BCR Weekly Outlook (21 January 2019)


Posted on: 2019-01-21 (Day) By BCR Weekly Outlook


 

Key Events for this week (21/01 – 25/01)

 

Time (GMT)

Country

Currency

Event

Previous

Forecast

 

Mon 21/01 02:00

AUD CNH NZD

Chinese GDP

6.5%

6.4%

 

 

 

The world’s second-largest economy is feeling the pressure from the trade war with the US and reflects the global slowdown. Various figures such as inflation and also industrial output (published alongside this GDP report) have shown a few initial signs. But how bad is the situation? The overall number will provide further data. After reporting an annualized growth rate of 6.5% in Q3, a minor deceleration to 6.4% is on the cards now. How reliable are official Chinese figures? In any case, the data affect sentiment.

Tue 22/01 13:30

GBP

UK Jobs Report

4.1%

4.1%

 

 

 

While Brexit grabs the headlines, the economy is still of interest and could move the pound at least temporarily. With a low unemployment rate at 4.1%, the focus remains on wage growth. A repeat of the robust annual increase of 3.3% is expected for November. The Claimant Count Change, or jobless claims, is a more up-to-date number for December and carries expectations for an increase of 20.1K after 21.9K last time.

Tue 22/01 21:45

NZD

New Zealand Inflation

0.9%

0.0%

 

 

 

The small South-Pacific nation releases inflation data only once per quarter, making every publication matter. After a jump of 0.9% in Q3, the last quarter of 2018 is projected to be flat: 0%. This could increase calls for a rate cut.

Wed 23/01 Morning

JPY

Japanese Rate Decision

-0.1%

-0.1%

 

 

 

The Bank of Japan has not altered its monetary policy for a few years, as inflation remains poor. Core inflation is far from the elusive 2% target despite a negative interest rate at 0.1% and the Tokyo-based institution’s pledge to keep 10-year yields close to 0%. No change is expected now, but Governor Kuroda could announce lower forecasts for inflation given the global slowdown.

Thu 24/01 00:30

AUD

Australian Jobs Report

37K

20K

 

 

 

Australia gained no less than 37K positions in November, much better than expected. The unemployment rate rose to 5.1% but this is the result of an increase in the participation rate. The report for December is forecast to show an increase of 18.1K jobs in the land down under. The jobless rate is expected to remain unchanged.

Thu 24/01 12:45

EUR

Euro-zone Rate Decision

0.0%

0.0%

 

 

 

The European Central Bank ended the Quantitative Easing program, or bond-buying scheme, at the end of 2018. It projected that the first rate rise will come in September at the earlier, but this may have to be pushed back due to increasing signs of an economic slowdown. Italy probably entered a recession and Germany narrowly averted it. France suffered from protests and other countries cannot pull the currency bloc forward. The Frankfurt-based institution does not publish new forecasts at this time and may refrain from its guidance. However, President Mario Draghi could express more caution in the press conference, weighing on the euro. An upbeat approach could boost the common currency.

 

 

 

You May Always Concern U.S. Dollar and XAUUSD (GOLD)

 

U.S. Dollar Index (DXY)

 

Weekly OHLC              95.247             96.040             95.060             96.017

Weekly Gain/Loss       0.82%

Key Resistance            96.500             97.000

Key Support                 95.000             94.000

 

The US Dollar soared in the third week of 2019, but it managed to climb above 96.00 as predicted last week after impeccable bouncing from EMA200 in the Daily Chart.  The US Dollar index settled at 96.017. US Dollar index is likely hunting for 96.50 in the following week but it remains to be seen how far the bulls can keep the market going. The attention among investors is due to a ‘No-Hike’ by the Federal Reserve with speculations of a slowdown in the US economy and at the same time, the US partial shutdown could start weighing on sentiment while US-China trade talks will be the major focus in the upcoming weeks. There are speculations that the economy could enter a technical recession at some point in 2020. In the Weekly chart, the Bulls has formed an impressive candle and it is likely to climb further and strong support from EMA200 in the Daily Chart could be the signs of another upside attempt by the Bulls towards 96.50 and any breakouts at this level will catalyst the Bulls to embolden and giving more pressure to the Bears, it is likely opening the way to 97.00 handle. On the other hand, another attempt to the level of 95.00 – 94.00 will be considered as a trend-changing and it might be moving further down if the 94.00 handle is broken.

