Trading Currencies: The Return of Janet Yellen

The return of the former Fed Chair Janet Yellen to the forefront of US policy; this time on the fiscal side it’s one that the FX market will probably meet with glee.

A solid communicator and an advocator for ‘strong’ policy accommodation, Janet Yellen’s upcoming appointment to Treasury Secretary will likely mean that Joe Biden’s fiscal stimulus package will be one of mammoth proportions – and a potential short-term negative for the USD.

To highlight this point, here are some extracts from her speech that she gave about her upcoming appointment.

“We lawmakers need to ‘act big’ on the next coronavirus relief package,” she complimented by adding that the benefits of the package will well and truly outweigh the costs of a higher debt burden.

“As Treasury chief my role will be to assist in the rebuilding of economy so that it creates more prosperity for more people and ensures that American workers can compete in an increasingly competitive global economy.”

“Right now, short term, I feel that we can afford what it takes to get the economy back on its feet, to get us through the pandemic.” As rates are historically low and that debt-servicing payments as a share of the economy are lower today than before the 2008 financial crisis.

These are big statements and the ones that support the trade we have seen throughout 2020. A tidal wave of USD is likely to hit the markets in the foreseeable future.

Future of the USD trend

Her comments also back what the Federal Reserve has stated – that it will back the economy with quantitative easing and record low rates until inflation averages 2% – something that is at least 2 years off. Having US fiscal and monetary policy aligned will create some form of inflation in the future that is the intended goal and that the rates will therefore rise.

Ms Yellen’s statement coupled with last week’s statements from Fed officials show that rates for the foreseeable future will remain incredibly low.

This was seen in the movement of US treasury with US 10-year yield falling from 1.12% to 1.09% on Yellen’s remarks and have continued to fall.

Time to go ‘risk-on’?

The flip side of this is the acceleration of the risk trade with textbook moves in CHF, JPY and USD easing while the like of EUR, GBP and AUD shifting higher.

EUR/USD is now back above $1.21 at $1.2145, the GBP/USD is back above $1.36 at $1.3630 while AUD/USD is now above $0.77.

Key Events to Watch in the Coming Week

  • Fed’s Monetary Policy Statement – January 28, 2021 (GMT +11)
  • USA’s Gross Domestic Product Annualized (Q4) – January 29, 2021 (GMT + 11)

This article is prepared by Lucia Han from Mitrade and is for reference only. We do not represent that the material provided here is accurate, current or complete. The article content neither takes into account your personal investment objects nor your financial situation, and therefore it should not be relied upon as such. You should seek for your own advice.

AUD/USD Daily Forecast – Australian Dollar Remains Strong

AUD/USD Video 21.01.21.

Australian Dollar Moves Higher Against U.S. Dollar

AUD/USD is currently trying to settle above the resistance at 0.7760 while the U.S. dollar remains under pressure against a broad basket of currencies.

The U.S. Dollar Index has managed to get below the support at the 20 EMA at 90.35 and is trying to develop additional downside momentum. If this attempt is successful, the U.S. Dollar Index will move closer to the 90 level which will be bullish for AUD/USD.

Australia has recently reported that Unemployment Rate declined from 6.8% in November to 6.6% in December. Analysts expected that Unemployment Rate would decline to 6.7%. Meanwhile, Employment Change report indicated that employment increased by 50,000 in December, in line with analyst forecasts.

Today, foreign exchange market traders will also focus on the employment data from the U.S. Initial Jobless Claims report is expected to show that 910,000 Americans filed for unemployment benefits in a week. Continuing Jobless Claims are expected to increase from 5.3 million to 5.4 million.

Joe Biden’s stimulus plan has recently provided material support to commodity-related currencies, including Australian dollar. If traders continue to focus on the upcoming stimulus, Australian dollar may get additional support.

Technical Analysis

aud usd january 21 2021

AUD/USD managed to settle above the resistance at 0.7740 and is trying to settle above the next resistance level at 0.7760. RSI remains in the moderate territory so there is plenty of room to gain additional upside momentum in case the right catalysts emerge.

If AUD/USD settles above 0.7760, it will get to another test of the next resistance level at 0.7780. A move above this level will push AUD/USD towards the resistance at 0.7800. In case AUD/USD gets above the resistance at 0.7800, it will move towards the next resistance level which is located at January highs at 0.7820.

On the support side, the previous resistance at 0.7740 will likely serve as the first support level for AUD/USD. A move below this level will push AUD/USD towards the support at 0.7725. If AUD/USD declines below 0.7725, it will move towards the 20 EMA at 0.7705.

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

EUR/USD Daily Forecast – U.S. Dollar Is Losing Ground Against Euro

EUR/USD Video 21.01.21.

Euro Gains Some Ground Against U.S. Dollar

EUR/USD is currently trying to get back above the resistance at 1.2130 while the U.S. dollar is losing ground against a broad basket of currencies.

The U.S. Dollar Index declined below the support at the 20 EMA at 90.35 and is slowly moving towards the 90 level. If the U.S. Dollar Index gets to the test of this level, EUR/USD will get additional support.

Yesterday, EU reported that Euro Area Inflation Rate decreased by 0.3% year-over-year in December while Core Inflation Rate grew by 0.2%. Both reports were in line with analyst expectations.

Prices remain weak in the Euro Area due to the negative impact of the strong second wave of coronavirus. It looks like Europe’s significant problems on the virus front put some pressure on the euro in recent weeks.

