Weekly Analysis (22-02-2021)

Last Week’s Market Overview

AUD

Australian dollar has pulled back sharply since early January and has fluctuated drastically between 0.7600 and 0.7800. It finally made a breakout in the previous week.

The direct catalysts for the gains are the better-than-expected economic updates and positive prospect for the economic situation. For labor market, there were 29.1 thousand new jobs added in January and the unemployment rate declined by 0.2% to 6.4% which is lower the 6.5% consensus. Furthermore, according to the RBA minutes, the RBA members predicted the pace of recovery would be faster by around half to a year than early forecast. They expected that the GDP and employment might return to their pre-pandemic levels in 2021.

The above factors together pushed the AUD to a new swing high, making it to be the best currency performer of the week.

JPY

last week has been a roller-coaster adventure for the Yen. At the beginning of the week, JPY extended its downtrend thanks to the fall on the COVID-19 infected cases and sustained pandemic recovery across the world.

Nonetheless, the slump stopped quickly due to the positive economic figures in Japan. The data on Wednesday showed that the January exports rose 6.4% compared to the same period of 2020. Moreover, the manufacturers’ Sentiment has turned positive for the first time since mid-2019. The January PMI released on Friday has also entered the expansion zone (50.6) for the first time in recent 22 months.

The optimistic figures drove the Yen to edge up for several days, but it could not recover the huge loss on Monday, finally falling by 0.48% in a week.

Market Change Last Week

Market Focus This Week

Reserve Bank of New Zealand (RBNZ) Meeting

The RBNZ is going to hold its first meeting in 2021 on upcoming Wednesday. Despite the first central bank considering to impose the negative interest rate after the outbreak of COVID-19, it has not lowered the interest rate further since March.

The economic recovery of New Zealand is on a good track. For example, the most recent report showed that the unemployment rate unexpectedly dropped by 0.4% point to 4.9% in the final quarter of 2020. In addition, the inflation was stronger than RBNZ forecasted as the CPI has held stably around 1.4%. As a result, there is little chance for the RBNZ to modify its interest rate to stimulate the economy under the improving situation.

Technical Analysis

USOIL (H4)

The WTI crude oil has experienced the first slump since late January in the previous week as it faced strong selling pressure after the breakout at 60.00.

Technically, the outlook for the black gold is still optimistic in longer term as the price is well confined within the uptrend channel. However, both two-line MA and RSI give out bearish signal on four-hour chart, so it may face some obstacles in the short run.

All in all, the oil price in this week is likely to challenge the 60.00 interval again. If the bulls successfully dominate the market, it will break out the resistance and resume its surge. Otherwise, it may pull back to around 57.50.

Support: 57.50, 54.00, 51.50

Resistance: 60.00, 66.50, 77.00

GBPUSD (D)

The British pound continued to edge up for successive six weeks, appreciating 1.11% against USD and breaking out the resistance at 1.3970 last week.

According to the daily chart, the two-line MA maintains it golden cross pattern, signalling the uptrend will be carried on. Moreover, the RSI is located slightly above 70, the pullback is highly possible to occur if the reading of the indicator keeps rising.

For this week, the GBP may move further north slowly as it has just broken out the resistance. However, if the surge is too fast, the bears are possible to enter the market and pull it back to the support at 1.3970.

Support: 1.3970, 1.3750, 1.3450

Resistance: 1.4350, 1.5000

NZDUSD (H4)

The New Zealand dollar had outstanding performance last week, rising over 1% against USD and closed around the resistance at 0.7315 last week.

Based on the four-hour chart, the Kiwi has fluctuated within the range from 0.7100 to 0.7315 for almost two months. Although it skyrocketed in this morning and passed through the upper bound of the channel, the breakout has not yet been confirmed.

In conclusion, if the price can stand firmly above 0.7315 in coming few days, the breakout can be confirmed and it may indicate the start of a new uptrend. Nevertheless, if the price return to the channel soon, the sideways trend will extend in the foreseeable future.   

Support: 0.7100, 0.7000, 0.6800

Resistance: 0.7315, 0.7500

Economic Events

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