Last Week’s Market Overview
After breaking below the uptrend channel in early January, EUR plummeted to 1.2050 strong support. Last week, the EUR started to rally at the beginning of the week amid the better-than-expected economic sentiment.
On Tuesday, the ZEW reported that German investors’ sentiment increased from 55.0 to 61.8 in January, it also showed the economic outlook was improved due to the rising expectations for exports. On Thursday, the ECB became more hawkish by saying that it might not use all of PEPP (a temporary asset purchase programme) envelope. As a result, the EUR surged significantly on both two days. Nonetheless, the Markit PMI figures were slightly below market expectations, Euro in the remaining week thus did not move much, closing at about 1.2170.
The Lonnie was boosted by the central bank meeting in the mid-week, but it then retraced back and finally remained almost unchanged for the whole week.
Governors of Bank of Canada met on previous Wednesday and decided to maintain all monetary policies. In addition, it stated the outlook after March would be stronger than October projection attributed to earlier-than-expected availability of vaccines and the government policy stimulus. The optimism therefore surprised the market, pushing the CADUSD to reach 0.7939.
The appreciation was ended by pessimistic employment figures on Thursday. According to the ADP Report, 28,800 jobs were reduced in December, and the November total of jobs added was revised from 40,800 to -219,800. It led to a plunge of CAD and made it the worst performer among major currencies last week.
Market Change Last Week
Market Focus This Week
Q4 Gross Domestic Product (GDP) (US & Germany)
The US government is going to released the GDP of final quarter in coming Thursday. In 2020, the pandemic has shocked the US economy since March and ended the 128 months of economic expansion as many economic activities have been banned or shut down. The GDP contracted 5% and 31.4% in Q1 and Q2 respectively, but finally shifted to expand after reopening the economy, rebounding 33.5% in Q3. In the final quarter, the worsened COVID-19 situation weighed on the pace of recovery, so the GDP growth rate is expected to slow down to 3.9% and the GDP would remain well below their levels at the beginning of the year
The Q4 GDP of Germany will be released on Friday. The pandemic began to spread fast across European countries in late February, Eurozone experienced a significant economic downturn in both Q1 and Q2. Although there was a 11.5% rebound in Q3, another contraction could not be avoided in Q4 due to the much stricter containment measures imposed after COVID-19 has revived since October. Germany is the most important economy in the EU and its performance is likely to be the best among EU members.
The market anticipates that the Eurozone Q4 GDP would fall, but Germany GDP would remain unchanged. In general, Germany 2020 annual GDP would decrease 5.0%, which is much better than 8.3% contraction of the whole EU.
The WTI crude oil went down slightly for two successive weeks, the fall in last week was only 0.09%.
Technically, both two-line MA and RSI have a positive indication because golden cross is maintained in the two-line MA and the RSI has already returned to the neutral zone. Furthermore, the price is still well confined within the trend channel.
All in all, the black gold may move a bit downwards in coming few days, but the decline would be stopped by support level soon. It is highly possible for it to rebound from the bottom and resume the incomplete uptrend.
Support: 49.50, 46.50, 43.50
Resistance: 55.00, 60.00
USD Index (D)
After the two-week rally, the greenback was resisted by 91.00 and slumped over 0.5%, closing at 90.24 last week.
For technical aspects, the RSI has broken below the 50-interval, staying at 47.23 level. In addition, the two-line MA has just formed a death cross. Both indicators signal that the uptrend of USD will come to an end in a moment.
As a result, it is very likely to see USD moving further south within this week and challenge the support level at 90.00. Since 90.00 is the decisive level for dollar bulls to defend, it may have to test for several times before a breakout.
Support: 27500, 19700, 13880
Resistance: 33900, 41900, 45000
NASDAQ Index (H4)
The Nasdaq resumed its rally and became the best performer among three US indices last week by rising 4.19%.
For two-line MA, the golden cross appearing on the chart indicates the potential for further advance. However, for RSI perspective, it has passed the 70-mark and entered the overbought zone. The price is touching the upper resistance trendline too.
In conclusion, the uptrend of Nasdaq is far from finished, and the latter two signals hint that there may be a retracement in the near future. We may see the index go down first, but retain its bullish momentums and skyrocket again when standing firmly near the support level at 13220 or 12950.
Support: 13220, 12950, 12600
Resistance: 13600, 14000
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