Weekly Analysis (31-05-2021)
Last Week’s Market Overview
After dropping for two weeks, the New Zealand dollar made a strong rally last week, surging by 1.14%.
Firstly, its first quarter’s retail sales released on Monday beat market consensus, increasing 2.5% instead of dropping 4.4%. It signalled that the consumer spending is improving and the economic recovery is being well on track. In addition, there was MPC meeting of RBNZ on Wednesday. Although the central bank did not make any change on its monetary policy this time, it said directly that there might be a rate hike in August next year.
As a result, the NZD appreciated against USD continuously from Monday to Thursday. Even though it retraced a bit on Friday, it still printed a green one-week candlestick and became the best performer among major currencies finally.
CNH (Offshore Renminbi)
The Chinese Yuan performed extremely well in the previous week. It had a 1.16% sharp uptick and thus reached a new three-year high.
The market predicted the PBoC, the central bank of China would be comfort to see the continued appreciation of its currency as it could become a tool to combat the surging commodity price. At the same time, the US Index declined from as high as 93.40 to under 90.00 within recent two months, the Renminbi was also hugely benefited from the weak dollar.
However, the but market is worried that the PBoC would take action to prevent the Yuan from rising too fast, so it seems quite difficult to surpass 6.25-level easily.
Market Change Last Week
Market Focus This Week
Monetary Policy Meeting of Reserve Bank of Australia
The economy is recovering at a faster-than-expected pace from the downturn caused by COVID-19. Its quarter-on-quarter GDP kept recording a positive figure after falling by 7% in the second quarter of year 2020, achieving a V-shaped rebound. The market consensus on the GDP of the first quarter is increasing 2.5% and the actual value will be released on upcoming Wednesday.
For the labour market, the unemployment rate reached its peak at 7.5% in July last year, which is not as severe as predicted at the beginning of the pandemic. Since the rate persisted to drop for almost a year, it returned to 5.5% in April.
The strong rebound is likely to extend in the next two years, the central bank revised up the economic outlook again during the meeting held in early May. The forecast for GDP growth is 4.75% and 3.5% over 2021 and 2022 respectively. The unemployment rate is expected to be cut to 5% and 4.2% by the end of this year and next year.
Both central banks of Canada and New Zealand has turned to be more hawkish. Nevertheless, the CPI in Australia was the least comparing to Canada and New Zealand, so it is not urgent for the bank to have a rate hike soon. Therefore, the RBA may retain a wait-and-see mode this time.
The Chinese Yuan has performed extremely well in recent two months. It climbed up 1.16% in the previous week.
From technical perspective, there is a golden cross that formed one month ago on the daily chart. In addition, the RSI also indicates the price would continue to surge as its readings keep moving between the upper neutral zone. Moreover, the prices are lying within the uptrend channel, but it is adjacent to resistance at 0.15700.
As a result, it is highly possible for the offshore Renminbi to move further north, but it may make a small pullback around 0.15700 first. The pullback is expected to last for a short period of time only, so its uptrend would be resumed soon.
Support: 0.15590, 0.15450, 0.15320, 0.15160
Resistance: 0.15700, 0.15940, 0.16100
It was the fourth week of uptick for the gold. It continued to move upwards by 1.18% last week.
In the technical aspect, the golden cross started at mid-April persists on the daily chart, suggesting for the extension of the current uptrend. However, the RSI is lying above 70-interval, and its price is close to the upper resistance of the uptrend channel. Both of them in contrast signal a reversal.
All in all, the bullish momentums are still quite strong, so the outlook for the gold remain positive and it is unlikely to have a trend reversal in the near future. Nonetheless, a temporary retracement may occur in the upcoming one to two weeks.
Support: 1850.00, 1765.00, 1680.00
Resistance: 1950.00, 2000.00, 2075.00
The seven-week appreciation of the Canadian dollar eventually came to an end last week. CAD dropped by 0.07% against USD despite a sharp advance in the oil price.
Technically, the golden cross formed by two-line MAs since the mid-year of 2020 still persists on the weekly chart. Apart from that, the candlesticks are confined very well within the uptrend channel. The RSI is currently oscillating between the range of 50 to 70 too.
The above technical indicators show a good future for the CAD, but it should be reminded that the current price is about 0.8280, which is near the important resistance at 0.8300. 0.8300 is a decisive level for the future movements of the loonie, its uptrend can be extended only if it can make a breakout. Since 0.8300 is really significant and difficult to be broken, so the CAD may need to test it several times.
Support: 0.8150, 0.8070, 0.7900
Resistance: 0.8300, 0.8550, 0.9400
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