Today, foreign exchange market traders will focus on the European Central Bank Interest Rate Decision and the subsequent commentary. The rate is expected to stay unchanged, and traders will pay attention to ECB evaluation of the current economic situation.

Technical Analysis

eur usd january 21 2021

Yesterday, EUR/USD made an attempt to settle above the resistance at 1.2155 but failed to develop sufficient upside momentum and pulled back. However, EUR/USD received strong support near 1.2080 and is trying to settle back above the resistance at 1.2130.

If this attempt is successful, EUR/USD will get to another test of the next resistance level which is located at the 20 EMA at 1.2155. A move above this level will open the way to the test of the resistance at 1.2175. In case EUR/USD settles above 1.2175, it will head towards the next resistance at 1.2220.

On the support side, the nearest material support level for EUR/USD is located at the 50 EMA at 1.2115. If EUR/USD manages to settle below this level, it will head towards the next support at 1.2080. A successful test of this level will push EUR/USD towards the next support level which is located at 1.2060.

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

GBP/USD Daily Forecast – Test Of Resistance At 1.3710

GBP/USD Video 21.01.21.

British Pound Continues To Gain Ground Against U.S. Dollar

GBP/USD is trying to settle above the resistance at 1.3710 while the U.S. dollar is losing ground against a broad basket of currencies.

The U.S. Dollar Index managed to get below the 20 EMA at 90.35 and is moving towards the 90 level as foreign exchange market traders focus on Biden’s stimulus plans. If the U.S. Dollar Index manages to get to the test of the 90 level, GBP/USD will get additional support.

Yesterday, UK reported that Inflation Rate increased by 0.3% month-over-month in December compared to analyst consensus which called for growth of 0.2%. On a year-over-year basis, Inflation Rate grew by 0.6%. Meanwhile, Core Inflation Rate increased by 1.4% compared to analyst consensus of 1.3%.

At this point, it is too early to tell whether inflation is moving higher in the UK. The country continues its battle against a new, more infectious strain of the virus, and the recent data suggests that UK made little progress on this front. Most likely, UK will have to keep current virus containment measures in place for more weeks than originally planned which may have a negative impact on consumer optimism and put pressure on prices.

Technical Analysis

gbp usd january 21 2021

GBP/USD is currently testing the nearest resistance level at 1.3710. Yesterday, GBP/USD made an attempt to settle above this level but failed to develop sufficient upside momentum. However, the current momentum looks strong, and GBP/USD has good chances to get above 1.3710.

If GBP/USD manages to settle above the resistance at 1.3710, it will head towards the next resistance level at 1.3755. A move above the resistance at 1.3755 will push GBP/USD towards the next resistance at 1.3785.

On the support side, the previous resistance level at 1.3665 will likely serve as the first support level for GBP/USD. If GBP/USD declines below this level, it will move towards the next support at 1.3625. A successful test of this support level will open the way to the test of the next support which is located at the 20 EMA at 1.3600.

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

The U.S Dollar Hits Reverse Ahead of the ECB Monetary Policy Decision and Press Conference

Earlier in the Day:

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

Later this morning, the Bank of Japan delivers its first monetary policy decision of the year. While the markets expect the BoJ to continue to leave policy unchanged, the latest wave of the pandemic will be a concern.

Vaccination rates will need to materially pick up globally, not just in Japan, to support a sustained economic recovery.

Away from the economic calendar, sentiment towards the U.S economic outlook provided direction early on. Hopes of significant fiscal support drove demand for riskier assets early on.

For the Japanese Yen

The trade surplus widened from ¥366.1bn to ¥751.0bn in December 2020. Economists had forecast a widening to ¥942.8bn.

According to the Ministry of Finance,

  • Exports rose by 2.0% in the month of December, while imports slid by 11.6%.
  • For the calendar year, 2020, exports slid by 11.1%, with imports tumbling by 13.8% to leave the trade surplus at ¥674.73bn.

By geography,

  • Exports to Asia fell by 5.1%, in spite a 2.7% increase of exports to China. Imports from Asia saw a more marked 7.5% decline in the calendar year 2020.
  • To the U.S, exports tumbled by 17.3%, with imports from the U.S sliding by 14.0%.
  • Exports to Europe slid by 15.1%, driven by sizeable declines to Germany (-14.9%) and the UK (-24.3%). Imports fell by 13.7 from Europe in the calendar year.

The Japanese Yen moved from ¥103.547 to ¥103.572upon release of the figures. At the time of writing, the Japanese Yen was down by 0.01% to ¥103.55 against the U.S Dollar.

For the Aussie Dollar

Employment figures were in focus this morning.

According to the ABS,

  • Employment rose by 50k in December, following a 90.0k increase in November, which was in line with forecasts.
  • Full employment increased by 37.5k, following an 84.2k jump in November.
  • As a result, the unemployment rate slipped from 6.8% to 6.7%, while the participation rate rose from 66.1% to 66.2%.
  • Employment finished the year 0.7% below the March level, having fallen 6.7% between March and May.
  • The recovery in employment was largely as a result of a more marked recovery in part-time employment, however.

The Aussie Dollar moved from $0.77551 to $0.77516 upon release of the figures. At the time of writing, the Aussie Dollar was up by 0.27% to $0.7768.

Elsewhere

At the time of writing, the Kiwi Dollar was up by 0.31% to $0.7194.

The Day Ahead:

For the EUR

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

While there are no stats, the ECB is scheduled to deliver its first monetary policy decision of the year.

