Last week, in testimony on Capitol Hill, the Fed Chair Powell reiterated his point for further fiscal stimulus support from the federal government. The week ended with mixed employment numbers with Nonfarm payrolls dropping to 245 thousand, down sharply from 638 thousand. This missed the estimate of 480 thousand. Wage growth has surprised investors with a gain of 0.3%, above the estimate of 0.1%.
Starting this week, the UK will be the first western country to deploy a Covid-19 vaccine, after regulators approved the Pfizer-BioNTech shot.
Vaccinations in the US can begin as early as Friday, with the FDA set to vote an emergency-use authorization for the Pfizer/BioNtech shot the day before. As fatalities across the US are spiking California has set a record for infections. Now more than half the state faces new restrictions, while New York City’s epidemic continues to worsen.
On Brexit, final negotiations to close a deal will resume on Sunday after delaying on Friday over the three difficult issues of fisheries, ensuring fair competition guarantees and ways to solve future disputes. It is still uncertain whether Britain or the EU are ready to move their position to allow a breakthrough. In the week ahead, both sides would have to settle on whether to continue negotiating in the belief of a deal or accept the end-result is of a no deal, Beaune said. He added, British talks that a deal could be accomplished by all parties in a day were not realistic.
The week ahead, offers another loaded economic calendar. Quite a few ‘high’ impact events on the Economic Calendar will move prices in different currency terms over the course of the week.
– On Monday, the final Q3’20 Japanese GDP report will be released.
– On Tuesday, the final Q3’20 Euroarea GDP report is due
– On Wednesday, the November Chinese inflation report will be released and the results of the December Bank of Canada rate decision will be announced
– On Thursday, the final October UK GDP report will be released, the results of the December European Central Bank rate decision will be announced and the November US inflation report be released.
Next week the ECB is expected to announce an extension to their pandemic bond-buying program by up to a year – until the middle of 2022 – weakening the Euro and boosting the value of the dollar basket. The ECB meeting and press conference is on Thursday the 10th of December from 12:45 GMT onwards
EUR/USD
A busy week ahead on the economic data front and market sensitivity to the numbers will largely depend on Covid-19 news updates. The spotlight is at the ECB monetary policy decision on Thursday. Lagarde had assured of further support in recent weeks
The price currently is above the Daily RSI overbought point which signifies a possible consolidation point this week.
FORECAST: NEUTAL/RANGE
Resistance: 1.2175, 1.2200, 1.2250
Support: 1.2100, 1.2050, 1.2000
AUD/USD
Last week, the Aussie closed above the 0.7400 area which saw both Wednesday and Thursday hold above that level.
This week is going to be relatively quiet in Australia and trader will be looking at the vulnerable US Dollar to further weaken in the near-term.
FORECAST: LONG
Resistance: 0.7450, 0.7500, 0.7525
Support: 0.7400, 0.7375, 0.7350
GBP/USD
Last week the pound broke the 1.35 price line. A busy economic calendar and Brexit uncertainty of a deal will certainly increase this week’s pound volatility.
We remain bullish with the drawdown being an opportunity to buy at a good price.
FORECAST: LONG
Resistance: 1.3450, 1.3500, 1.3550
Support: 1.3400, 1.3350, 1.3300
GOLD (XAU/USD)
Gold prices against the USD have moved sharply this week. This is due to US stimulus talks and the US Dollar weakness masking gold’s own bearish underlying fundamentals.
We will remain neutral this week as most developed countries are still coping in surge of the pandemic but at the same time the UK will start using the vaccine to essential NHS workers.
FORECAST: NEUTAL/RANGE
Resistance: 1850, 1875, 1900
Support: 1825, 1800, 1750
USD/JPY
Japans Household spending and current account figures for October and finalized 3rd quarter GDP numbers are due out on Tuesday. Revisions to the GDP numbers, household spending will garner the greatest interest. At the end of the week, the BSI Large Manufacturing Conditions Index for the 4th quarter will also draw attention.
Japan’s downside growth risk has probably intensified with accelerating Covid-19 caseloads, both locally and globally but the US Dollar weakness will be in the main spotlight.
FORECAST: SHORT
Resistance: 104.25, 104.50, 105.00
Support: 104.00, 103.50, 103.00
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