Happy New Year!
Traders last week experienced low volatility due to the Christmas/New year holiday. Nevertheless, we saw a continuing weak dollar with the NZD, AUD and GBP gaining upwards.
In the US, the Chicago PMI went up to 59.5 in December, from 58.2 and beating the forecast of 56.6. Pending Home Sales reduced for a third straight month, with a reading of -2.6%. The week ended on a positive note, as unemployment claims dropped for a second straight week, falling to 787 thousand.
This week will be busy with various economic announcements around the globe and the financial market is expected increased volume this week as investors return from their holidays. On Monday, the German and EU will report their Manufacturing PMIs which are expected to confirm the initial estimates of 58.6 and 55.5, respectively.
Tuesday, traders will observe the German Retail Sales, the French CPI (Consumer Price Index) and the US Manufacturing PMI (Purchasing Managers’ Index) in the morning. The major event this week will be the runoff Senatorial election in Georgia where the two Republican senators are trying to defend their seats. The ultimate winner will is expected to impact the US economy.
On Wednesday, the day will start with the German Preliminary CPI and EU Service PMI’s and ends with the US FOMC Meeting Minutes.
Thursday is looking very busy of economic announcements from the EU in the morning and in the afternoon the US Unemployment Claims will be announced.
On Friday, the most important figure of the month and the first of the year 2021, the US Non Farm Payrolls and Unemployment Rate. The unemployment rate in the US is expected to be increased to 6.8% from 6.7% last December.
EUR/USD
The December month was an impressive rise for the euro, as it grown 2.4% percent. The runoff election in Georgia on Tuesday will determine which party controls the US Senate, which could affect the movement of the dollar.
FORECAST: NEUTRAL
Resistance: 1.2250, 1.2300, 1.2350
Support: 1.2200, 1.2150, 1.2100
AUD/USD
The Australian dollar was among the best 2020 performers, ending the year against the greenback above the 0.7700 threshold and at levels last seen in April 2018. The pair posted gains for a seventh consecutive week, backed by the persistent American dollar’s weakness. T
Australia will start the week released the December Commonwealth Bank Manufacturing PMI, foreseen unchanged from the preliminary estimate at 56, and the December RBA commodity Index SDR.
FORECAST: LONG
Resistance: 0.7750, 0.7800, 0.7850
Support: 0.7600, 0.7550, 0.7500
USD/CAD
The Canadian dollar showed gains through the week, as the Loonie fell by 1%. There are five Canadian events in the upcoming week, including tier-1 employment releases. The US dollar remains under pressure, and we could see some movement around the pair in mid-week, with the US runoff election in Georgia on Tuesday.
FORECAST: SHORT
Resistance: 1.2800, 1.2850, 1.2900
Support: 1.2700, 1.2650, 1.2600
GBP/USD
After some good gains on the pound, Covid-19 concerns may put a halt to it. The cable is technically bullish but it could correct down before resuming its gains. This Monday, the UK will publish the November money figures like Mortgage Approvals and Net Lending, while Markit will release the December Manufacturing PMI, expected to be unchanged at 57.3.
FORECAST: NEUTRAL
Resistance: 1.3700, 1.3750, 1.3800
Support: 1.3600, 1.3550, 1.3500
GOLD (XAU/USD)
XAU/USD is likely to remain at a high point in 2021 because of the Fed’s monetary stimulus measures, but it’s expected to struggle as it has to compete with other cheaper assets. At that time gold will likely shine, but until then, we are expecting a range bound movement in the metal.
FORECAST: NEUTRAL
Resistance: 1900, 1925, 1950
Support: 1875, 1800, 1750
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