ECB Rate Decision, UK unemployment, retail sales, and public finances are key investors’ focus for these days. Moreover, the increase in COVID-19 infection may keep the market volatile. Get more insights for the new trading week with AtoZ Markets’ Forex Weekly Fundamental Forecast.
April 18, 2021, | AtoZ Markets– Market passed a steller weak while equity indices moved to the record high. However, the fundamental divergence might not show a respective flagship equity indices.
The S&P 500 and Nasdaq 100 broke above the record high on the better-than-expected retail sales news. Euro Stoxx 50 had done earlier whole the Equity implied volatility. Meanwhile, the VIX, VSTOXX index moved to a record low since the COVID-19 crisis started in February 2020.
Forex Weekly Fundamental Outlook
The Euro showed a good movement against the US dollar that took the price above 1.20 area. However, the strong us macro data took the price down below that level. Among those releases the US retail sales and the jobless claim were significant.
So let’s start the Forex Weekly Fundamental Outlook with the EURUSD:
The European Bank has been supportive of recovering the European economy for the last 12 months. The current decision about pandemic recovery remains at the top of the point.
In the recent week, the main reason behind the bearish pressure of the EURUS came from the ECB’s brief. The current pressure of the ECB is to keep the yield low against the sharp rise in US yields. Therefore, the rising tide with a long-term borrowing cost may affect the European economy.
On the other hand, EU nations focus on their vaccination programs, but it remains behind the loosening restrictions domestically. However, the Eu manufacturing performance is strong that may offset the current weakness on lockdowns.
European central banks are considering minimizing the weakness by expanding its Pandemic Emergency Program 2nd time in 2020. The amount of the emergency program starts from €1.35trn to €1.85trn, extending it another nine months until March 2022.
On the other hand, the US stimulus program may lift the EU GDP with the rise in the global yields as a risk for the ECB. Moreover, ECB upgraded the inflation forecast while the headline infarction was up, particularly in Germany. It is a sign of intention, while some hawkish tone might provide a broader economic policy.
Therefore, a hawkish tone after the ECB rate decision might show some bullish pressure in the EURUSD pair. However, a strong bullish daily close above the 1.20 level may extend the bullish pressure.
The ILO unemployment measure saw a significant fall in January to 5% from 5.1% in December. Nonetheless, the Bank of England remains more optimistic about the unemployment outlook this year. They have provided the forecast lower once the government starts to withdraw the furlough support that has been in place over the last 12 months.
The monthly jobless claim remains concerning while it showed a strong rise in February from 7.2% to 7.5%. The rise in the claims came from the reimposition of lockdowns in January. However, there is some sign of pickups in hiring in some areas of the country. The current projection for the unemployment claim for this week is 6.5% from 7.5%. Moreover, the Chancellor extended the current reduction to key tax and business rates.
On the other hand, the lockdowns in January may show a big slide in the UK retail sales by -8.2% as consumers remain in the home. Moreover, the 16% rise in household goods helped offset the 50% decline in clothing sales. Overall, the UK GDP shows a much shallower contraction from January to February than feared.
The latest PMI reports, manufacturing, and service sectors for April are in focus. In April, companies are restocking inventory and are currently stuck for the COVID-19. Therefore, investors should find a stable price of the GBPUSD above 1.40 level while a daily close might extend the price higher.
AUSUD moved down on Thursday before rallying ups. The statistics of last week showed that the employment sector is improving slowly. The unemployment rate declined from 5.8% to 5.6% in March, indicating a better-than-expected result. Moreover, the employment change came at 70.7K in March from 88.7K a month ago against the expectation of 35.2K.
However, the current unemployment rate of Australia remains at 0.4% higher than the pre-pandemic level, which is a positive sign of AUD. Moreover, the participation rate in the Australian economy is at 66.3%, near the all-time high.
The job number recovery is irregular due to the higher activity in Queensland and lowers in South Wales; otherwise, it was normal in other areas.
Last week, data was quite positive for Aussie. Therefore the Australian currency is right now a local weakness against the US Dollar. Therefore, the current challenge for this week for the AUDUSD is to cover the 0.78 level. Any daily close above this level would be positive for the AUD that may extend higher.
