Weekly Outlook: Economic Data & Covid-19 In Focus

Weekly Outlook: Economic Data & Covid-19 In Focus

28 Mar 2021 11:35 AM
 

Weekly Outlook 29th March to 2nd April 2021

USDINR: It is a busy week for the Dollar on the economic calendar. The week starts with CB Consumer Confidence (Mar) which will measure the level of consumer confidence in the economy. In the middle of the week, ADP Nonfarm Employment Change (Mar), Pending Home Sales (MoM) (Feb) and Crude Oil Inventories are due. The crude oil inventories will be a key area of focus because a weaker than expected inventory might signal a greater demand for fuel, further increasing crude oil prices. In the latter half of the week Initial Jobless Claim numbers and ISM Manufacturing PMI (Mar). The week ends with Unemployment Rate and Nonfarm Payrolls for March. A higher than expected unemployment rate will be bearish for the dollar whereas a higher than expected reading in the Nonfarm Payrolls will be considered bullish. Also, President Joe Biden will unveil his long term economic rejuvenation plan in the coming week where he will talk about his multi trillion dollar plan to rebuild America’s infrastructure.

It is a busy week for the Rupee as well. On Wednesday, we have Federal Fiscal Deficit and Infrastructure Output (YoY) for February and India’s Current Account (USD) and Foreign Debt (USD). A higher than expected reading for Infrastructure Output will be taken positive for the Rupee. On Thursday, we have the imports, exports and trade balance. A higher than expected trade balance will show that India has exported more goods than expected and will be a positive signal. The week ends with FX Reserves (USD) and a higher than expected reading would be bullish for the rupee. It will be relatively quiet week for the USDINR because there are only two working days i.e. 30th and 31st March.

USDINR Tech: USD/INR has been forming lower lows and lower highs from the past 4 weeks as it ended the week around its support level of 72.26. The pair has exhibited signs of bearish exhaustion as the candlestick body size has been decreasing. All momentum indicators seem neutral. An unsuccessful test of this week’s low of 72.26 could trigger a move towards 72.00. Near term resistance lies around 72.75 then at 73. Importers should hedge near term liabilities with a target below 72.50 while exporters should wait for 72.70+ levels to start hedging.

EURUSD: It is a relatively quiet week for Euro ahead. The week starts with German CPI (MoM) for the month of March. A reading higher than expected should be taken as bullish for Euro as it shows the changes in prices of goods and services purchased by consumers. On Wednesday, German Unemployment Change and German Unemployment rate for the month of March are due. If the unemployment numbers came higher than forecasted, it will be bearish for the currency as it shows the number of unemployed people during the previous month. On the latter half of the week German retail sales (MoM) Feb is due. A reading higher than expected should be taken as positive for the currency as it shows the value of inflation-adjusted sales at retail level. Friday will be holiday in Eurozone.

EURUSD Tech: The pair is currently trading at the bottom of the upward ascending range at 1.1762 and may see an uptrend in the coming week. In the MACD, the price line (purple line) is parallel to the trend line (green line) showing some consolidation in this region. The pair may face some resistance at 1.1875 which also coincides with its 9-day simple moving average (red line). Immediate support lies at the 1.1755 level. The last candle stick shows a piercing pattern indicating a trend reversal in the pair, supporting our bullish view of Euro.

GBPUSD: It is a relatively quiet week for GBP. On Wednesday, we have GDP, Current Account (Q4) and Business Investment (QoQ) numbers due. A higher than expected number should be bullish for the Sterling. The week ends with Manufacturing Purchasing Managers Index (PMI) the next day. A higher than expected reading will be positive for the GBP. The Bank of England said that the degree to which households spend the savings they accumulated while being at home will determine the speed of recovery of UK from its worst economic shock in more than three hundred years. In the UK, more than 29 million people have received their first doze of vaccine but with the rising infection rates in Europe, the British public might also be at risk for a third wave. If the third wave hits the UK, it would negatively affect the GBP.

GBPUSD Tech:  GBP/USD depreciated in the last week but, bounced back from 1.3665. Technical indicators are indicating that the pair may see some buyers in the coming week. In MACD, the price line (purple line) is expected to cut the signal line (green line) from below suggesting a bullish GBP. Immediate resistance lies at 1.3800, a support turned resistance followed by 1.3830 which coincides with its 9-day SMA and 1.3910. Support lies at 1.3670 followed by 1.3610.

USDJPY: It is a relatively quiet week for Yen on the economic calendar. The week starts with Jobs/application ratio for February. A reading higher than expected should be taken as bullish for yen as it indicates the health of employment in the economy. Retail sales (YoY) for the month of February is due out on the same day. A reading higher than expected should be taken positive for yen as it depicts consumer spending. On Wednesday, Industrial production (MoM) February is due. A higher than expected reading should be taken positive for the currency as it measures the inflation adjusted value of output produced. The week ends with the Tankan Large Manufacturers/Non-Manufactures Index for Q1. A higher than expected reading should be taken as bullish for the currency as it shows the business conditions in the manufacturing/non-manufacturing sector.

USDJPY Tech: USDJPY is expected to trade between 110 and 108.35. There is a strong resistance in 110 which the pair hasn’t crossed in one year. If we see the RSI Index, it is at 75.261 indicating that it is overbought and we might see selling pressure which would push the pair towards 108.35, which is the immediate support for the pair. The pair is expected consolidate in this region with some bearish bias .