With the markets expecting the ECB to stand pat on policy, the ECB press conference will likely be the key driver.

Last week, ECB President Lagarde stood by the ECB’s growth forecasts for this year, in spite of extended lockdown measures.

We can expect plenty of discussion on price stability and the outlook during the presentation and the Q&A.

Away from the economic calendar, COVID-19 vaccine news along with the latest COVID-19 figures will provide direction.

At the time of writing, the EUR was up by 0.16% to $1.2125.

For the Pound

It’s a relatively quiet day ahead on the economic calendar. CBI Industrial Trend Orders are due out later today.

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

Ultimately, however, COVID-19 news updates will likely remain the key driver near-term.

At the time of writing, the Pound was up by 0.15% to $1.3674.

Across the Pond

It’s a busy day ahead on the economic calendar. Key stats include the weekly jobless claims figures and December’s Philly FED Manufacturing PMI.

Housing sector data for December, including building permits and housing starts are also due out. These will likely have a muted impact on risk sentiment, however.

Away from the economic calendar, President Biden’s first moves as U.S President together with COVID-19 news will also influence.

At the time of writing, the Dollar Spot Index was down by 0.15% to 90.340.

For the Loonie

It’s a quiet day on the economic data front. Economic data is limited to house price figures that will likely have a muted impact on the Loonie.

Chatter from Capitol Hill and COVID-19 news will be the key drivers on the day, with little else for the markets to consider.

At the time of writing, the Loonie was up by 0.13% to C$1.2620 against the U.S Dollar.

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

USD/CAD Daily Forecast – Test Of Support At 1.2625

USD/CAD Video 20.01.21.

Canadian Dollar Gained Strong Upside Momentum

USD/CAD is testing the support level at 1.2625 while the U.S. dollar is mostly flat against a broad basket of currencies.

The U.S. Dollar Index is currently trading in the range between the support at the 20 EMA at 90.35 and the resistance at 90.50. If the U.S. Dollar Index settles below the 20 EMA, it will gain additional downside momentum and move towards the 90 level which will be bearish for USD/CAD.

Today, Canada reported that Inflation Rate decreased by 0.2% month-over-month in December. Analysts expected that Inflation Rate would remain unchanged. On a year-over-year basis, Inflaiton Rate grew by 0.7% compared to analyst consensus of 1%. Meanwhile, Core Inflation Rate increased by 1.5% year-over-year. Meanwhile, the Bank of Canada left the interest rate unchanged at 0.25%, in line with the analyst consensus.

Interestingly, today’s inauguration of Joe Biden had little impact on the dynamics of the U.S. dollar on the foreign exchange market. Perhaps, traders would like to see his first moves before evaluating the future trajectory of the American currency.

Today, commodity-related currencies like Canadian dollar received material support as oil gained ground on stimulus optimism. If WTI oil manages to settle above multi-month highs, Canadian dollar will get additional support.

Technical Analysis

usd cad january 20 2021

USD to CAD managed to get below the support at 1.2665 and tested the next support level at 1.2625. USD to CAD failed to settle below the support at 1.2625 on the first attempt, but it maintains good chances to get to another test of this support level. RSI is in the moderate territory, and there is plenty of room to gain additional downside momentum.

If USD to CAD settles below 1.2625, it will head towards the next support level at 1.2590. A successful test of this level will push USD to CAD towards the next support which is located at 1.2550.

On the upside, the previous support at 1.2665 will likely serve as the first resistance level for USD to CAD. A move above this level will push USD to CAD towards the resistance at 1.2700. If USD to CAD gets above 1.2700, it will head towards the resistance at 1.2720.

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

U.S. Dollar Index (DX) Futures Technical Analysis – Bulls Still Respecting Uptrend, 90.340 Pivot

The greenback has been helped since the start of the new year by rising U.S. Treasury yields and some investor caution about the strength of the global economic recovery from the coronavirus pandemic. However, the short-term move hasn’t been strong enough to sway longer-term traders from changing their bearish outlook.

At 07:00 GMT, March U.S. Dollar Index futures are trading 90.335, down 0.141 or -0.16%.

In other news, Yellen, appearing before the Senate Finance Committee on Tuesday, urged lawmakers to “act big” on the next coronavirus relief package, adding that the benefits outweigh the costs of a higher debt burden.

Yellen also said the dollar’s value should be determined by market forces, adding that the United States should oppose attempts by other countries to artificially manipulate currency values to gain trade advantage.

Daily Swing Chart Technical Analysis

The main trend ticked higher on the daily chart last Friday when buyers took out 90.720. However, the lack of follow-through to the upside following the surge to 90.790 suggests the move may have been fueled by short-covering and buy stops rather than new buyers. A trade through 89.890 will change the main trend to down.

The main range is 92.730 to 89.165. Its retracement zone at 90.950 to 91.370 is new resistance.

The minor range is 89.890 to 90.790. The index is currently straddling its 50% level at 90.340.

The short-term range is 89.165 to 90.790. Its 50% level at 89.980 is the last potential support before the 89.890 main bottom.

Daily Swing Chart Technical Forecast

The early price action suggests the direction of the March U.S. Dollar Index on Wednesday will be determined by trader reaction to the pivot at 90.340.

Bearish Scenario

A sustained move under 90.340 will indicate the presence of sellers. If this creates enough downside momentum then look for the selling to possibly extend into 89.980 and 89.890. The latter is a potential trigger point for an acceleration to the downside.

