Last Week’s Market Overview
The safe-haven dollar climbed up again after moving to near 90 support level last week. There were several catalysts for the strong dollar, such as the production delays of vaccines and slowdown in the pace of recovery.
In the previous Wednesday, the Fed stated that was tough in recent months, and it will keep the accommodative monetary policy until the economy rebound from the pandemic-triggered recession.
Although the Fed showed a dovish stance, the market was still pessimistic on the course of virus. The USD then edged higher, closing at above 90.50 in last week because of the risk aversion in the markets.
Nasdaq Index plummeted for 3.49% in last week which thus became the worst week for the index since November.
Apart from the negative outlook on economy and the concerns on vaccine rollout, the market was also shocked by the trading frenzy on some stocks like AMC and GameStop, triggering the risk-off sentiment among the investors. The investors were worried about the hedge funds with massive losses from the short-selling this time may raise money by selling other stocks. Moreover, they were cautioned about the overheated market thanks to the intensifying speculative behavior.
All in all, the major indices worldwide dropped significantly in the previous week, the Nasdaq was the worst performer among three US major indices.
Market Change Last Week
Market Focus This Week
Interest Rate Decision (Australia & UK)
The Reserve Bank of Australia is going to hold the first meeting in 2021 on coming Tuesday. In recent months, the Australia economy was on the right track in general. The inflation was 0.9% in final quarter of 2020, unemployment also kept declining, and business condition was improving too.
The interest rate has already been lowered to 0.1% in order to stimulate the economy, so it is unlikely for RBA to lower the rate so fast when the economy is doing quite well and the housing price is skyrocketing. However, it is possible to extend Quantitative Easing (QE) program by a further $100 billion due to the worsening pandemic across the world.
The Bank of England will have its first 2021 meeting on next Thursday. Although the BoE said that the negative interest rate could be in the monetary toolbox as a response to the Covid crisis, most of investors believe that the negative rate is controversial on its feasibility and effect, so it would not be adopted in the near future.
The market anticipate that the BoE will remain all the monetary policies unchanged, so the rate will stay at 0.1%.
The WTI crude oil had only small movements in previous four weeks and the price was also well confined within the consolidation zone bounded between 51.50 and 54.00.
In the longer run, the oil price indicates a bullish sign in both daily and weekly charts. Nonetheless, it is likely to be a sideways market in the near future in technical perspective. For instance, by observing the four-hour chart, the two-line MA are fluctuating above and below each other alternatively, and the RSI is oscillating around the 50-interval too.
Since the price of black gold has just touched the lower bound of consolidation zone, it may have a rebound in the upcoming week.
Support: 51.50, 46.50, 43.50
Resistance: 54.00, 60.00
After the uptrend of AUDUSD ended in the mid-January, the AUD has retraced from its high for three weeks.
For technical aspects, both two-line MA and RSI show a bearish sign. For example, the death cross pattern is appearing in two-line MA, and the RSI is staying firmly under 50-mark. Therefore, the bearish momentums may keep dominating the market.
All in all, the depreciation is suggested to be continued in the near future. The downside movement may be resisted by the 0.7600, the lower resistance of the consolidation area.
Support: 0.7600,0.7410, 0.7000
Resistance: 0.7800, 0.8140
S&P 500 Index (H4)
Similar to Nasdaq, the S&P 500 Index experienced the greatest slump last week, pulling back sharply from 3870 to 3714.
In long term, the index is still trending upwards according to the weekly candlestick patterns. However, both two-line MA and RSI in four-hour chart anticipate that the short-term uptrend has been over. In addition, you should find that the price has broken below the trend channel from the graph above.
As a result, the bears may take over the market temporarily and the drop is highly possible to be stopped by the strong support level at 3550.
Support: 3550, 3230
Resistance: 3830, 4000
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