing vaccination drive would raise hope of an easing of containment measures.

At the time of writing, the Pound was up by 0.08% to $1.3683.

Across the Pond

It’s a busy day ahead on the economic calendar.

January’s nonfarm payroll figures and unemployment rate are due out later today.

With plenty of market sensitivity to U.S labor market numbers, expect today’s figures to garner plenty of interest.

Other stats on the day include average earnings and trade data. We would expect these numbers to have a muted impact on the markets, however.

At the time of writing, the Dollar Spot Index was down by 0.03% to 91.503.

For the Loonie

It’s a busy day on the economic data front.

Key stats include trade data for December and employment figures for January. Expect January’s employment numbers to have the greatest impact on the Loonie.

Ivey PMI numbers for January are also due out late in the day and will likely garner some interest.

With no stats for the markets to have considered from earlier in the week, we can expect Loonie sensitivity to the numbers.

At the time of writing, the Loonie was up by 0.11% to C$1.2813 against the U.S Dollar.

For a look at all of today’s economic events, check out our economic calendar.

NZD/USD Forex Technical Analysis – Weakens Under .7206, Strengthens Over .7232

The New Zealand Dollar is edging lower on Thursday after posting a second straight higher close the previous session. Yesterday’s rally was fueled by a report that showed New Zealand’s jobless rate surprisingly dropped in the fourth quarter.

The seasonally adjusted unemployment rate dropped to 4.9% in the December 2020 quarter from 5.3% in the September 2020 quarter, Statistics New Zealand said in its statement. That beat forecasts by economists polled by Reuters who had expected an unemployment rate of 5.6%.

At 08:21 GMT, the NZD/USD is trading .7201, down 0.0009 or -0.12%.

Also helping to underpin the Kiwi is increasing global risk sentiment and higher domestic bond yields. New Zealand yields have been on the rise since the Reserve Bank (RBNZ) trimmed the amount of bonds it would buy this week, and took off on Wednesday when local jobs data proved far stronger than forecast.

Daily NZD/USD

Daily Swing Chart Technical Analysis

The main trend is up according to the daily swing chart, but the NZD/USD has struggled to sustain this upside bias since forming a main top at .7248. Nonetheless, buyers still came in at .7106 on January 28 to defend the uptrend.

A trade through .7248 will reaffirm the uptrend with .7316 the next potential upside target. A trade through .7106 will change the main trend to down, while a move through .7096 could trigger an acceleration to the downside.

The short-term range is .7316 to .7096. The NZD/USD is currently testing its retracement zone at .7206 to .7232.

The main range is .7003 to .7316. Its retracement zone at .7159 to .7123 is support.

Daily Swing Chart Technical Forecast

The early price action suggests the direction of the NZD/USD will be determined by trader reaction to .7206.

Bullish Scenario

A sustained move over .7206 will indicate the presence of buyers. This could trigger a surge into the Fibonacci level at .7232. Taking out .7232 could extend the rally into the main top at .7248.

A breakout over .7248 will reaffirm the uptrend. This is a potential trigger point for an acceleration to the upside with .7316 a potential upside target.

Bearish Scenario

A sustained move under .7206 will signal the presence of sellers. If this move generates enough downside momentum then look for the selling to possibly extend into .7159 to .7123. Since the main trend is up, buyers could come in to defend the trend.

The trigger point for an acceleration to the downside is .7096.

For a look at all of today’s economic events, check out our economic calendar.

The BoE Puts the Pound in the Spotlight

Earlier in the Day:

It’s was a quieter start to the day on the economic calendar this morning. The Kiwi Dollar and Aussie Dollar were in action.

For the Kiwi Dollar

Building consents were in focus ahead of the Asian open.

In December, building consents increased by 4.9%, following a 1.2% rise in November.

According to NZ Stats,

  • A record 11,291 new homes were consented in the 4th quarter of 2020.
  • Consents for townhouses, flats, and units rose from 8,208 (Dec-19) to 11,603 (Dec-20), accounting for almost a 3rd of all consents.

The Kiwi Dollar moved from $0.72084 to $0.76330 upon release of the figures. At the time of writing, the Kiwi Dollar was up by 0.03% to $0.7211.

For the Aussie Dollar

Trade data and business confidence figures were in focus this morning.

In December, Australia’s trade surplus widened from A$5.022bn to A$6.785bn.

According to the ABS,

  • Goods and services exports increased A$1,010m (3%) to A$37,268m.
    • The export of general merchandise rose by 4%, supported by a jump in rural goods exports (18%).
  • Goods and services imports fell A$761m (2%) to A$30,483m.
    • The import of capital goods slid by 16%, while the imports of consumption goods rose by 2%.
    • Intermediate and other merchandise goods also rose by 2%, with non-monetary gold imports up 10%.

In the 4th quarter, business confidence was on the rise. The NAB Business Confidence Index increased from -8 to +14.

According to the NAB Survey,

  • The 22-point jump was driven by a strong increase in rec & personal services. Business services, retail, and manufacturing also saw large increased.
  • Confidence turned positive across all industries and strongest in retail.

Looking at the indicators:

  • The Employment Index jumped from -14 to -1, with capacity utilization rising from 77.2% to 80.2% in the quarter.
  • Profitability rose from -1 to +13, with trading up from +1 to +16.
  • Forward orders were also on the rise, with the indicator up from -9 to +6.
  • Exports saw a modest increase from -5 to -4.
  • Inflationary pressured remained soft, however. Final product prices were flat in the 4th quarter, up marginally from -0.1% in the 3rd

The Aussie Dollar moved from $0.76330 to $0.76315 upon release of the data. At the time of writing, the Aussie Dollar was up by 0.31% to $0.7636.