Bullish Scenario

A sustained move over 90.340 will signal the presence of buyers. If this move can attract enough buyers then look for the rally to possibly extend into 90.790, followed by a resistance cluster at 90.950.

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

EUR/USD Daily Forecast – Euro Continues To Rebound

EUR/USD Video 20.01.21.

U.S. Dollar Is Under Pressure Against Euro

EUR/USD is trying to settle back above the resistance at 1.2155 while the U.S. dollar is losing ground against a broad basket of currencies.

The U.S. Dollar Index declined below the support level at 90.50 and is currently testing the next support level at the 20 EMA at 90.35. In case the U.S. Dollar Index settles below this level, it will gain additional downside momentum which will be bullish for EUR/USD.

Yesterday, EU reported that Euro Area ZEW Economic Sentiment Index increased from 54.4 in December to 58.3 in January despite the negative impact of the second wave of the virus.

Today, foreign exchange market traders will have a chance to take a look at Euro Area inflation data for December. Inflation Rate is projected to decline by 0.3% year-over-year while Core Inflation Rate is expected to grow by 0.2%. Most likely, prices will remain weak in the EU in the upcoming months due to the negative impact of lockdowns in the first quarter of this year.

Technical Analysis

eur usd january 20 2021

EUR/USD managed to get above the resistance at 1.2130 and is trying to settle above the next resistance level at 1.2155. If this attempt is successful, EUR/USD will get to the test of the resistance at the 20 EMA at 1.2165. The next resistance level is located at 1.2175, so EUR/USD will likely face strong resistance in the 1.2155 – 1.2175 area.

In case EUR/USD manages to settle above this resistance area, it will gain additional upside momentum and head towards the resistance at 1.2220. A successful test of this level will push EUR/USD towards the resistance at 1.2250.

On the support side, the previous resistance level at 1.2130 will likely serve as the first support level for EUR/USD. In case EUR/USD declines below this level, it will get to the test of the next support at the 50 EMA at 1.2115. A move below the 50 EMA will push EUR/USD towards the next support level which is located at 1.2080.

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

GBP/USD Daily Forecast – Test Of Resistance At 1.3665

GBP/USD Video 20.01.21.

U.S. Dollar Is Losing Ground Against British Pound

GBP/USD is currently trying to settle above the resistance at 1.3665 while the U.S. dollar is losing ground against a broad basket of currencies.

The U.S. Dollar Index managed to settle below the support at 90.50 and is trying to get below the next support level at the 20 EMA at 90.35. If the U.S. Dollar Index declines below the 20 EMA, it will head towards the 90 level which will be bullish for GBP/USD.

Today, the UK will provide inflation data for December. Analysts expect that Inflation Rate increased by 0.2% month-over-month. On a year-over-year basis, Inflation Rate is projected to grow by 0.5%. Meanwhile, Core Inflation Rate is expected to grow by 1.3%.

In addition to UK inflation data, foreign exchange market traders will focus on the Inauguration Day in the U.S. The U.S. dollar pulled back from recent highs as the support from the recent increase in U.S. Treasury yields was not sufficient enough to push it higher, and traders will keep an eye on any dovish comments from Biden’s economic team.

Technical Analysis

gbp usd january 20 2021

GBP/USD gained upside momentum and is trying to settle above the nearest resistance level at 1.3665. If this attempt is successful, GBP/USD will head towards the next resistance at 1.3710. RSI is in the moderate territory, and there is plenty of room to gain additional momentum in case the right catalysts emerge.

A move above 1.3710 will open the way to the test of the resistance at 1.3755. In case GBP/USD gets above the resistance at 1.3755, it will move towards the resistance at 1.3785.

On the support side, the nearest support for GBP/USD is located at 1.3625. In case GBP/USD declines below this level, it will move towards the next support level which is located at the 20 EMA at 1.3585.

The next support is located at 1.3575, so GBP/USD will likely receive material support in the 1.3575 – 1.3585 area. A move below this support area will push GBP/USD towards the support at 1.3540.

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

Inauguration Day and the Bank of Canada Put the Greenback and the Loonie in Focus

Earlier in the Day:

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

For the Aussie Dollar

The Westpac Consumer Confidence Index fell by 4.5% to 107.0 in January. In December, the Index had stood at 112.0.

According to the January report,

  • Domestic border closures and COVID-19 clusters together with a sharp rise in new COVID-19 cases overseas weighed on sentiment.
  • In spite of the fall, the index is up by 14.6% from a year ago and stood 41.5% higher than the pandemic low last April.

Looking at the key components:

  • Economic conditions next 12-months slid by 8.3%, with family finances vs a year ago falling by 7.0%.
  • In spite of the decline both were up compared with a year ago.
  • Family finances next 12-months saw a more modest 0.3% decline, with economic conditions next 5-years down by 4.5%.
  • Compared with this time last year, economic conditions next 5-years was up by 31.6%, with economic conditions next 12-months up by 21.1%.
  • Time to buy a major household item was down by 2.8%, while up by 4.8% compared with this time last year.
  • Time to buy a dwelling bucked the trend, however, rising by 0.2%. This was supported by sentiment towards house prices.
  • The House Price Expectations Index increased by 1.1%.
  • Sentiment towards unemployment was disappointing, however. The Unemployment Expectations Index was up by 11.9%, while down by 11.2% compared with a year ago.

The Aussie Dollar moved from $0.77100 to $0.77102 upon release of the figures. At the time of writing, the Aussie Dollar was up by 0.21% to $0.7711.

