Weekly Outlook - FED, GDP Numbers, COVID-19, US Politics And RBI In Focus

Weekly Outlook - FED, GDP Numbers, COVID-19, US Politics And RBI In Focus

24 Jan 2021 11:09 AM

Weekly Outlook 25th January to 29th January 2021

USDINR: It’s a quiet week ahead on India’s economic calendar. Indian markets will be closed on Tuesday on account of Republic day.  The focus will be on COVID-19 vaccine distribution, foreign inflows/outflows and RBI. For the US on Tuesday, consumer confidence figures for January will draw interest. Another fall in consumer confidence would test support for riskier assets early on. Mid-week, core durable goods and durable goods orders for December will provide direction. The focus will then shift to 4th quarter GDP figures due out on Thursday. Weekly jobless claims figures will also draw interest on Thursday. On the monetary policy front, however, the FOMC monetary policy decision on Wednesday is the main event. Following FED Chair Powell’s assurances of no rate hikes or tapering of bond purchases, the statement will need to be aligned.

USDINR tech: The pair continued sideways trading during the week with a weekly high of 73.31 and low of 72.99. A break above this week's high could lead the pair towards 73.50 while on the downside critical support region still lies around 72.75 – 73.00.  Observing the rising annualised premiums above 5% exporters can target to start hedging between 73.30 – 73.40 while importers should continue to hedge their short-term liabilities at current levels. Importers can use a combination of forwards and vanilla options as volatility is still low.

EURUSD – It’s another busy week ahead on the economic data front. In the 1st half of the week, German business Sentiment and consumer confidence figures will be in focus. Expect plenty of EUR sensitivity to the numbers. The focus will then shift to 4th quarter GDP numbers on Friday. French, German, and Spanish GDP numbers are due out. Expect Germany and France’s GDP numbers to have the greatest impact on the EUR. French consumer spending and German unemployment numbers will also provide direction on Friday. Other stats include prelim inflation figures for January. Barring a marked slide in consumer prices, however, the numbers should have a muted impact on the EUR. On the monetary policy front, ECB President Lagarde is scheduled to speak on Monday. Expect any forward guidance to move the dial.

EURUSD Tech: The pair rallied significantly during the week and broke above the $1.21 handle; this could signal an attempt to test the peak again. The broad trading range for the pair seems to have support at $1.20 while the resistance seems to be around $1.23 level. The resistance region upwards of $1.23 extends till $1.25 handle. An attempt towards $1.25 needs a lot of momentum which the pair currently lacks.

GBPUSD – It’s a relatively quiet week ahead on the economic calendar. Key stats include claimant count figures for December and the unemployment rate for November, due out on Tuesday. Earnings and 3-month rolling employment figures should have less influence on the day. With no other stats to consider in the week, COVID-19 will remain a key driver. The Pound ended the week up by 0.71% to $1.3686.

GBPUSD Tech: Pound had a very choppy trading week, thereby increasing the uncertainty if the pair has enough momentum to go higher. Currently, $1.3750 seems to be a level difficult to break above, hence we should expect some sideways trading in the short term. If the pair manages to break above the top of the current week’s candlestick then it can head towards $1.40 and then towards $1.43 level. On the downside, if we break below $1.35 then we could go seeking $1.33 level.  

USDJPY - It is a busy week ahead. December retail sales figures on Thursday will draw plenty of interest. At the end of the week, inflation and prelim industrial production figures will also provide direction. Ultimately, however, vaccination rates and the trends in new COVID-19 cases will remain key drivers. The Japanese Yen ended the week up by 0.07% to ¥103.78 against the U.S Dollar.

USDJPY Tech: The pair has seen a very choppy week and ended up forming a hammer which was preceded by an inverted hammer signalling indecision in the market. This market is also experiencing an overextended downside but it also shows signs of strengthening. Giving a longer-term view seems a bit difficult unless one is okay with hanging on to the volatility.