Coca-Cola generated $33 bn revenues last year, which is the lowest annual Sales since 2009. the weakness in revenue came from the coronavirus pandemic that drug the Global Business down.
In the latest quarter, the financial report of Coca-Cola be the expectation, but investors violate impressive with the share price. The company is processing job cars and slimming down its drink portfolio to cut costs. Moreover, the company’s main focus is to improve brands like Coca-Cola, Coke Zero, Dasani, and fruit juice, tea, and coffee.
The recent acquisition of Costa Coffee and white breed indicates that it is unfortunate to achieve its business targets. There are lockdown restrictions in the UK affecting the turnover of Coca-cola from the last year.
Coca-Cola management said that the Global revenue from the last quarter declined by mid-single digits. Moreover, companies are scaling back of lock the restrictions that are coming in the upcoming quarter. Coca-Cola wants in February that this quarter’s result may come with a 2% decline. Moreover, the profit expectation for the quarter may come at $0.50c a share.
In this situation, investors should see how the price reacts at the $54.88 level. Any rejection from this level with a weaker quarterly release would be a possible selling idea.
United Airlines [UAL]
In A1, United Airlines faced a less than expected result in the last 12 months’ performance due to lockdowns and travel ban. As a result, United Airlines had to bail out a loan from $520m to pay the $5.5 bn fundraising program.
It is also locking the $3.5 bn secured loans as cash reserves, pointing out a choppy and unrealistic return than normal. Meanwhile, United Airlines revenue may come at $3.2 bn with acceleration in demand as the vaccination programs increase.
However, some expectations with a $6.7 c inverse in shares price with an average daily cash flow for Q1 may increase to $9m a day.
The current price of the United Airlines Stock is at $55.8 level. As long as the price is trading below the $60.00 level, it may show more bearish pressure.
In last year, Netflix managed to show that it is facing fewer likes in Disney+ with $8.51m new subscribers. Moreover, the Q4 revenue came at $6.64 bn. The current projection for Q1 is the rise of the subscriber’s number by 6 million, with a profit of $2.97c a share.
Current Netflix subscribers at the north of 200m at 203.7m. Currently, the company is looking for an operating margin of 20% with a positive cash flow by the end of 2021. These goals are ambitious for the company considering the share buybacks to pay dividends.
On the other hand, the downside risk is that Q2 may slow down subscriber growth due to the winter lockdowns. This could prompt Netflix to be more cautious about their growing number in Q2 and Q3.
However, the stock is trading above the significant $500 level; as long as the price is holding this level, we may see more bullish pressure.
Bitcoin tumbled from an all-time high after the Turkey Central Bank banned cryptocurrency use and crypto assets for purchases. The crypto usage in Turkey was rapidly increasing as everyone wanted to abandon Liras. Therefore, the outlook of the Turkish Lira became painful and forced the TCMB to come back from Cryptocurrencies.
However, Turkey’s restriction of crypto usage is a regional effect that might not affect the BTC broadly. Moreover, among other news, there are Crypto ban possibilities by India and unsubstantiated reports of the U.S. A Treasury crackdown might be effective.
Bitcoin price moved sharply below the $60,000 level while investors should wait for a strong daily bearish close to consider further bearishness in the price.
Ethereum price is struggling to stay above the $2100 level. However, the price reached an all-time high of $2550 a few days ago. Later on, the price came down in two consecutive days and currently trading 17% below its ATH. Moreover, the market value dropped more than $260 billion as other crypto and altcoin crashed.
The first reason behind the bullish movement in ETh was Coinbase’s public IPO, indicating that cryptocurrencies will be mainstream. Secondly, the US bond yield and Dollar declined last week with downside pressure from the US inflation rate. The headline CP rose at 2.6% in March, where Feds target was at 2.0%.
However, Ethereum prices dropped because of the sharp decline in Bitcoin. ETH, along with other altcoins, has a strong correlation with BTC. Therefore, investors should see how the price settles below the $60,000 level to get the price direction of Ethereum.
Overall, investors may face some liquidity in the forex market due to the recent bearish pressure in the Crypto market. Moreover, the main price driver for this week will be the ECB rate decision. Currency, a hawkish tone from the ECB rate decision with the price above 1.20 would be significant for the EURUSD.
What do you expect from the ECB rate decision? Let us know in the comments section below!