Weekly Outlook 9th November to 13th November, 2020
USDINR: Key economic data releases for India in the upcoming week include inflation numbers and annualised industrial production. Inflation is expected to ease to 7.28% from 7.34%, while industrial production is expected to pickup from -8.0% to -2.7%. India's foreign exchange reserves rose for the fifth straight week to hit a fresh record high of $560.72 billion for the week ending Oct. 30, from $560.53 billion in the prior week, the Reserve Bank of India said. September’s JOLTs job openings are due out on Tuesday, in what’s a particularly quiet start to the week. The focus will then shift to October inflation and weekly jobless claims figures due out on Thursday. Away from the economic calendar, COVID-19 and U.S politics will remain the key driver, however. Over the weekend, Biden became President-Elect. Trump’s unwillingness to concede and potentially lengthy legal battles could test the markets, however.
Technicals: Technically, USDINR will face a resistance at 74.75 – 75.00 region. Trendline resistance around 74.75 - observe the yellow trendline connecting the dollar peaks of Apr’20 and Jun’20. 144-day Simple Moving Average comes at 74.79 (this moving average has been a good indicator of turning points). Price up-gap in the USDINR daily chart: 74.42 – 74.58 (blue horizontal lines) As we all know, price gaps in USDINR usually fills up. Exporters should do some forward dollar selling. COMFORT OF LEVELS having seen 73.00 – 73.50 for a prolonged time.
EURUSD – It’s a relatively quiet week ahead for the Eurozone, due to the absence of any material data releases. Germany is set to release it’s November ZEW survey on Tuesday, a boosted economic sentiment is expected. Germany, European Union and the US will also publish their October CPI. ECB is also scheduled to publish it’s estimate for the Q3 GDP. We won’t expect too much influence, however, with the markets now looking for the ECB to deliver next month. Away from the economic calendar, COVID-19 news updates and U.S politics will remain a key driver in the week. The EUR/USD ended the week up by 1.95% to $1.1874.
Technicals: Euro is currently trading in a region which offers a lot of resistance from 1.19 to 1.20 level. This market will continue to see a lot of volatility, until a peaceful transfer of power occurs in the white house. If the pair continues to trade in this range of 1.19 to 1.20, then a likelihood of a breakout from the resistance should give us a target of 1.25 and for support it should be 1.16.
GBPUSD – It’s a particularly busy week ahead on the economic calendar. On Tuesday, claimant counts and employment figures are due out ahead of a particularly busy Thursday. On Thursday, 3rd quarter GDP and September manufacturing and industrial production figures will draw plenty of interest. September trade data, retail sales, and house price figures are also due out. The stats should have a muted impact on the Pound, however. Away from the economic calendar, expect Brexit to remain the key driver along with COVID-19 news updates. The GBP/USD ended the week up by 1.61% to $1.3156.
Technicals: The pound recently broke through the 1.30 level and then reached it’s 200-day EMA, a region which offers a lot of resistance. The market will continue to be very choppy, as the Brexit sword continues to hang over the head of traders. The pair might continue to trade between it’s 50-week and 200-week EMA.
USDJPY - It is a particularly quiet week on the economic calendar. September’s current account figures, due out on Tuesday, will have a muted impact on the Yen. The focus in the week will be on geopolitics and COVID-19. Expect a continued rise in new COVID-19 cases to support demand for the Yen. The Japanese Yen ended the week up by 1.25% to ¥103.35 against the U.S Dollar.
Technicals: Multiple economic data releases kept pushing the pair up and down but it ended the week breaching its support. Now a move towards ¥102 seems very plausible but won’t happen very quick. A bounce back is definitely on the cards towards ¥104. The pair has experienced massive resistance in this region. Previously, the buyers entered the market at ¥102, basis the current dynamics this handle could be retested but it’s difficult to know precisely where the bottom is.
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It’s a quiet week ahead on India’s economic calendar. The only material data release is WPI inflation (Dec) which is expected to ease from 1.55% to 1.30%.
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The Indian rupee ended a seven-week gaining streak against the dollar, tracking a jump in long-term U.S. Treasury yields