From China

This morning, the PBoC left loan prime rates unchanged in the central bank’s first monetary policy decision of the year.

In line with market expectations, the 1-year LPR remained unchanged at 3.85%, with the 5-year unchanged at 4.65%.

The Aussie Dollar moved from $0.77026 to $0.77072 upon announcement of the decision.

Elsewhere

At the time of writing, the Japanese Yen was up by 0.13% to ¥103.77 against the U.S Dollar, with the Kiwi Dollar up by 0.04% to $0.7125.

The Day Ahead:

For the EUR

It’s a relatively busy day ahead on the economic calendar. German wholesale inflation figures for December and finalized December inflation figures for the Eurozone are due out later today.

Barring marked revision from prelim Eurozone inflation figures, we don’t expect the stats to have too much influence, however.

Away from the economic calendar, COVID-19 vaccine news along with the latest COVID-19 figures and Italian politics will provide direction.

At the time of writing, the EUR was up by 0.10% to $1.2141.

For the Pound

It’s a relatively busy day ahead on the economic calendar. December inflation and wholesale inflation figures are due out of the UK later today.

A pickup in inflationary pressures should deliver support for the Pound. Wholesale inflationary pressures will also need to see a pickup, however.

While the stats will influence, the market focus will remain on the UK Government’s progress towards ending the COVID-19 pandemic.

At the time of writing, the Pound was up by 0.12% to $1.3647.

Across the Pond

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

The lack of stats will leave the Greenback in the hands of chatter from Capitol Hill and COVID-19 news.

It’s Inauguration Day, so expect market focus to be on Capitol Hill. Upon entering the Oval Office, Biden is expected to begin repealing Trump policy.

At the time of writing, the Dollar Spot Index was down by 0.12% to 90.388.

For the Loonie

It’s a busy day on the economic data front. December inflation figures are due out ahead of the Bank of Canada’s first monetary policy decision of the year.

With the markets likely to hold out for the BoC rate statement and press conference, inflation figures will likely have a relatively muted impact on the Loonie.

Rising crude oil prices and optimism towards the economic outlook is likely to leave the BoC in a holding pattern. It remains to be seen, however, whether there’s any hawkish chatter.

At the time of writing, the Loonie was up by 0.11% to C$1.2721 against the U.S Dollar.

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

USD/CAD Daily Forecast – U.S. Dollar Is Under Pressure

USD/CAD Video 19.01.21.

Canadian Dollar Moves Higher Against U.S. Dollar

USD/CAD found itself under pressure and moved below the 20 EMA at 1.2745 while the U.S. dollar lost some ground against a broad basket of currencies.

The U.S. Dollar Index has recently made an attempt to settle below 90.50 but received support near 90.40 and rebounded back above 90.50. If the U.S. Dollar Index manages to get to the test of the next support level which is located at the 20 EMA at 90.30, USD/CAD will find itself under pressure.

Today, Canada reported that Manufacturing Sales declined by 0.6% month-over-month in November compared to analyst consensus which called for a decline of just 0.1%. Meanwhile, Wholesale Sales increased by 0.7% compared to analyst forecast which called for growth of 1%.

Tomorrow, foreign exchange market traders will focus on Bank of Canada’s Interest Rate Decision and the subsequent commentary. It remains to be seen whether Bank of Canada will hint that it is ready to provide additional stimulus.

Meanwhile, the U.S. Treasury Secretary nominee Janet Yellen has just told U.S. lawmakers to “act big” on the new coronavirus aid package. The new round of U.S. stimulus may ultimately put additional pressure on the American currency, but dollar bears have failed to push dollar to new lows at the beginning of this year.

Technical Analysis

usd cad january 19 2021

USD to CAD declined below the 20 EMA at 1.2745 and is testing the next support level at 1.2720. If this test is successful, USD to CAD will move towards the next resistance at 1.2700. In case USD to CAD manages to settle below the support at 1.2700, it will head towards the next support level at 1.2665.

On the upside, USD to CAD needs to get back above the 20 EMA to have a chance to develop upside momentum. The next resistance level is located at 1.2775. If USD to CAD settles above this level, it will move towards the resistance at 1.2800.

From a big picture point of view, USD to CAD is stuck in the range between the support at 1.2700 and the resistance at 1.2800. Most likely, it will need additional catalysts to get out of this range.

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

Silver Price Daily Forecast – Silver Gains Ground On Weaker Dollar

Silver Video 19.01.21.

Silver Moves Higher Ahead Of Yellen’s Speech

Silver is trying to get back above the 50 EMA at $25.15 while the U.S. dollar was under pressure against a broad basket of currencies.

The U.S. Dollar Index developed downside momentum ahead of Yellen’s speech before the Senate Finance Committee and managed to get below the support at 90.50. Currently, the U.S. Dollar Index is trying to get to the test of the next support level at the 20 EMA at 90.30. If the U.S. Dollar Index settles below this level, it will gain additional downside momentum which will be bullish for silver and gold price today.

Meanwhile, gold is stuck below the $1850 level although it tries to move higher. In case gold manages to settle above the nearest resistance level at $1850, it will move towards the next resistance at $1865 which will be bullish for silver and other precious metals.

Gold/silver ratio failed to settle above the 50 EMA at 74.20 and is testing the support at the 20 EMA at 72.90. A move below the 20 EMA will push gold/silver ratio towards the 72 level which will provide additional support to silver.

