Last Week’s Market Overview
The safe-haven currencies did not perform well last week amid the strong risk-on sentiment in the market and the Swiss was affected the most compare to USD and JPY.
Last week, Swiss National Bank’s Tomas Jordan emphasized that it was important to intervene the exchange rate and the US designation of currency manipulator would not deter its monetary policies. It led to a sharp drop on CHF on Monday.
The Consumer Sentiment Index was released on last Thursday and it stood at –15 points which was slightly worse than October’s figure (–13 points). Expectations regarding general economic development, budget situation, labor market, households and personal financial situation were more pessimistic than in October’s survey, so it caused another round of slump on Friday.
The oil price extended its gains again last week, increasing for more than 9%. The surge was majorly pushed by three factors, including the fall in inventories, better-than-expected US economic performance and tightening supply.
On Wednesday, the OPEC+ extended its production policy, suggesting that producers are sticking to its output cuts. On the same day, the American Petroleum Institute reported that US crude oil stockpiles unexpectedly fell by 4.3 million barrels, reaching lowest level since March. Furthermore, the US economic data were beating the market consensus. The unemployment numbers kept improving, and the factory orders continued to increase, rising for 1.1.
The aforementioned factors helped boost oil prices and it almost rebounded to the price level at the beginning of 2020.
Market Change Last Week
Market Focus This Week
UK Q4 GDP
The market is focusing on the United Kingdom as the UK government is going to release its 2020 last quarter’s GDP on upcoming Friday.
The UK is one of the countries affected by the virus the most. It is because the UK economy comprises a much larger share in services sector among comparable advanced economies. Owing to the coronavirus-induced lockdowns, a lot of businesses and activities were hammered, followed by a 1.7% drop of annual GDP in Q1, Q2 plunged 21.5%. The activities of services, construction and production restarted in mid-2020 thanks to the easing restrictions, it thus led to a rebound in Q3. Unluckily, the situation became worse in winter, the second wave pandemic led to another round of lockdowns. The re-introduced measures weighed on the recovery in the fourth quarter, it is possible to have a 10% tumble on GDP for the whole year.
For Q4, the market believes that the final figures will be better than expected in November, but it has mixed attitude towards whether the production has a contraction. Some forecast to see a modest contraction, but some of estimates point to a 0.5% expansion. We will know the answer when official GDP figures are released.
The WTI crude oil performed extremely well in the previous week. After breaking the resistance at 54.00, it edged up to a higher level easily.
In the medium to longer run, the two-line MA is supporting for the bullish bias on oil price. Nonetheless, the RSI has entered into the overbought zone, suggesting a pullback in the near future.
All in all, the bullish momentums remain strong and the price of black gold is likely to maintain its uptrend. However, a temporary correction is highly possible to occur when it reaches to the upper psychological resistance at 60.00.
Support: 54.00, 51.50, 46.50
Resistance: 60.00, 66.50
The Euro broke below the lower support level and plummeted quickly last week. Fortunately, it rebounded sharply on Friday, closing around the support at 1.2270.
For technical aspects, the two-line MA is showing a death cross pattern, but the mouth tends to close, and the RSI is just lying above 50-mark. Both indicators signal the market outlook is still unclear, but it may be decided in the upcoming week.
Therefore, we should pay more attentions to the movements in coming few days. It is very likely to observe a tug of war between the bulls and bears near 1.2270 as it is a decisive level to determine the next step of the EUR.
Support: 1.1915, 1.1600
Resistance: 1.2050, 1.2270
The recent performance of Yen was quite poor as it experienced a slump for consecutive two weeks. It made a 0.67% plummet and dropped below the support level at 0.00950 last week.
Technically, the death cross pattern is maintained in the two-line MA. From RSI perspective, it has already retraced from the oversold zone and is well confined between the range of 30 and 50.
Since both indicators suggest a bearish trend for JPY, and its price has just broken below 0.00950, the downside movement is expected to continue in the foreseeable future.
Support: 0.00930, 0.00910
Resistance: 0.00950, 0.00960, 0.00975
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