The past week has been dominated by the new Covid-19 variant, Omicron, as we all try to out together the limited information we have and establish what will it all mean for the coming months. There is so much uncertainty and so the volatility and choppy prices we’ve seen this week may continue until we get a better idea of the threat caused by the new variant.
The RBA and BoC both will hold meetings next week and will likely be armed with little more information than OPEC+ had on Thursday, which makes the job of offering reliable guidance very challenging. Even the Fed, ECB and BoE the week after will find life difficult and two of them were expected to announce tightening measures prior to the news of the Omicron variant.
The US economy is adding jobs at a slower rate as employers are starting to have success luring people back to the labour force. If wages continue to rise, that will be the key for companies to reach their hiring targets.
A relatively quiet week ahead for the euro area, with much of the headline data being revisions and ZEW figures the only notable releases. Much like in Europe, the UK next week sees a number of low-level economic data releases, with GDP numbers on Friday the only outlier.
The most important data that will come out next week will be:
The Australian Cash Rate and RBA Rate Statement on Tuesday, later in the day, the EU and German ZEW Economic Sentiment on Tuesday.
The Canadian BOC Rate Statement and Overnight Rate but also the US JOLTS Job Openings and 10-y Bond Auction on Wednesday.
US Unemployment Claims and the 30-y Bond Auction on Thursday and on Friday the US monthly CPI and Prelim UoM Consumer Sentiment.
Major Currencies Performance and Signals
EUR/USD
The Euro bounced back last week but stayed in a range. The German economic is in focus at the start of the week, with factory orders and industrial production figures due out. We remain neutral
FORECAST: SELL
Resistance: 1.1350, 1.1400, 1.1450
Support: 1.1300, 1.1250, 1.1200
GBP/USD
The British pound rate ended the week in negative territory due to revived fears of covid-19. Manufacturing and industrial production, trade, and GDP numbers are due out at the end of the week. We expect the pound to come back this week as it is in oversold territory.
FORECAST: BUY
Resistance: 1.3250, 1.3300, 1.3350
Support: 1.3200, 1.3150, 1.3100
AUD/USD
The Aussie Dollar ended the week down by 1.7% to the psychological level of 0.7. It’s a quiet week ahead, however, on Tuesday, the RBA monetary policy decision will be key.
FORECAST: SELL
Resistance: 0.7050, 0.7100, 0.7150
Support: 0.7000, 0.6950, 0.6900
USD/JPY
Last week the Japanese Yen rose by 0.51% to 112.8 against the US Dollar but ended in negative territory in general. At the end of the week, November inflation figures and prelim consumer sentiment figures for December will also provide direction.
FORECAST: NEUTRAL
Resistance: 113.00, 113.50, 114.50
Support: 112.50, 112.00, 111.50
USD/CAD
Last week, the Loonie ended the week up 0.4% to 1.2843 against the US Dollar. The main event of the week, however, will be the BoC monetary policy decision. Expect any hawkish chatter on the economic outlook to deliver a boost to the pair. For the moment we are bullish
FORECAST: BUY
Resistance: 1.2850, 1.2900, 1.2950
Support: 1.2800, 1.2750, 1.2700
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