Technical Analysis

silver january 19 2021

Silver is currently trying to settle above the 50 EMA at $25.15 and get to another test of the next resistance at $25.30. If this test is successful, silver will move towards the next resistance level which is located at the 20 EMA at $25.55.

A successful test of the resistance at $25.55 will open the way to the test of the resistance level at $25.85. In case silver manages to get above $25.85, it will head towards the resistance at $26.30. No important levels were formed between $25.85 and $26.30 so this move may be fast.

On the support side, silver must settle below the 50 EMA at $25.15 to have a chance to develop downside momentum in the near term. The next support level is located at $25.00.

In case silver declines below this level, it will move towards the support at $24.70. If silver manages to settle below the support at $24.70, it will head towards the next support at $24.50.

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

Dollar’s Weakness is Back

Gold creates a double bottom formation with two hammers on a daily chart.

Nasdaq and DAX bounce from the upper line of a correction pattern.

Dollar index cancels the Inverse Head and Shoulders and drops lower.

EURUSD starts bullish correction.

AUDJPY is heading higher after testing the neckline of a giant iH&S pattern.

USDCHF bounces from the neckline and drops lower with a proper sell signal.

CADCHF goes lower after the false bullish breakout from the symmetric triangle.

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

Stocks Move Higher Ahead Of Yellen Speech

Treasury Secretary Nominee Janet Yellen Is Expected To Support The Huge Stimulus Package

S&P 500 futures are gaining ground in premarket trading as traders expect that Janet Yellen will support Biden’s $1.9 trillion stimulus package when she speaks before the Senate Finance Committee.

Yellen is projected to state that the stimulus package is a vital instrument in the combat against the consequences of the coronavirus pandemic, and that the U.S. debt burden is not a concern right now.

Yellen is also projected to commit to market-determined exchange rate of the U.S. dollar, in contrast with the outgoing President Donald Trump who has many times stated that he wanted a weaker U.S. dollar.

However, it remains to be seen whether Yellen’s comments will provide additional support to the U.S. dollar which is currently losing ground against a broad basket of currencies. The new stimulus package may ultimately serve as a bearish catalyst for the American currency and push it to multi-month lows.

IEA Cuts Its Oil Demand Forecast

IEA decided to cut its oil demand outlook by 0.3 million barrels per day (bpd) due to continued problems on the coronavirus front.

This is not a big surprise to the market as traders are prepared to see poor demand data in the first quarter of 2021 due to lockdowns in Europe.

Another downside revision of the full-year oil demand forecast did not spoil the mood of oil traders, and WTI oil is currently trying to settle above $52.50.

Not surprisingly, oil-related stocks are set for a strong start of the trading session after the correction on Friday.

Precious Metals Lack Momentum As Higher Yields Reduce Demand For Gold And Silver

Gold and silver have been trying to stabilize after the sell-off which happened at the beginning of this year.

The recent rebound of the U.S. dollar put additional pressure on precious metals, but rising U.S. Treasury yields were the main negative catalyst.

The bond market may be sensitive to Yellen’s speech before the Senate Finance Committee, so gold and silver may have an active trading session today. Gold and silver mining stocks, which have recently suffered a significant correction, may also be volatile today.

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

AUD/USD Daily Forecast – Resistance At 0.7725 In Sight

AUD/USD Video 19.01.21.

Australian Dollar Gains Ground Against U.S. Dollar

AUD/USD is moving towards the resistance level at 0.7725 while the U.S. dollar is losing ground against a broad basket of currencies.

The U.S. Dollar Index managed to get below the support level at 90.70 and is moving towards the next support at 90.50. A move below the support at 90.50 will push the U.S. Dollar Index towards the next support level at the 20 EMA at 90.35 which will be bullish for AUD/USD.

Today, Australia reported that New Home Sales increased by as much as 26.2% month-over-month in December. Australia’s New Home Sales have started to grow in June 2020 when the country’s economy began to recover from the blow dealt by the coronavirus pandemic.

Various stimulus measures in combination with the country’s success in virus containment managed to halt a multi-year decline in New Home Sales and pushed them to multi-year highs.

Technical Analysis

aud usd january 19 2021

 

AUD/USD managed to get above the resistance at 0.7700 and is moving towards the next resistance level at 0.7725. From a big picture point of view, AUD/USD failed to settle below the 20 EMA near 0.7690 so it has good chances to get back to the upside mode.

RSI declined from the highs that were reached at the beginning of this year, and there is plenty of room to gain upside momentum in case the right catalysts emerge.

If AUD/USD settles above the resistance at 0.7725, it will move towards the next resistance level at 0.7740. A successful test of the resistance at 0.7740 will push AUD/USD towards the resistance at 0.7760. In case AUD/USD manages to settle above the resistance level at 0.7760, it will head towards the resistance at 0.7780.

On the support side, AUD/USD needs to settle below the 20 EMA near 0.7690 to have a chance to gain downside momentum. If AUD/USD declines below this level, it will head towards the support at 0.7675.

A move below this level will push AUD/USD towards the next support level which has emerged at 0.7660. In case AUD/USD declines below 0.7660, it will head towards the next support level at 0.7635.

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

EUR/USD Daily Forecast – Support At 1.2080 Stays Strong

EUR/USD Video 19.01.21.

Euro Gains Ground Against U.S. Dollar

EUR/USD received support near 1.2080 and is trying to get back above 1.2100 while the U.S. dollar is under pressure against a broad basket of currencies.