Elsewhere

At the time of writing, the Japanese Yen was down by 0.01% to ¥105.04 against the U.S Dollar.

The Day Ahead:

For the EUR

It’s a quieter day ahead on the economic calendar.

German construction PMI figures for January and Eurozone retail sales figures for December will be in focus.

Following some quite dire retail sales figures from Germany, expect the Eurozone’s retail sales figures to draw the greatest interests.

Lockdown measures have extended into February raising the prospects of a continued decline in spending through the quarter.

From the ECB, therefore, expect the ECB Economic Bulletin to have the greatest influence on the day. How the ECB sees lockdown measures effecting growth for 2021 will be key.

At the time of writing, the EUR was down by 0.01% to $1.2035.

For the Pound

It’s a busier day ahead on the economic calendar. January construction PMI figures are due out ahead of the main event of the week.

Later today, the BoE will deliver its monetary policy decision.

While the markets are expecting the BoE to stand pat, any dissent or talk of the need for more support would weigh on the Pound.

January’s PMI numbers and service sector PMI figures in particularly were woeful. Hopes of a rebound supported by high vaccination rates across the UK may allow the BoE to sit back for now, however.

At the time of writing, the Pound was down by 0.05% to $1.3640.

Across the Pond

It’s a quieter day ahead on the economic calendar.

The all-important weekly jobless claims figures will be in focus later today.

Factory orders for December and 4th quarter unit labor costs and productivity numbers are also due out. These should have a relatively muted impact on the Greenback, however.

Away from the economic calendar, chatter from Capitol Hill will need continued monitoring.

At the time of writing, the Dollar Spot Index was down by 0.05% to 91.124.

For the Loonie

It’s yet another particularly quiet day on the economic data front, with no material stats to provide the Loonie with direction.

The lack of stats will leave the Loonie in the hands market risk sentiment and crude oil prices on the day.

At the time of writing, the Loonie was down by 0.01% to C$1.2787 against the U.S Dollar.

For a look at all of today’s economic events, check out our economic calendar.

NZD/USD Forex Technical Analysis – Strengthens Over .7232, Weakens Under .7206

The New Zealand Dollar is trading sharply higher on Wednesday after data released by Statistics New Zealand showed the country’s jobless rate dropped in the fourth quarter, beating analyst forecasts, as the economy recovers from the COVID-19 pandemic.

The seasonally adjusted unemployment rate dropped to 4.9% in the December 2020 quarter from 5.3% in the September 2020 quarter, Statistics New Zealand said in the statement. That beat forecasts by economists polled by Reuters who had expected an unemployment rate of 5.6%.

At 06:43 GMT, the NZD/USD is trading .7216, up 0.0021 or +0.28%.

Daily NZD/USD

Daily Swing Chart Technical Analysis

The main trend is up according to the daily swing chart, however, momentum has been trending lower the past six sessions. A trade through .7248 will signal a resumption of the uptrend. The main trend will change to down on a move through .7106.

The minor trend is down. This is controlling the momentum. A trade through .7226 will change the minor trend to up. This will shift momentum to the upside. A new minor bottom has formed at .7135.

The main range is .7003 to .7316. Its retracement zone at .7159 to .7123 is support.

The short-term range is .7316 to .7096. The NZD/USD is currently testing its retracement zone at .7206 to .7232. Trader reaction to this zone will determine the near-term direction of the Forex pair.

Daily Swing Chart Technical Forecast

Based on the early price action, the direction of the NZD/USD will be determined by trader reaction to the short-term 50% level at .7206.

Bullish Scenario

A sustained move over .7206 will indicate the presence of buyers. This could trigger a rally into the short-term Fibonacci level at .7232, followed closely by the main top at .7248.

Taking out .7248 will change the main trend to up. We could see an acceleration to the upside on the move with .7316 the next major target.

Bearish Scenario

A sustained move under .7206 will signal the presence of sellers. If this move generates enough downside momentum then look for a possible break into the main retracement zone at .7159 to .7123.

For a look at all of today’s economic events, check out our economic calendar.

Private Sector PMIs and US ADP Nonfarm Figures Put the EUR and the Dollar in the Spotlight

Earlier in the Day:

It’s was a busy start to the day on the economic calendar this morning. The Kiwi Dollar, Aussie Dollar, and Japanese Yen were all in action, with economic data from China also in focus.

For the Kiwi Dollar

Employment figures for the 4th quarter supported the Kiwi Dollar.

Employment rose by 0.60% in the quarter, partially reversing a 0.8% decline in the 3rd quarter. As a result, the unemployment rate fell from 5.3% to 4.9%. Economists had forecast a fall in employment of 0.8% and an unemployment rate of 5.6%.

According to NZ Stats,

  • Despite the 4th quarter rise in employment, the unemployment rate remained higher than it has been in a few years.
  • This time last year, the unemployment rate had stood at 4.1%.
  • The total number of unemployed remained 25,000 higher than the 4th quarter of last year.

The Kiwi Dollar moved from $0.71645 to $0.71912 upon release of the figures. At the time of writing, the Kiwi Dollar was up by 0.29% to $0.7213.

For the Aussie Dollar

Building approvals jumped by 10.9% in December, following a 2.6% increase in November.

According to the ABS,

  • A 6th consecutive monthly increase in approvals took private sector house approvals to a record high in December.
  • Private sector house approvals surged by 15.8%, while dwellings excluding houses increased by 2.3%.

The Aussie Dollar moved from $0.76079 to $0.76113 upon release of the data that preceded service PMI numbers from China. At the time of writing, the Au1ssie Dollar was up by 0.12% to $0.7616.

For the Japanese Yen

Japan’s Services PMI fell from 47.7 to 46.1 in January, which was a upward revision from a prelim 45.7.

