Weekly Outlook - Focus on COVID-19 vaccine distribution, Capitol Hill and RBI

Weekly Outlook - Focus on COVID-19 vaccine distribution, Capitol Hill and RBI

10 Jan 2021 12:09 PM
 

Weekly Outlook 11th January to 15th January 2021

USDINR: 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%. The focus will be on COVID-19 vaccine distribution, foreign inflows/outflows and RBI. For the US in the 1st half of the week, JOLTs job openings and inflation figures are due out. The numbers are unlikely to have a material impact on the Dollar and market risk sentiment, however. In the 2nd half of the week, it gets a little busier. The weekly jobless claims figures will draw attention on Thursday. At the end of the week, consumer sentiment and industrial production will also provide direction.

USDINR tech: In the past week we’ve seen the pair rally as it continued to form higher highs and higher lows. The long-term resistance level comes in at 74.20 while the immediate resistance lies at 73.40. Key support region starts from 73.00 and extends till 72.90. Exporters can target 73.60 to get start hedging with forwards while importers can start hedging with a spot target of 73.10 with forwards and vanilla options as premiums are lower due to less volatility.  

EURUSD – It’s a quiet week ahead on the economic data front. Industrial production and trade data for the Eurozone are due out on Wednesday and Friday. We would expect the industrial production figures to garner the greatest interest. Finalized December inflation figures for Spain and France are also due out. These are likely to have a muted impact on the EUR, however. On the monetary policy front, ECB President Lagarde has 2 scheduled speeches in the 1st half of the week. Expect any forward guidance to influence. On Thursday, the ECB’s monetary policy meeting minutes are also due out but should have a muted impact.

EURUSD Tech: The pair again rallied during the week and broke above the $1.23 level. Although, the price action has seen a pullback from there and last weekly candlestick seems similar to a shooting star. The pair might struggle to go higher due to the shooting star formation, but a sudden collapse is not expected. Although the pair is certainly overextended. The key support region lies starts from $1.20 and extends till $1.19. On the upside, if we break above this week’s high then the next crucial resistance comes in at $1.25, although that seems unlikely to happen.

GBPUSD – It’s a relatively busy week ahead on the economic calendar. Key stats include November industrial and manufacturing production, and GDP figures for November. December retail sales and November trade figures are also due out but would likely have a muted impact on the Pound. Away from the economic calendar, expect COVID-19 news to also influence. With the UK in lockdown, strong progress towards the vaccination of priority groups should ease pressure on the Pound.

GBPUSD Tech: Pound tried to rally during the start of the previous week but gave back the gains as the market started to get choppy. Historically GBP seems to be trading cheap, hence keeps attracting buyers on pullbacks. Eventually, the pound might try to rally towards $1.40, but that will certainly take time. The key support levels are near $1.35 level than at $1.3350 followed by $1.32 level.  

USDJPY - It is a particularly quiet week ahead. Economic data is limited to November current account figures that are likely to have a muted impact on the Yen. The focus will remain on COVID-19 updates and sentiment towards the economic outlook. A spike in new COVID-19 cases in Japan will be of concern, with the economy continuing to struggle.

USDJPY Tech: The pair yet again attempted ¥104 but met the same fate as before in these fading rallies market. Although the last candlestick seems impressive as even if the longer-term trend were to reverse it might take some time. If we manage to get a weekly close above ¥105 then we should be looking at longer-term bullish bias. The pair might continue to be choppy as the previous few months. From a longer-term view testing, ¥101 still seems likely.