The U.S. Dollar Index is currently testing the nearest support level at 90.70. If this test is successful, the U.S. Dollar Index will head towards the next support at 90.50 which will be bullish for EUR/USD.

Today, foreign exchange market traders will have a chance to take a look at Euro Area ZEW Economic Sentiment Index for January. Analysts forecast that ZEW Economic Sentiment Index will grow from 54.4 to 57. In Germany, which is the leading EU economy, ZEW Economic Sentiment Index is expected to increase from 55 to 60.

The U.S. dollar managed to rebound from multi-month lows at the beginning of this year, but it remains to be seen whether the recent upside momentum will be sustainable. The 50 EMA will likely serve as a strong obstacle on the way up for the U.S. Dollar Index, and a move above this level will signal that the American currency is ready to continue its upside move which will be bearish for EUR/USD.

Technical Analysis

eur usd january 19 2021

EUR/USD failed to settle below the support level at 1.2080 and is moving towards the nearest resistance level which is located at the 50 EMA at 1.2110. A move above the 50 EMA will signal that EUR/USD will try to develop additional upside momentum.

If EUR/USD settles above the 50 EMA, it will get to the test of the next resistance level at 1.2130. In case EUR/USD gets above the resistance at 1.2130, it will head towards the next resistance at 1.2155. The 20 EMA is located in the nearby so EUR/USD will likely face material resistance in this area.

On the support side, EUR/USD must settle below the support at 1.2080 to continue its downside move. A move below the support at 1.2080 will push EUR/USD towards the next support level at 1.2060. In case EUR/USD gets below this level, it will head towards the support at 1.2040.

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

GBP/USD Daily Forecast – British Pound Gains Ground Against U.S. Dollar

GBP/USD Video 19.01.21.

British Pound Moves Higher Against U.S. Dollar

GBP/USD is trying to settle back above 1.3600 while the U.S. dollar is losing some ground against a broad basket of currencies.

Yesterday, the U.S. Dollar Index made an attempt to settle above the resistance at the 50 EMA at 90.95 but failed to develop sufficient upside momentum and pulled back. Currently, the U.S. Dollar Index is trying to settle below the nearest support level at 90.70. If this attempt is successful, the U.S. Dollar Index will move towards the next support level at 90.50 which will be bullish for GBP/USD.

There are no important economic reports scheduled to be released today in the U.S. and UK so foreign exchange market traders will focus on general market sentiment and wait for any updates ahead of Joe Biden’s inauguration.

At this point, traders will try to evaluate the future foreign exchange policy of Biden’s administration. Biden’s Treasury Secretary nominee Janet Yellen is expected to state that the U.S. is not seeking a weaker dollar, but it remains to be seen whether an explicit commitment to market-set foreign exchange rates will have any significant impact on the dynamics of the American currency.

Technical Analysis

gbp usd january 19 2021

GBP/USD failed to settle below the 20 EMA at 1.3575 and is trying to settle back above 1.3600. RSI is in the moderate territory so there is plenty of room to gain additional upside momentum in case the right catalysts emerge.

The nearest resistance level for GBP/USD is located at 1.3625. If GBP/USD manages to get above this level, it will head towards the resistance at 1.3665. A move above the resistance at 1.3665 will push GBP/USD towards the next resistance level at 1.3710.

On the support side, the 20 EMA at 1.3575 will serve as the first material support level for GBP/USD. A move below the 20 EMA will push GBP/USD towards the support level at 1.3540. If GBP/USD declines below this support level, it will head towards the next support at 1.3500.

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

Economic Data Puts the EUR and the Loonie in Focus as Inauguration Day Nears

Earlier in the Day:

It’s was a relatively quiet start to the day on the economic calendar this morning. The Kiwi Dollar was in action early this morning.

For the Kiwi Dollar

Business confidence picked up in the 4th quarter of 2020.

According to the NZIER Quarterly Report,

  • A net 16% of businesses expect a deterioration in general economic conditions over the coming months. This was lower than the 38% in the previous quarter and well below the 68% in March 2020.
  • The building sector delivered strong optimism, while other sectors saw some improvement.
  • Away from the construction sector, businesses were reportedly still cautious about general economic conditions ahead.
  • While demand has improved, firms are still finding it difficult to pass on rising costs by raising prices.
  • Despite resulting weak profitability, increased certainty about the outlook supported hiring and investment.
  • A net 15% of firms are planning to hire in the next quarter, with a net 10% planning to invest in plant and machinery.

The Kiwi Dollar moved from $0.71122 to $0.71118 upon release of the figures that preceded retail sales figures.

In December, electronic card retail sales rose by 3.5% compared with December 2019. In November, sales had increased by 1.4%, year-on-year.

According to NZ Stats,

  • Spending on groceries, furniture, and electronics drove sales, while accommodation and fuel spending dragged.
  • Retail spending rose in 4 of the 6 industries in December 2020 compared with December 2019.
  • Consumables had the largest retail sector increase, rising by 7.5%, followed by spending on durables, which increased by 6.7%.
  • Spending on eating out increased by a relatively modest 1.8%. In spite of containment measures, domestic tourism delivered support.
  • By contrast, spending on hotels, motels, and other accommodation was down by 32% due to a lack of international tourists.

The Kiwi Dollar moved from $0.71120 to $0.71051 upon release of the figures. At the time of writing, the Kiwi Dollar up by 0.25% to $0.7128.