According to the finalized Survey,

  • Rising COVID-19 cases continued to weigh on service sector activity at the start of the year.
  • Both output and new business inflows saw sharper declines in January.
  • New business inflows fell at the fastest pace in 8-months.
  • Employment levels remained stable for a fourth consecutive month, however.
  • Firms also remained optimistic towards growth prospects.

The Japanese Yen moved from ¥105.021 to ¥105.032 upon release of the finalized PMI. At the time of writing, the Japanese Yen was up by 0.04% to ¥104.94 against the U.S Dollar.

Out of China

China’s Caixin Services PMI fell from 56.3 to 52.0 in January.

According to the January Caixin survey,

  • Business activity saw its weakest increase in 9-months in January.
  • New business increased at the slowest pace since last August, with new export sales weighing.
  • Weak demand, attributed to the COVID-19 pandemic, weighed on export sales at the start of the year.
  • In spite of weaker conditions, staffing levels increased marginally.
  • Input cost inflation increased to the second-sharpest pace since early 2012.
  • Optimism towards the next 12-months remained strong, while weakening from December to the lowest level since last September.

The Aussie Dollar moved from $0.76100 to $0.76160 upon release of the figures.

The Day Ahead:

For the EUR

It’s a busy day ahead on the economic calendar.

Italian and Spanish service sector PMI figures for January are due out.

Finalized numbers are also due out, along with composite PMIs, for France, Germany, and the Eurozone.

Barring any marked revisions from prelims, expect Italy and the Eurozone’s PMIs to be the key drivers.

Later in the day, prelim January inflation figures for Italy and the Eurozone will also draw attention.

Expect the Eurozone’s annual rate of inflation to have the greatest impact on the EUR.

Away from the economic calendar, expect COVID-19 news updates to also continue to influence.

At the time of writing, the EUR was up by 0.03% to $1.2048.

For the Pound

It’s a relatively quiet day ahead on the economic calendar. January’s finalized services and composite PMIs are due out later this morning.

Expect any marked downward revisions to prelim figures to pin back the Pound.

At the time of writing, the Pound was up by 0.08% to $1.3679.

Across the Pond

It’s a busy day ahead on the economic calendar.

ADP nonfarm employment change figures are due out along with the market’s preferred ISM Non-Manufacturing PMI for January.

Expect both sets of numbers to provide the Dollar with direction.

Finalized Markit survey PMI numbers are also due out but should have a muted impact on the markets.

Away from the economic calendar, chatter from Capitol Hill will remain a key area of interest.

At the time of writing, the Dollar Spot Index was down by 0.19% to 91.028.

For the Loonie

It’s another particularly quiet day on the economic data front, with no material stats to provide the Loonie with direction.

The lack of stats will leave the Loonie in the hands of the weekly EIA and API crude oil inventory numbers.

At the time of writing, the Loonie was up by 0.11% to C$1.2767 against the U.S Dollar.

For a look at all of today’s economic events, check out our economic calendar.

AUD/USD and NZD/USD Fundamental Daily Forecast – Aussie Firms Ahead of RBA Policy, Rate Decisions

The Australian and New Zealand Dollars are trading slightly better early Tuesday ahead of the release of the Reserve Bank of Australia’s (RBA) rate statement and interest rate decision at 03:30 GMT.

On Monday, both currencies finished lower after giving up earlier gains as a surge in demand for risky assets failed to impressive investors. Aussie and Kiwi traders were also a little cautious as a wave of runaway retail traders unsettled global equity and silver markets.

At 02:41 GMT, the AUD/USD settled at .7651, up 0.0028 or +0.37% and the NZD/USD is at .7173, up 0.0015 or +0.22%.

RBA on Tap

The Aussie is moving higher early Tuesday but gains are likely being capped by general nervousness ahead of the RBA announcements and a landmark speech outlining its policy settings for the year coming on Wednesday.

Traders expected RBA policymakers to leave its benchmark interest rate unchanged, but there is some uncertainty over the central bank’s A$100 billion ($76 billion) quantitative easing program, which expires in April.

Most analysts assume the RBA will extend the program, if only to lessen upward pressure on the Aussie, but will be looking for signs that purchases will be tapered slightly.

With other major central banks still rapidly expanding their balance sheets, any pullback by the RBA would likely see local bond yields and the currency surge higher.

Yields on Australian 10-year Government bonds were at 1.11%, the highest since January 11, having risen steadily from a low of 0.73% last October.

The “Australian Dollar may rally modestly intraday if the RBA does not hint at an announcement” this week, Commonwealth Bank of Australia traders told clients in a note on Monday. “But the overall trend is for a weaker AUDUSD this week if global equity markets continue to sink.”

Traders Preparing for NZD Employment Change & Unemployment Rate

According to a Bloomberg News survey, the New Zealand economy did not see any jobs growth in the fourth quarter of 2020, and as a result, the labor market will see its headline unemployment rate rise from 5.3% to 5.6%.

For a look at all of today’s economic events, check out our economic calendar.

Economic Data Puts the EUR in the Spotlight, with Capitol Hill also in Focus

Earlier in the Day:

It’s was a quiet start to the day on the economic calendar this morning. There were no material stats to provide the majors with direction in the early part of the day.

Later this morning, the RBA is in action, however. With the markets expecting the RBA to stand pat, the rate statement will be the key driver.

Any talk of the need for further support or a gloomier outlook would sink the Aussie Dollar that remains susceptible to any negative COVID-19 news.

For the Majors

At the time of writing, the Aussie Dollar was up by 0.21% to $0.7637, with the Kiwi Dollar up by 0.10% to $0.7165.

The Japanese Yen was up by 0.02% to ¥104.91 against the U.S Dollar.

The Day Ahead:

For the EUR

It’s a relatively quiet day ahead on the economic calendar.