 

 

XAUUSD (Gold)

 

Weekly OHLC              1288.94           1295.70           1280.46           1281.20

Weekly Gain/Loss       -0.60%

Key Resistance            1300.00           1350.00

Key Support                 1265.99           1243.46

 

Gold prices are trading sideways and consolidating, waiting for the dollar to make its next move. It would be a volatile situation with the global geopolitical concerns, the Federal Reserve being a bit dovish, and the US-China trade negotiations being difficult to understand at times, large Stop Loss is advisable at this moment due to this matter for those who are willing to have Long positions. Gold price failed to make further move above $1300 handle in three weeks. The $1300 handle is a psychological level and at this point, the pullback is expected, and any drops will be the opportunity to Long and it might be pulled back to $1265.99 and 1243.46, the level $1250 underneath will be supportive due to up trending channel that has been broken out of. Shorting will not be a good trade at this moment due to arising the sentiment of purchasing this precious metal. Gold price hits its high at $1295.70 and currently it settled at $1281.20 and any breakthrough at $1300 level will likely open the way to $1377.99. The other possible scenario, any break down below the $1243.46 level, there will be a chance for the price to drop back down to the $1200 level.

 

 

 

More Trading Opportunities

 

EURUSD

 

Weekly OHLC              1.14593           1.14885           1.13526           1.13652

Weekly Gain/Loss       -0.82%

Key Resistance            1.1450             1.1500

Key Support                 1.1350             1.1300

 

The Euro has broken the 1.15 handle but it pulled back a bit during the week, reaching towards the 1.1380 level. It was indeed a fake breakthrough to trap the Long Traders. There are a lot of supports underneath and the volatility will remain high since it does look to form a bit of a rounded bottom. It is the matter of time before the Euro will rally again, but it is going to be choppy in the process. The Bulls will come back sooner rather than later, but obviously it does have a lot of concerns when it comes to the European Union as well. The Federal Reserve has changed its tune about interest rate hikes lately, and that should continue to help a lot of buyers in this market over the longer-term. However, it’s obvious that there are a lot of concerns out there, and on Friday and Italian bank mentioned that they believe the recession was coming, but quite frankly that should not be a longer-term surprise. The market will turn around and start picking up the Euro again as it has been forming a line of bottoming. Any breakthrough at 1.13 handle will bring this pair to 1.12 but massive buyers are seen at the area of 1.1300-1.1350 to give the Bulls another strength to climb again towards 1.1400 and 1.1500.

 

 

GBPUSD

 

Weekly OHLC              1.28477           1.30004           1.26675           1.28702

Weekly Gain/Loss       0.18%

Key Resistance            1.2900             1.2950

Key Support                 1.2700             1.2500

 

The Cable fell significantly during the week, testing 1.27 handle for support and the bulls managed to settle at 1.28702, gained 0.18% from the previous week. GBPUSD pulled back after reaching its resistance level at EMA200 and forming Bearish Engulfing Candlestick in Daily Chart. It is likely to re-test again 1.27 handle and any breakthrough at this level, 1.25 will be the next destination for this pair while any breakout above the EMA200 in Daily Chart will certainly open more upside rooms towards 1.33 level, maybe even the 1.35 handle. The premise of this potential break out to the upside is that the Brexit may get pushed back, and that seems to be the base case of traders right now. This is going to be very dangerous pairs to be involved in with any type of major leverage.

 

 

AUDUSD

 

Weekly OHLC              0.72006           0.72239           0.71455           0.71595

Weekly Gain/Loss       -0.57%

Key Resistance            0.72500           0.73000

Key Support                 0.71500           0.71000

 

The Australian dollar has been rather silent this week, failing to break above the important 0.7250 level.  Any breakthrough above that respective level, the next phase of recovery will be in the radar towards 0.7350. 0.70 handle offers a significant amount of support underneath at the 0.70 level and overall this is a market that is going to be moving with the US/China trade relations scenario. Looking at the longer term charts, it is obvious that the 0.70 level is the beginning of major support all the way down to the 0.68 handle. The massive hammer that formed a couple of weeks ago suggests that there is a lot of interest in the Aussie underneath here, it is in the process of bottoming longer-term. Short-term pullbacks should be buying opportunities, perhaps reaching towards the 0.74 handle, maybe even the 0.75 level. Overall, any breakthrough above 0.7250 level would be the sign the buyers are starting to pick this market up again.