Elsewhere

At the time of writing, the Japanese Yen was down by 0.02% to ¥103.71 against the U.S Dollar, while the Aussie Dollar was up by 0.22% to $0.7698.

The Day Ahead:

For the EUR

It’s a relatively busy day ahead on the economic calendar. Finalized December inflation figures from Germany and ZEW economic sentiment figures for Germany and the Eurozone are due out.

Expect Germany’s ZEW Economic Sentiment figure for January to be the key driver.

Away from the economic calendar, COVID-19 vaccine news along with the latest COVID-19 figures will also influence.

On the political front, the Italian government faces a Senate vote later today that will decide Conte’s fate. On Monday, the Chamber of Deputies voted in favor of Conte’s government following the coalition breakdown.

A political crisis on top of the COVID-19 pandemic would pressure the EUR.

At the time of writing, the EUR was up by 0.09% to $1.2088.

For the Pound

It’s another quiet day ahead on the economic calendar, with no material stats due out to provide the Pound with direction.

The lack of stats will continue to leave COVID-19 news to provide direction.

At the time of writing, the Pound was up by 0.06% to $1.3595.

Across the Pond

It’s another particularly quiet day ahead on the economic calendar after Monday’s market close.

The lack of stats will leave the Greenback in the hands of chatter from Capitol Hill and COVID-19 news.

At the time of writing, the Dollar Spot Index was down by 0.06% to 90.713.

For the Loonie

It’s a relatively busy day on the economic data front. Manufacturing sales and wholesales figures for November are due out later today.

The numbers are unlikely to have a material impact on the Loonie, however.

COVID-19 news updates from China and the U.S will likely remain the key drivers on the day.

At the time of writing, the Loonie was up by 0.17% to C$1.2735 against the U.S Dollar.

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

USD/CAD Daily Forecast – Resistance At 1.2800 Stays Strong

USD/CAD Video 18.01.21.

U.S. Dollar Is Gaining Some Ground Against Canadian Dollar

USD/CAD has recently made an attempt to settle above 1.2800 but pulled back closer to the support level at 1.2750 while the U.S. dollar was mostly flat against a broad basket of currencies.

The U.S. Dollar Index tried to settle above the resistance at the 50 EMA at 90.95 but failed to develop sufficient upside momentum and pulled back towards 90.80. The nearest support level for the U.S. Dollar Index is located at 90.70. If the U.S. Dollar Index declines below this level, it will head towards the support at 90.50 which will be bearish for USD/CAD.

Today, Canada reported that Housing Starts declined from 259,900 in November to 228,300 in December. It should be noted that Housing Starts remain at rather high levels so it’s too early to tell whether Canada’s housing market has started to slow down due to the second wave of the virus.

In the upcoming trading sessions, foreign exchange market traders will likely focus on the first moves of the U.S. President-elect Joe Biden. It remains to be seen whether his $1.9 trillion stimulus program will put additional pressure on the American currency.

Technical Analysis

usd cad january 18 2021

USD to CAD faced strong resistance at 1.2800 and pulled back. Currently, USD to CAD needs to settle back above 1.2775 to have a chance to get to the test of the resistance at 1.2800.

If USD to CAD manages to settle above 1.2800, it will move towards the next resistance level which is located near the 50 EMA at 1.2835. A move above this level will push USD to CAD towards the resistance at 1.2860.

On the support side, the nearest support level for USD to CAD is located at the 20 EMA at 1.2750. If USD to CAD declines below this level, it will head towards the next support level at 1.2720. In case USD to CAD manages to settle below the support at 1.2720, it will get to the test of the next support level which is located at 1.2700.

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

Silver Price Daily Forecast – Silver Is Volatile At The Start Of The Week

Silver Video 18.01.21.

Silver Tested Support At $24.00 But Quickly Rebounded

Silver is trying to settle above the resistance at $25.00 after an unsuccessful attempt to get below the support at $24.00 while the U.S. dollar is gaining ground against a broad basket of currencies.

The U.S. Dollar Index gained strong upside momentum and managed to settle above the resistance at 90.70. Currently, the U.S. Dollar Index is testing the next resistance level which is located at the 50 EMA at 90.95. If the U.S. Dollar Index gets above this level, it will head towards the resistance at 91.20 which will be bearish for silver and gold price today. Stronger dollar is a negative catalyst for silver and other precious metals as it makes them more expensive for buyers who have other currencies.

Meanwhile, gold is trying to get back to the $1850 level after an attempt to settle below the support at $1800. If gold manages to settle above $1850, it will move towards the resistance at $1865 which will be bullish for silver.

Gold/silver ratio has recently made an attempt to settle above the resistance at the 50 EMA at 74.30 but failed to gain sufficient upside momentum. If gold/silver ratio settles above the 50 EMA, it will move towards the resistance at 75.50 which will put additional pressure on silver.

Technical Analysis

silver january 18 2021

Today, silver tested the support level at $24.00 but failed to develop additional downside momentum and rebounded closer to the $25 level.

The nearest significant resistance level for silver is located at the 50 EMA at $25.15. If silver manages to settle above this level, it will move towards the next resistance at $25.30. A successful test of this level will push silver towards the next resistance which is located near the 20 EMA at $25.55.

On the support side, silver will likely get some support near $24.70. A move below this level will open the way to the test of the support at $24.50. In case silver gets below this level, it will head towards the support at $24.25.

The recent trading action indicated that silver may move fast between these levels so traders should be ready to react quickly to any developments.

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