The Eurozone’s 1st estimate GDP figures for the 4th quarter are due out.

With the ECB standing by its growth forecasts for 2021, weaker than forecasted numbers would weigh on the EUR.

Vaccine woes and extended lockdown measures continue to question the ECB and the IMF’s growth forecasts.

Away from the economic calendar, expect COVID-19 news updates to continue to influence.

At the time of writing, the EUR was up by 0.06% to $1.2067.

For the Pound

It’s a particularly quiet day ahead on the economic calendar. There are no material stats to provide the Pound with direction.

The lack of stats will leave the UK governments progress on the vaccination front in focus.

At the time of writing, the Pound was up by 0.09% to $1.3675.

Across the Pond

It’s also a particularly quiet day ahead on the economic calendar. There are no material stats due out of the U.S to provide the markets with direction through the U.S session.

The lack of stats will leave COVID-19 and Capitol Hill in focus.

On Monday, the Dollar Spot Index rose by 0.44% to end the day at 90.980.

For the Loonie

It’s a particularly quiet day on the economic data front, with no material stats to provide the Loonie with direction.

The lack of stats will leave the Loonie in the hands of market risk appetite on the day.

At the time of writing, the Loonie was up by 0.05% to C$1.2845 against the U.S Dollar.

For a look at all of today’s economic events, check out our economic calendar.

Private Sector PMIs, Capitol Hill, and COVID-19 in the Spotlight

Earlier in the Day:

It’s was a busy start to the week on the economic calendar this morning. The Aussie Dollar and the Japanese Yen were in action in the early in the day, with economic data from China also in focus.

For the Aussie Dollar

In January, the AIG Manufacturing Index rose from 52.1 to 55.3.

According to the January survey,

  • Manufacturers reported stronger and more broad-based recovery over the summer holiday period.
  • 5 of the 6 manufacturing sectors reported positive trading conditions during Dec-2020 and Jan-2021.
  • Machinery & equipment and chemicals, pharmaceuticals, cleaning, rubber, petroleum & related product manufacturers saw the strongest results.

At the time of writing, the Aussie Dollar was down by 0.08% to $0.7638.

For the Japanese Yen

The finalized Manufacturing PMI came in at 49.8 for January, which was up from a prelim 49.7, while down marginally from a December 50.0.

According to the Market survey,

  • The marginal deterioration in sector conditions was attributed to a renewed decline in output volumes.
  • Production has now failed to register outright growth since December 2018.
  • New orders were stable in January, ending a run of 24 consecutive monthly declines.
  • Export demand fell for a 3rd consecutive month, however, with the rate of decline accelerating from December.
  • Employment levels returned to contraction, also weighing on the headline PMI. The rate of job shedding was the most marked since August of last year.
  • Firms remained optimistic, however, supported by hopes of an end to the pandemic.

The Japanese Yen moved from ¥104.699 to ¥104.689 upon release of the figures. At the time of writing, the Japanese Yen was up by 0.02% to ¥104.66 against the U.S Dollar.

From China

The Caixin Manufacturing PMI fell from 53.0 to 51.5. Economists had forecast a rise to 54.8.

According to the Caixin survey,

  • Business conditions improved at the slowest rate for 7 months at the start of the year.
  • The COVID-19 pandemic weighed on demand conditions.
  • New orders rose at a softer pace, with new export work falling for the first time in 6 months.
  • After stabilizing at the end of last year, employment also fell at the start of the year.
  • Optimism amongst manufacturers fell to an 8-month low in January.

The Aussie Dollar fell from $0.76376 to $0.76336 upon release of the figures.

Elsewhere

At the time of writing, the Kiwi Dollar was down by 0.10% to $0.7186.

The Day Ahead:

For the EUR

It’s a particularly busy day ahead on the economic calendar.

Key stats include Italy, Spain and Eurozone manufacturing PMI figures and German retail sales numbers.

Finalized manufacturing PMIs from France and Germany and unemployment figures from the Eurozone are also due out. Barring a marked deviation from prelims and an unexpected jump in unemployment, the figures should have a muted impact on the EUR, however.

Away from the economic calendar, COVID-19 news will remain a key driver, with vaccination rates and vaccine supply also in focus.

At the time of writing, the EUR was down by 0.05% to $1.2130.

For the Pound

It’s a relatively quiet day ahead on the economic calendar. January’s finalized manufacturing PMI will be in focus later today.

Barring a downward revision from prelim, however, the numbers should have a muted impact on the day.

UK vaccination rates and government measures to contain the virus will remain key drivers.

At the time of writing, the Pound was up by 0.13% to $1.3726.

Across the Pond

It’s a relatively busy day ahead on the economic calendar. January’s ISM Manufacturing PMI and finalized Markit Manufacturing PMI are due out later today.

Expect the ISM Manufacturing PMI to have the greatest influence.

Away from the economic calendar, chatter from Capitol Hill and COVID-19 updates will also remain in focus, however. The markets will be looking for progress towards further fiscal stimulus to support the economic recovery.

At the time of writing, the Dollar Spot Index was down by 0.02% to 90.563.

For the Loonie

It’s a particularly quiet day on the economic data front, with no material stats to provide the Loonie with direction.

The lack of stats will leave PMI numbers from the China, the Eurozone and the U.S and COVID-19 news and stimulus talks to influence.

At the time of writing, the Loonie was down by 0.06% to C$1.2785 against the U.S Dollar.

For a look at all of today’s economic events, check out our economic calendar.

AUD/USD and NZD/USD Fundamental Weekly Forecast – RBA, NZ Employment Data on Tap

The Australian and New Zealand Dollars put in a mixed performance last week as concerns over the Reserve Bank’s (RBA) bond-buying program weighed on prices ahead of next Tuesday’s policy decisions, while the Kiwi held steady ahead of next Wednesday’s labor market reports.

