The Dollar continues to weaken, and that has been a benefit to commodities such as crude oil. The Covid-19 vaccine is benefiting the crude oil because anticipation of a steady increase in general travelling.
Last week has ended with the VIX volatility measure peaking the most since the end of October as global equities experienced a wary pullback. The S&P 500, DAX 30 and Nikkei 225 aimed lower. This could be a setting of a bad tone for financial markets heading into 2021.
After UK became the first western nation to begin distributing a covid-19 vaccine, the US is poised to follow after the FDA recommended the authorization of the Pfizer’s and BioNTech’s solution. The expectation of immunization may have kept US consumer sentiment upbeat this past week, despite ongoing roadblocks to a $900 billion bipartisan fiscal package.
Looking at the other currencies, the Australian Dollar managed to outperform, most probably boosted by Chinese demand for iron ore from the Down Under. Meanwhile, the British Pound declined, seeing the worst week on average since early September. Sterling’s woes can be traced to dimming prospects of a Brexit deal, as made apparent by UK Prime Minister Boris Johnson.
As negotiations on a UK-EU trade deal carry on, with less than 24 hours to go, a British government source has said that “as things stand the offer on the table from the EU remains unacceptable”.
The chief negotiators’ meeting finished on Saturday evening although other teams have been continuing to negotiate at technical levels, according to a UK official.
This week, keep a close eye on central banks such as the Fed, BoE and BoJ for their economic outlooks and views on unconventional policy., Australia reports the latest jobs report.
On Wednesday, we have the EU PMI’s in the morning, OPEC-JMMC all day, US retail sales, FOMC Statement and late at night New Zealand releases their third-quarter GDP.
On Thursday, Australia reports the latest jobs report, the Swiss SNB the Monetary Policy Assessment, the UK is reporting the official bank rate and in the US late in the day Unemployment claims.
Finaly on Friday, the BoJ is going to report their Monetary Policy Statement followed by the German IFO report and ending with Canada’s retail sales.
EUR/USD
The unexpectedly hawkish remark of Ms. Lagarde that if the situation with the Eurozone economy improves enough, it may not be necessary to use all these €500 billion in emergency funding, put the final end to the efforts of the bears to move the pair south.
The dollar is still weakening so we expected more bullish moves testing the 1.2175 and even 1.2200
FORECAST: LONG
Resistance: 1.2175, 1.2200, 1.2250
Support: 1.2100, 1.2050, 1.2000
AUD/USD
Last week, the Aussie closed above the 0.7500 area boosted by Chinese demand for iron ore.
This week we expect the bullish trend to continue testing the 0.7600 level.
FORECAST: LONG
Resistance: 0.7550, 0.7600, 0.7625
Support: 0.7500, 0.7475, 0.7450
GBP/USD
Last week the pound saw the worst week since early September. Still the Brexit uncertainty of a deal will certainly continue this week’s pound volatility.
We remain bearish with a careful eye on the Brexit headlines,
FORECAST: SHORT
Resistance: 1.3250, 1.3300, 1.3350
Support: 1.3200, 1.3150, 1.3100
GOLD (XAU/USD)
This week, the Fed final monetary policy decision of this year and a likely US fiscal stimulus deal could have a significant impact on the gold price.
We expect Gold to be trading again in a range because of the risn-on risk-off of the covid-19 pandemic and the early vaccine results.
FORECAST: NEUTAL/RANGE
Resistance: 1850, 1875, 1900
Support: 1825, 1800, 1750
USD/CAD
Oil prices have recovered with their best two weeks since the March collapse and were unaffected by the recent OPEC Plus meeting. Commodity prices are at their highest levels of the pandemic.
Fundamental and technical courses are aligned for the Canadian dollar.
Markets are anticipating the global recovery sometime next year and the first beneficiaries have been the commodities.
FORECAST: NEUTAL/RANGE
Resistance: 104.25, 104.50, 105.00
Support: 104.00, 103.50, 103.00
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