Weekly Outlook: Economic Data & CPI Numbers In Focus

Weekly Outlook: Economic Data & CPI Numbers In Focus

06 Jun 2021 11:59 AM

Weekly Outlook: June 7th- June 11th

USDINR: The rupee fell 0.8% this week, shedding to 72.9950 from 72.44 last Friday. Dollar index also weakened on Friday after disappointing nonfarm payrolls data.

It is a relatively quiet week for the rupee. Friday is an eventful day with industrial production and manufacturing data due. Industrial production is expected to decrease from 22.4% previously to 17.6%.

It is not a very busy week for the dollar as well. Trade balance and JOLTs job openings data is due out on Tuesday. It is followed by crude oil inventories. CPI numbers for May would be the highlight of the week with core CPI expected to decrease from 0.9% to 0.4%. Initial jobless claims number are also due out on the same day. The week ends with Michigan consumer sentiment and expectations for the month of June. A higher than expected reading would be taken as positive for the dollar.

USDINR Tech: Rupee depreciated this week and closed at 72.9950. Further rupee depreciation is expected as the pair has just bounced back from a triple bottom formed at (72.25 -72.35) on 28th May. If we break above the previous weeks high of 73.31, there might be some resistance at 73.50. After this the next resistance level is 73.80-73.85. On the downside, 72.90 is an important support for the pair. Importers should hedge their near term exposures with the help of forwards and options if they find the pair trading below 73. Forward premiums for one month have come down from 33.75 paise last week to 24 paise making import forwards more attractive. Exporters should start hedging their exposure around 73.30-73.35 and can target 73.50-73.55 for increasing their hedge percentage.

EURUSD: EURUSD ended the week on a lower note closing at 1.2165. On the last trading day of the week, bulls took the control and supported the euro to end slightly higher than the 3-week low. A weak US Nonfarm Payrolls report weighed on dollar and supported the euro.

On the economic calendar, the week starts with German factory orders. On Tuesday, German zew economic sentiment and GDP QoQ for Q1 is due out and GDP is expected to come around -0.6%. Going ahead, on Wednesday, German trade balance data for the month of April is due. A better than expected reading may provide strength to the euro. It is followed by deposit facility rate and ECB marginal lending facility which was previously at 0.25%. The ECB is having a monetary policy meeting on Thursday. Market participants will keep an eye on the meeting.

EURUSD Tech: EURUSD ended 0.2% weaker this week. On Friday, the pair initially hit a 3-week low of 1.2102 but bulls gained some strength and the pair ended at 1.2165 slightly above the 3-week low. The momentum indicators are neutral reinforcing the view that pair may consolidate on these region. On the downside, support lies at 1.2050 mark. If euro appreciates, the resistance lies at 1.226 followed by 1.23 level.

GBPUSD: GBP/USD closed slightly lower at 1.4155 after having a very volatile week. On the virus front, cases are rising in the UK, and that has been weighing on sterling. The rapid spread has cast doubts about Britain's planned reopening.

It is a relatively quiet week for the sterling in the economic calendar. It starts with Halifax house price index and BRC retail sales monitor for May. BRC retail sales monitors measures the change in the value of same-store sales in BRC-member retail outlets. It is followed by RICS housing price balance for May.  Housing price balance and Halifax house price index are leading indicators for the housing market in the UK.  Friday is a relatively busy day with industrial output and manufacturing data due. Trade balance data is also due out on the same day. The UK will also publish monthly Gross Domestic Product statistics for April.

GBPUSD Tech: GBP/USD broke above its 3-month high at 1.4235 and touched 1.4248 although, it has consistently formed lower lows since and ended the week 0.17% lower. Technical indicators are in the neutral zone, suggesting we might see further consolidation in the broad region of 1.4075-1.4220. Immediate resistance lies at 1.4218 followed by 1.4235 before it touches the recent new high. On the downside, the pair might find some support at 1.4080 followed by 1.4045 which also coincides with its 33-day SMA 1.4005.

USDJPY: USDJPY depreciated 0.45% this week. It saw a high of 110.33 and ended lower at 109.31. Fed’s dovish view that recent price pressure should prove temporary calmed investors’ sentiment and prompted some selling around the USDJPY pair. On the last two trading days, the pair hovered near a 2-month high due to robust U.S. economic data and surged to 110.33.

On the economic calendar, it is a relatively quiet week for yen. On Tuesday, GDP QoQ for Q1 data is due which is expected to come around -1.2%. On Thursday, Industrial Production for the month of April is due, previously at 2.5%. Market participants will keep an eye on U.S. inflation and job data as any change in the figures may influence the USDJPY pair.

USDJPY Tech: USD/JPY traded in the broad range of 109.30 – 110.33 last week.  The pair formed an inverted hammer on Wednesday and saw a huge up move towards 110.33 although, bears took control on the last trading day of the week. We can expected further downside in the pair, evident from the probable bearish crossover in MACD. Immediate resistance lies at 110.33 followed by 110.75 before it touches the 2-month high near 110.95. Immediate support lies at 109.30, a resistance turned support followed by 109.00 which coincides with its 33-day SMA and 108.60.