Last week, the AUD/USD settled at .7642, down 0.0073 or -0.94% and the NZD/USD finished at .7157, down 0.0025 or -0.35%.

Besides the domestic events, traders will also be monitoring the release of several key economic reports from China on manufacturing and servicing, and reports from the United States on Manufacturing PMI and Non-Farm Payrolls.

RBA Expectations

The Reserve Bank of Australia (RBA) board’s first policy decision for the year on Tuesday is likely to show a strong commitment to years of further cheap money just as Prime Minister Scott Morrison begins to signal a more hawkish fiscal positions.

Economists expect the RBA will upgrade its economic forecasts this week but will also change some language around the duration and/or size of the central banks’ tools including: a record low-interest rate of 0.10 percent, a $100 billion quantitative easing program and so-called yield curve control that help keep government debt costs low, as well as a term funding facility for commercial banks to provide cheap loans to business and households, according to the Financial Review.

NZ Employment Data

According to a Bloomberg News survey, the New Zealand economy did not see any jobs growth in the fourth quarter of 2020, and as a result, the labor market will see its headline unemployment rate rise from 5.3% to 5.6%.

US Reports

This week, the key reports are Monday’s Manufacturing PMI and Friday’s U.S. Non-Farm Payrolls. A preliminary report in January on manufacturing PMI came in well above expectations. However, since that data was released, we’ve seen a jump in coronavirus cases so we could see a slight dip in the actual number. Nonetheless, the number is expected to be well-above the 50-level that separates contraction from expansion.

Non-Farm Payrolls are predicted to come in only slightly better than the previously reported loss of 140K jobs in December. A stronger than expected number could trigger a spike higher in Treasury yields, which would put further pressure on gold prices.

Weekly Forecasts

Traders expect RBA policymakers to leave its benchmark interest rate unchanged, but there is some uncertainty over the central bank’s A$100 billion ($76 billion) quantitative easing program, which expires in April.

Most analysts assume the RBA will extend the program, if only to lessen upward pressure on the Aussie, but will be looking for signs that purchases will be tapered slightly.

The “Australian Dollar may rally modestly intraday if the RBA does not hint at an announcement” this week, Commonwealth Bank of Australia traders told clients in a note on Monday. “But the overall trend is for a weaker AUDUSD this week if global equity markets continue to sink.”

For a look at all of today’s economic events, check out our economic calendar.

The Week Ahead – Economic Data, the BoE, and COVID-19 in Focus

On the Macro

It’s a busy week ahead on the economic calendar, with 66 stats in focus in the week ending 5th February. In the week prior, 57 stats had been in focus.

For the Dollar:

It’s another busy week ahead.

Private sector PMI and labor market figures are the key stats due out in the week.

On Monday, the ISM Manufacturing PMI for January will be in focus ahead. There would have to be a marked decline, however for the PMI to weigh on risk sentiment.

The focus will then shift to the market’s preferred ISM Non-manufacturing PMI and ADP nonfarm employment figures due out on Wednesday.

While we will expect the ADP numbers to influence, the non-manufacturing PMI will likely be the key driver.

On Thursday, the weekly jobless claims figures will be in focus ahead of nonfarm payroll and unemployment numbers on Friday.

Other stats in the week include finalized Markit PMI figures, along with factory orders and trade data. These stats will likely have a muted impact on market risk sentiment, however.

The Dollar Spot Index ended the week up by 0.38% to 90.584.

For the EUR:

It’s yet another busy week ahead on the economic data front.

In the 1st half of the week, private sector PMI figures for Italy and Spain are due out on Monday and Wednesday.

Finalized numbers for France, Germany, and the Eurozone will also influence along with German retail sales figures on Monday.

1st estimate GDP numbers for the Eurozone will also draw plenty of attention on Tuesday.

The focus will then shift to the ECB Economic Bulletin on Thursday German factory orders on Friday.

Other stats include finalized January inflation figures and unemployment and retail sales figures for the Eurozone. Barring particularly dire numbers, however, these should have limited impact on the EUR.

The EUR ended the week down by 0.29% to $1.2136.

For the Pound:

It’s a relatively quiet week ahead on the economic calendar. Key stats include finalized private sector PMI figures for January and January’s construction PMI.

On Thursday, however, the main event will be the BoE’s first monetary policy decision of the year.

Following particularly disappointing prelim January PMI figures, will the BoE get the markets ready for more easing?

The markets are expecting the BoE to stand pat this week.

The Pound ended the week up by 0.16% to $1.3708.

For the Loonie:

It’s a relatively quiet week ahead on the economic calendar.

Employment, trade, and Ivey PMI figures are due out. The markets will need to wait until Friday for the numbers, however.

Expect the employment and trade figures to have the greatest impact at the end of the week.

From elsewhere, private sector PMI numbers from China and the U.S will also influence in the week along with the weekly crude oil inventory numbers. Expect OPEC’s meeting in the week to also provide direction.

The Loonie ended the week down by 0.35% to C$1.2777 against the U.S Dollar.

Out of Asia

For the Aussie Dollar:

It’s another busy week on the economic data front.

January manufacturing sector stats get the week going on Monday ahead of trade and retail sales figures on Thursday and Friday.

While we can expect the stats to influence, the RBA monetary policy decision will also draw attention on Tuesday.

With no moves anticipated, the rate statement will be the key driver.

Building approvals due out on Wednesday should have a muted impact, however.

From elsewhere, private sector PMI figures from China will also provide direction in the week.

The Aussie Dollar ended the week down by 0.92% to $0.7644.

For the Kiwi Dollar:

It’s another quiet week ahead on the economic calendar.

Economic data is limited to 4th quarter employment figures, due out on Wednesday.

