RBA may Hold, but BoE to Taper this week while the dollar strength still dominates the market. Besides, the Non-Farm Payroll will indicate further about the market. Get more insights for the new trading week with AtoZ Markets’ Forex Weekly Fundamental Forecast.
May 02, 2021, | AtoZ Markets–Based on last week’s price action, the Dollar strength came back to the front, where most of the significant currency pairs rebounded towards the dollar. The main force went from the better-than-expected US Q1 GDP along with monthly profit-taking. However, a contradictory situation where the better GDP result opened room for the Fed to rethink their dollar strength possibility in the coming weeks.
US Q1 GDP came at a 6.4% increase from the previous quarter, where the FOMC statement showed an expectation of further dollar weakness. Therefore, investors need the other direction of the market to get a clear view. What may happen in major currency pairs during this week’s releases? Can US Dollar maintain its dominance over the market? Let’s see the forex weekly analysis to see the possible movement in most currency pairs and cryptos!
Forex Weekly Fundamental Outlook- RBA may Hold
The EURUSD rebounded from the 1.20 level while the AUDUSD rejected from 0.78. There was a decent selling opportunity in other major currency pairs, as we discussed in our last forex Weekly analysis. Moreover, other currency pairs faced pressure from the sudden US Dollar weakness last week.
Let’s start the Forex Weekly Fundamental Outlook with the AUDUSD:
The Reserve Bank of Australia showed an unexpected dovish tone during the COVID-19 pandemic. It launched aggressive quantitative easing as a part of its yield curve control program.
RBA tends to mislead the market with optimistic growth forecasts, and we may see a repetition of this on Friday during the quarterly economic projection. Besides, there is a policy to decide on Tuesday that will hint at something about the economy.
Currently, as RBA may Hold analysts are expecting no change in the QE program as it started a few weeks ago. The third round of this program may happen in the summer, and we may expect some hints this week. However, the leading investors’ focus will be on the RBA’s tone over the economy.
Last week, the inflation data came and showed that the Australian economy is still under pressure. Moreover, there is a threat of increased COVID-19 infection in Asian countries, like India and Japan. Among the world’s top economies, some Asian countries play a vital role. Therefore, RBA may Hold this week and any dovish may bring the AUDUSD down where the ultimate target would be 0.76 level.
In the UK Economy, the latest PMI reports showed a rebound in the economy where the lockdown is over. Moreover, BoE policymakers are optimistic about the economic rebound in the current and next quarters. Therefore, we may see the growth forecast this week that may revise higher. Investors should focus on the revised inflation forecast to see further evidence about the UK economy.
Based on removing the COVID-19 infection with lockdown elimination, I influence BoE to talk about tapering. However, the policymakers did not decide in last week’s meeting, but further intention may set on Thursday. Any signal of tapering may bring positive news for the pound. In that case, GBPUSD may move higher towards the 1.40 level.
On the other hand, Scotland voters will go to the poll on May 6 for the Scottish parliamentary election. As per the current projection, Pro-independence parties may secure a majority, forcing Westminster to authorize another Scottish independence referendum. In the local council’s election, the Conservative party has been hit by sleaze allegations. A poor performance for the pro-business Tories may increase the bullish possibility in the GBPUSD.
The USDCAD moved down to the three-year low, where the reduction of Canada’s weekly bond purchase program boosted the sentiment. Currently, the Bank of Canada is the first currency that started to withdraw from pre-pandemic stimulus. Moreover, the strong rebound in the labor market in February and March influenced the decision.
On the other hand, lockdowns in some provinces may return to normal in the coming month. Therefore, the employment report on Friday may indicate further about the economy. Nevertheless, Canada now accelerated vaccination pace with the limitation in lockdown. Besides, investors may see some profit-taking this week after a prolonged bearish pressure.
Bitcoin showed considerable growth in recent days from the crash. Despite the solid bearish movement below the $55,000 level, the price moves up with a bullish daily close.
On the other hand, Chicago Mercantile Exchange (CME) announced the launch of Micro Bitcoin Futures (MBT). Therefore, it may increase interest in cryptocurrencies among retail traders. Besides, the US Securities and Exchange Commission (SEC) gave some time for deciding VanEck’s Bitcoin ETF. Here, an increase in institutional demand may play an active role in approving it.
Peloton showed a decent growth during the pandemic that made Pelaton stock promising. During 2020, the company saw its revenue to come at $1.83bn with an increase in customer base over 3m.
Moreover, the management is still optimistic about the growth where the projecting sales in 2021 may come between $3.5bn to $3.65bn. Furthermore, the margin of the company is still healthy at over 40%.
However, the business model of the company is still facing pressure due to its high motorbike price. During the fiscal Q2 report, management reported that they had met a supply halt due to the lockdown. In the coming quarter, the revenue may come at $1.11 bl with the loss of $0.12 a share.
Pfizer did a great job during the pandemic that increased its sales forecast for 2021 to $15bn with a profit of over $4bn. It charges $19.5 per dose of the vaccine, while in the EU, the price increased to €19.5 from €12.0. Based on its annual report, the yearly turnover is at $47.6bn that may increase to $62.5bn in 2021.
The revenue in 2019 came at $41.2bn, indicating a 50% increase in revenue in two years. A more surprising fact about the company is that its shares are moving higher with a modest speed since 2020. Moreover, the dividend yield is just below 4%.
Moderna vaccine is not costly, meaning that it may make millions of dollars from the product. The company signed many contracts with multiple governments. For the US Government, Moderna takes 100m doses at $15 each, and for the UK Government, 17 million doses. Moderna lowered its global vaccine production to 600m doses in 2021. It anticipated that it could deliver up to 1bn amounts.
In Q4, Moderna revenue increased to $570.7m, beating the expectation of $287m. Despite the increase in revenue, the company faced a loss of $272.5m a year ago. The Loss came from the boosting production capacity to deliver doses in 2021. Therefore, the R&D came at $759m in Q4.
Overall, investors may see some decent movement this week. However, there are several important releases that may increase the market volatility. On the other hand, the global market is still facing some pressure from the 3rd wave of COVID-19, especially in the Asian continent. Therefore, investors should closely monitor COVID-19 news along with economic releases.
Do you think RBA may hold this week? Let us know in the comments section below!