Last Week’s Market Overview
Last week, the GBP made a surge for consecutive five weeks and closed around the weekly high.
Even though the most recent retail sales released on Monday showed the consumer spending in January plunged again after May under the reintroduced lockdown, the British pound still printed green bars before Thursday.
GBP then retraced a bit on Thursday, but it edged up quickly on the following day amid the better-than-expected 2020 final quarter’s GDP. The figure published was 1% which was much higher than the 0.5% market consensus. It also acted as a catalyst for GBP to break the resistance at 1.3850 again.
The dollar depreciated against all the major counterparts in the previous week, making an almost 0.7% slump.
The first downside driver might be the less than impressive economic data. The U.S. NFIB small business index dropped from 95.9 to 95.0. Jobless claims remained far above the 665,000-peak during the 2008 Financial Crisis.
Apart from the unencouraging figures, the Fed stated again the low interest rate would be held in order to achieve full employment. It might be another factor for the weak dollar.
Market Change Last Week
Market Focus This Week
2021 January Retail Sales Report (US & Australia)
The US is going to release its January Retail Sales Report on upcoming Wednesday. The latest report shows the December retail sales decreasing 0.7% since November, but rising 2.9% compared to the same time last year. It is the third consecutive month of dropping consumption because of high level of unemployment, ongoing pandemic and lack of government’s financial support. Among all thirteen categories, electronics & appliance stores and food & beverage stores were the worst performer, plummeting by 4.86% and 4.47% respectively.
President Joe Biden has unveiled a $1.9 trillion additional coronavirus pandemic relief package in order to tackle the pandemic and revive the staggering economy. The package includes direct relief to households and small businesses. For example, one of aids for individuals will be a pivotal third stimulus check for $1400. The proposed additional relief is expected to boost the consumption in the near future. Furthermore, the number of COVID-19 infected cases has kept declining since January. It is likely to benefit the store retailers a lot and be a driver pushing the retail sales. The market expects the figure will turn positive in January, surging for 0.7% compare to December.
Australia is going to release the retail sales data of January on Friday. The retail sales of Australia in December slumped by 4.1% when compare with November, but it rose by 9.6% in annual term. The tumble was mainly recorded in household goods, department stores and clothing.
The market has a more positive outlook on January’s retail sales as the outbreak of virus in some states has been controlled, mobility restrictions imposed since December were largely lifted in early January. In addition, the employment figures also remain strong recently. These factors support for the rebound of retail sales in January.
The WTI crude oil had outstanding performance in the previous week. It at the end successfully broke out the significant resistance at 60.00.
Technically, the outlook for the black gold is quite optimistic based on two-line MA and RSI. The fast MA pass the slow MA from below again and formed a golden cross again. Moreover, the RSI has already returned into the neutral zone. Both indicators thus signal that the bullish momentums of oil persist.
As the price has just broken above the 60.00 interval, it may take some time to stay firmly above the level. Therefore, it is likely to continue the uptrend and move further north after resting around 60.00 for a while.
Support: 60.00, 54.00, 51.50
Resistance: 66.50, 77.00
The British pound made a 0.85% surge last week and broke out the upper resistance level at 1.3850, reaching the high point since mid-2018.
For technical aspects, the price is standing firmly above the 1.3850 resistance and the golden cross is still maintained in the two-line MA, but the RSI has stepped into the overbought zone.
All in all, it is possible to see the pound making a corrective pullback in the near future and the retracement may occur when the price touches the resistance line of trend channel. Nonetheless, the uptrend is highly possible to resume after the temporary downside movement is resisted by support level.
Support: 1.3850, 1.3520, 1.3180
Resistance: 1.4350, 1.5000
The Australian dollar appreciated near 1.1% against US dollar and has become the best weekly performer among all major currencies.
According to the two-line MA, the golden cross indicates the AUD would keep bullish in the medium to long run. In addition, the RSI is recording 66.092 which also support for further upward move in the short term.
However, the price is very close to the strong resistance (support) at 0.7800, it takes time for confirming the breakout. Therefore, the AUD may fluctuate slightly around the level for some period of time and extend its uptrend later.
Support: 0.7800, 0.7600, 0.7410
Resistance: 0.8140, 0.8650
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