With little else for the markets to consider, expect the numbers to influence.

Building consent numbers due out on Thursday should have a muted impact on the Kiwi.

From elsewhere, China’s private sector PMI figures will also provide the Kiwi with direction.

The Kiwi Dollar ended the week up by 0.06% to $0.7193.

For the Japanese Yen:

It is a relatively quiet week ahead.

Finalized private sector PMIs for January are due out ahead of household spending figures on Friday.

Expect the household spending figures to garner the greatest attention in the week.

Ultimately, however, COVID-19 news updates will continue to be the key driver.

The Japanese Yen ended the week down by 0.87% to ¥104.68 against the U.S Dollar.

Out of China

It’s busier week ahead.

The market’s preferred Caixin manufacturing PMI on Monday will set the tone.

On Wednesday, the services PMI will also draw interest as the markets look for a pickup in private sector activity.

Before the start of the week, the NBS private sector PMIs were out on Sunday morning.

The NBS Manufacturing PMI fell from 51.9 to 51.3 in January, with the non-manufacturing PMI falling from 55.7 to 52.4.

Away from the economic calendar, expect COVID-19 news from China to also influence.

The Chinese Yuan ended the week up by 0.83% to CNY6.4283 against the U.S Dollar.

Geo-Politics

U.S Politics

Stimulus talk and foreign policy moves by U.S President Joe Biden will be key in the week.

Following 4th quarter GDP figures from last week, vaccination and infection rates will be a key area of focus.

The U.S administration has pledged 100 million vaccinations in 100 days. A marked pickup in vaccination rates would support riskier assets.

COVID-19

Vaccination rates and availability of vaccines will be key areas of interest.

An upward trend in vaccination rates and a downward trend on infection rates would support riskier assets in the week.

Expect plenty of focus on the U.S and the EU in particular, which continues to face supply issues.

Corporate Earnings

A number of big names deliver results in the week ahead.

From the U.S, key names include but are not limited to:

Alphabet Inc. (Tue), Amazon.com Inc. (Tue), Exxon Mobil Corp. (Tue), Pfizer Inc. (Tue), Ford Motor Co. (Thur).

The Weekly Wrap – COVID-19 Woes Hit the Global Equity Markets

The Stats

It was a relatively busy week on the economic calendar, in the week ending 29th January.

A total of 57 stats were monitored, following 74 stats from the week prior.

Of the 57 stats, 40 came in ahead forecasts, with 15 economic indicators coming up short of forecasts. There were 2 stats that were in line with forecasts in the week.

Looking at the numbers, 33 of the stats reflected an upward trend from previous figures. Of the remaining 24 stats, 21 reflected a deterioration from previous.

For the Greenback, it was back into the green to mark a 3rd weekly gain in 4-weeks. The Dollar Spot Index rose by 0.38% to $90.584. In the previous week, the Dollar had fallen 0.59% to 90.238. The weekly loss marked a 6th gain in 10-weeks.

Out of the U.S

It was a relatively busy week on the economic data front.

In the 1st half of the week, January consumer confidence and December core durable goods and durable goods orders were in focus.

The stats were skewed to the positive, with consumer confidence seeing a pickup at the turn of the year.

Core durable goods rose by a further 0.7%, following a 0.8% rise in November.

Durable goods rose by a modest 0.2%, however, following a 1.2% increase in November.

On Thursday, the stats were also skewed to the positive.

In the week ending 22nd January, initial jobless claim stood at 847k, down from 914k from the previous week.

The U.S economy saw further growth at the end of the year, expanding by 4% in the 4th quarter. While in line with forecast, the pace of the recovery slowed markedly from the 3rd quarter.

At the end of the week, personal spending and Chicago PMI figures also drew attention.

Personal spending fell by 0.2% following a 0.4% decline in November. Chicago’s PMI figures impressed, however, with the PMI rising from 59.5 to 63.8 in January.

Other key stats in the week included inflation, trade, and housing sector data. These stats had a muted impact on the markets, however.

On the monetary policy front, the FED was also in action mid-week.

There were no moves, which was in line with market expectations. FED Chair Powell looked to assure the markets that there would be no tapering of the asset purchasing program. Powell’s assurances failed to convince the markets, however, leading to a jump in the Dollar and a slide in equities.

In the equity markets, the NASDAQ slid by 3.49%, with the Dow and the S&P500 seeing losses of 3.27% and 3.31% respectively.

Out of the UK

It was a relatively quiet week on the economic data front.

Key stats included December claimant counts and November employment figures and unemployment rate.

The stats were skewed to the positive. Claimant counts rose by just 7k, after having risen by 38.1k in November.

Employment fell by 88k in November following a 144k slide in October. As a result of the decline, however, the unemployment rate ticked up from 4.9% to 5.0%.

In the week, the Pound rose by 0.16% to $1.3708. In the week prior, the Pound had risen by 0.71% to $1.3686.

The FTSE100 ended the week down by 4.30%, following a 0.60% slide from the previous week.

Out of the Eurozone

It was a relatively busy week on the economic data front.

In the 1st half of the week, German business and consumer sentiment figures were in focus.

The stats were skewed to the negative as the 2nd wave of the pandemic and extended lockdown measures weighed.

At the end of the week, 4th quarter GDP figures for France, Germany, and Spain were in focus.

While 1st estimate GDP numbers were better than expected, a marked slowdown in the pace of the economic recovery was evident.

The French economy contracted by 1.3%, quarter-on-quarter. Both Germany and Spain reported growth, though these were modest. The Spanish economy grew by 0.4%, with Germany’s economy growing by 0.1%.

Other stats in the week included French consumer spending, German employment and Spanish inflation figures.

While skewed to the positive, the stats had limited impact on the EUR and the European majors.

Extended lockdown measures across EU member states and low vaccination rates limited the impact of the data.

For the week, the EUR fell by 0.29% to $1.2136. In the week prior, the EUR had fallen by 0.74% to $1.2171.

For the European major indexes, it was a bearish week. The DAX30 and the EuroStoxx600 fell by 3.18% and by 3.11% respectively, with the CAC40 seeing a more modest 2.88% loss.

For the Loonie

It was a particularly quiet week.

Key stats were limited to November GDP and December RMPI figures.

In November, the Canadian economy grew by 0.7% following 0.40% growth in October.

The RMPI jumped by 3.5% in December, following a more modest 0.6% rise in November.

While the stats were upbeat, negative sentiment towards the global economic outlook and demand for crude oil weighed.

In the week ending 29th January, the Loonie fell by 0.35% to C$1.2777. In the week prior, the Loonie had fallen by 0.01% to C$1.2733.

Elsewhere

It was a mixed week for the Aussie Dollar and the Kiwi Dollar.

In the week ending 29th January the Aussie Dollar fell by 0.92% to $0.7644, while the Kiwi Dollar ended the week up by 0.06% to $0.7193.

For the Aussie Dollar

It was a quiet week.

Key stats included inflation, business confidence, and private sector credit numbers.

It was a mixed bag on the economic data front.

Business confidence waned at the end of the year, with the NAB Business Confidence Index falling from 12 to 4.

Private sector credit picked up at the end of the year, however, rising by 0.3%. In November, private sector credit had risen by just 0.1%.

Inflation figures were mixed, however. Consumer prices rose by 0.9% in the 4th quarter, following a 1.6% jump in the 3rd quarter.

The annual rate of inflation picked up from 0.7% to 0.9% providing some support, however.

For the Kiwi Dollar

It was a quiet week.

Trade figures for December were in focus late in the week.

As a result of lockdown measures, imports fell by the largest amount since December 2009 at the end of the year.

Exports only saw a modest increase supported by high demand for breathing equipment.

The stats reflected the impact of containment measures on the NZ economy, which was ultimately Kiwi Dollar negative.

A Friday rebound, however, delivered the upside for the week.

For the Japanese Yen

It was a relatively busy week.

Retail sales, inflation, and industrial production were in focus in the 2nd half of the week.

The numbers were skewed to the negative, with retail sales falling by 0.3% and industrial production by 1.6% in December.

A slower rate of decline in consumer prices was of little comfort. In January, Tokyo core consumer prices fell by 0.4% year-on-year. In December, core consumer prices had fallen by 0.9%.

The Japanese Yen fell by 0.87% to ¥104.68 against the U.S Dollar. In the week prior, the Yen had risen by 0.07% to ¥103.78.

Out of China

It was a particularly quiet week on the data front.

There were no material stats to provide the broader market with direction.

The lack of stats left industrial profit figures for December in focus, which were skewed to the positive.

For the calendar year 2020, profits rose by 4.1%, with profits up by 20.1% year-on-year. Profits had been up by 15.5% year-on-year, in November.

In the week ending 22nd January, the Chinese Yuan rose by 0.83% to CNY6.4283. In the week prior, the Yuan had fallen by 0.02% to CNY6.4819.

The CSI300 slid by 3.91%, with the Hang Seng ended the week down by 3.95%.

NZD/USD Forex Technical Analysis – Rangebound Trade Signaling Investor Indecision, Impending Volatility

The New Zealand Dollar is trading slightly better late in the session on Friday after giving back some of its earlier gains as a drop in U.S. equity markets soured demand for higher risk assets. The intraday drop in investor sentiment was fueled by disappointing vaccine data from Johnson & Johnson and the continuing spat between Wall Street hedge funds and small, retail investors.

At 19:17 GMT, the NZD/USD is trading .7193, up 0.0037 or +0.52%.

Daily NZD/USD

Daily Swing Chart Technical Analysis

The main trend is up according to the daily swing chart, but momentum is trending lower.

A trade through .7248 will signal a resumption of the uptrend. A move through .7096 will change the main trend to down.

The minor trend is down. This is controlling the momentum. It will shift to up when the main trend is reaffirmed.

The minor range is .7316 to .7096. Its retracement zone at .7206 to .7232 is resistance. This zone stopped the selling earlier today.

The short-term range is .7003 to .7316. Its retracement zone at .7159 to .7123 is support. It attracted buyers earlier in the session.

The main range is .6589 to .7316. If the main trend changes to down then its retracement zone at .6952 to .6867 will become the primary downside target.

Daily Swing Chart Technical Forecast

The NZD/USD is currently trading inside a pair of retracement zones at .7159 to .7123 and .7206 and .7232. Look for a choppy, two-sided trade if the Kiwi remains inside these zones.

Overtaking .7206 will indicate the presence of buyers, but I don’t think we’re going to see a breakout to the upside unless buyers can take out .7232 with conviction.

On the downside, the first sign of weakness will be a move under .7159. The trigger point for a potential acceleration to the downside is .7123.

For a look at all of today’s economic events, check out our economic calendar.

Economic Data Puts the EUR, the Greenback, and the Loonie in Focus

Earlier in the Day

It’s was a busy start to the day on the economic calendar this morning. The Aussie Dollar and the Japanese Yen were in action in the early in the day.

For the Japanese Yen

Inflation and industrial production figures were in focus this morning.

In January, Tokyo core consumer prices fell by 0.4% year-on-year, following a 0.9% decline in December. Economists had forecast a 0.6% decline.

According to the Ministry of Internal Affairs and Communication,

  • Prices for furniture and household utensils rose by 2.8%, with prices for housing up by 0.6%.
  • There were also increases in prices for clothes & footwear (+0.3%) and culture & recreation (+0.2%).
  • Fuel, light, and water charges slumped by 8.5%, with prices for education falling by 1.8%.
  • There were also declines in prices for transportation & communication (-1.0%), food (-0.6%), and medical care (-0.3%).
  • Prices for goods fell by 1.4%, while prices for services increased by 0.2%.

The Japanese Yen moved from ¥104.250 to ¥104.274 upon release of the figures that preceded industrial production figures.

Industrial production fell by 1.6% in December, following a 0.5% decline in November. Economists had forecast a 1.5% slide.

According to the Ministry of Economy, Trade and Industry,

  • Industries that mainly contributed to the decrease were:
    • Motor vehicles.
    • General-purposes and business-oriented machinery.
    • Electrical machinery, and information and communication electronics equipment.
  • Industries that mainly contributed to the increase were:
    • Transport equipment (excl. motor vehicles).
    • Chemicals (excl. inorganic, organic chemicals, and medicine).
    • Iron, steel, and non-ferrous metals.

The Japanese Yen moved from ¥104.279 to ¥104.311 upon release of the figures. At the time of writing, the Japanese Yen was down by 0.22% to ¥104.47 against the U.S Dollar.

For the Aussie Dollar

Private sector credit rose by 0.3% in December, following a 0.1% increase in November.

According to the RBA,

  • Total housing credit rose by 0.4%, with total business credit rising by 0.2%, month-on-month.
  • In November, business credit had fallen by 0.2%, while housing credit had risen by 0.3%.
  • Personal credit fell by 0.5%, however, following a 0.1% decline in November.
  • Year-on-year, total credit rose by 1.8%.
  • Total personal credit tumbled by 12.3%, while housing and business credit rose by 3.5% and by 1.0% respectively.

The Aussie Dollar moved from $0.76709 to $0.76665 upon release of the figures. At the time of writing, the Aussie Dollar down by 0.16% to $0.7671.

Elsewhere

At the time of writing, the Kiwi Dollar was up by 0.04% to $0.7174.

The Day Ahead:

For the EUR

It’s a particularly busy day ahead on the economic calendar.

Key stats include 4th quarter GDP figures for France, Germany, and Spain. With lockdown measures extending into the 1st quarter, weaker than expected figures could test market optimism towards any near-term economic recovery.

French consumer spending and German unemployment figures will also influence on the day.

Other stats include prelim Spanish inflation figures for January that will likely have a muted impact on the EUR.

At the time of writing, the EUR was down by 0.09% to $1.2111.

For the Pound

It’s yet another particularly quiet day ahead on the economic calendar. There are no material stats to provide the Pound with direction.

The lack of stats will leave the Pound in the hands of COVID-19 news and any plans on easing lockdown measures. With more virulent strains of the COVID-19 virus hitting the UK, however, it may take some time for the economy to fully reopen.

At the time of writing, the Pound was down by 0.02% to $1.3718.

Across the Pond

It’s another busy day ahead on the economic calendar. December inflation and personal spending figures are due out later today.

Expect personal spending figures to draw plenty of interest.

Other stats include Chicago PMI, pending home sales, and finalized Michigan Consumer Sentiment figures for January.

Barring particularly dire numbers, however, these stats should have a muted impact on market risk sentiment.

Away from the economic calendar, chatter from Capitol Hill and COVID-19 updates will also remain in focus.

At the time of writing, the Dollar Spot Index was up by 0.22% to 90.657.

For the Loonie

It’s a relatively quiet day on the economic data front. GDP and RMPI figures are due out later today.

Expect GDP figures for November to be the key driver.

Away from the economic calendar, expect stimulus talk and COVID-19 news to also influence.

At the time of writing, the Loonie was flat at C$1.2830 against the U.S Dollar.

For a look at all of today’s economic events, check out our economic calendar.

NZD/USD Forex Technical Analysis – Shift in Risk Sentiment Saves Kiwi from Steep Decline

The New Zealand Dollar is trading higher late in the session on Thursday after shrugging off earlier weakness. The Kiwi was pressured early on follow-through selling tied to yesterday’s volatile session which saw the U.S. stock market post its biggest one-day loss in three months.

At 21:20 GMT, the NZD/USD is trading .7185, up 0.0027 or +0.37%. This is up from a low of .7106.

Fueling the rapid turnaround in the currency was a rebound in the U.S. stock market. Equities rebounded from sharp losses in the prior session in a broad rally as earnings season got off to a strong start and fears eased around hedge funds selling long positions to cover shorts.

The move encouraged long U.S. Dollar traders to sell positions in the safe-haven asset as rising sentiment shifted to the riskier commodity-linked New Zealand Dollar.

Weekly NZD/USD

Daily Swing Chart Technical Analysis

The main trend is up according to the daily swing chart, however, momentum is trending lower. A trade through .7096 will change the main trend to down, while a move through .7248 will signal a resumption of the uptrend.

The minor trend is down. This is controlling the momentum.

The short-term range is .7003 to .7316. Its retracement zone at .7159 to .7123 is support. This zone helped stop the selling on Thursday.

The minor range is .7316 to .7096. Its retracement zone at .7206 to .7230 is potential resistance. Trader reaction to this zone should set the tone on Friday.

Daily Swing Chart Technical Forecast

Ahead of the opening on Friday, we’re looking at resistance at .7206 to .7232 and support at .7159 to .7123.

We could see a choppy, two-sided trade if the NZD/USD stays inside the minor range at .7159 to .7206 or the slightly bigger range at .7122 to .7232.

A sustained move over .7232 will indicate the buying is getting stronger. This could trigger an acceleration to the upside.

A sustained move under .7122 will signal the presence of sellers. This could trigger a possible acceleration to the downside.

For a look at all of today’s economic events, check out our economic calendar.