After a muted week, investors are going to see important releases from the US and China. Besides US retail sales and Chinese GDP, US CPI and RBNZD Rate Statement will attract investors’ attention. Get more insights for the new trading week with AtoZ Markets’ Forex Weekly Fundamental Forecast.
April 11, 2021, | AtoZ Markets– In this week, investors will see a busy activity in the market with several important releases from the US, China, New Zealand, and Canada.
Among these releases, the Chinese GDP and US retail sales are expected to be the most important one. China closed 2020 with a positive gain despite the lockdown and shutdown that may continue in 2021. Therefore, the quarterly GDP report will provide a further indication of the Chinese economy. AtoZ Markets team has highlighted below the main drivers in our Forex Weekly Fundamental Forecast.
Forex Weekly Fundamental Outlook- US Retail Sales in Focus
After a muted week, we are expecting a busy week with several important releases. Moreover, the increase in COVID-19 infection is increasing that may keep the global market warm.
So let’s start the Forex Weekly Fundamental Outlook with the USDCNH:
The Chinese economy closed 2020 with a positive note, pointing to a record surplus in December. The positive outlook comes from the continued lockdown and the export of PPE and other medical-related products.
Based on the recent trade data in February, there was a strong rebound in exports with increased global demand. Export increased by 18.1%, but it seems to remain flattered due to the lockdown at the beginning of the last years.
There is some projection about the Chinese Q1 GDP for 2021 to be around 6%. However, there are some other opinions against the projection, saying that it was too optimistic. Based on the global economic outlook of the last 12 months, it might be a conservative side.
A strong rebound in the US economy might provide a significant spillover in the global economy. Therefore, the current expectation of the better than expected US economy might benefit the Chinese economy. Moreover, the summer months with the economic reopening are likely to see throughout the summer months.
Last week, IMF revised the global economic forecast by 0.5 pp to +6.0% in 2021 and additional 0.2 pp to +4.4% in 2022. However, the economic contraction was not satisfactory in 2020 as some financial support and easing of lockdowns showed a better-than-expected economy. Moreover, the policy support and stimulus programs, especially in the US, may provide positive feedback on the global economy.
According to the most recent meeting, the EU Governing Council was to aim the premature tightening of financial policies. However, there was no projection for the target of Bond market yields. However, as long as the inflation outlook is unsatisfactory, the Governing Council may maintain the financial condition close to the December level.
In this context, ECB will indicate the security purchases for coming quarters. However, this type of communication does not say that eh ECB has control over the yield curve. Based on the current movement, there is a possibility of importance in the future bond market.
UK GDP, released n February, has shown a 2.9% contraction in January. The weaker-than-expected number indicates that the slowdown in Q1 is likely to be less than -4% than the BoE penciled in at the beginning of the year.
Since then, the bank changed its view with a higher expectation, supported by recent gains in the PMI data with a contraction in Q1. Nonetheless, the rolling three-month basis UK economy may show modest improvement from the -1.7% decline in the earlier quarter.
In this situation, GBPUSD has a higher possibility to show a bullish momentum in the coming weeks as long as the price is above the 1.3650 low. However, the US retail sales will indicate further about the GBPUSD price. A better than expected US retail sales may alter the current market structure.
In the latest financial releases, JPMorgan showed a better-than-expected result on both profits and revenues.
Revenue for the current period came at $30.1 bn, beating the expectation of $28.7 bn. In the meantime, the investment revenue came 7% higher than the previous result. Moreover, the trading revenue came 20% higher than the previous result.
The bank also showed a boosted profit number with $2.9 bn credit reserves set earlier regarding non-performing loans. However, Federal Reserve is planning to buy banks, and dividend expectations are high with the economy reopening. As a result, the extra cash received and the reserve might provide additional dividends and cash to JPMorgan.
Goldman Sachs [GS]
Goldman Sachs is another US Bank that crashed the estimates in January with a revenue of $11.74 bn of $12.08c per share. Moreover, the biggest gain came from the bank’s equity reserve that showed a 40% jump in revenue from the earlier year to $2.39 bn.
Furthermore, investment banking also saw a decent growth to $2.61 bn, a 27% increase from the previous report. Based on these releases and recent events, the bank’s equity operation may show how much liquidations cost the bank has.
Based on the number, Goldman Sachs CEO was very effusive regarding how the bank is operating. Therefore, the current expectation for the Q1 profits is set to be $8.28 a share. If we see the result come true, there is a possibility of a bullish gain in the Goldman Sachs stock.
Morgan Stanley [MS]
At the end of 2020, Morgan Stanley saw a full-year net revenue to hit the maximum level of $48.2 bn. Meanwhile, the net income came at $11 bn, up from $9 bn a year ago.
A better-than-expected Q4 result helped revenue come at $13.64 bn, above the expectation of $2 bn. This outperformance was driven by the investment banking and the equity trading division. Both of these sectors brought the revue up by $350m above expectations.
Moreover, the wealth management sectors were a strong contributor. Morgan Stanley’s CEO, James Gorman, provides an expectation of the better-than-expected fiscal years after the block trade blew up.
Bitcoin again moved above the $60,000 level on the weekend, breaking above two days range. However, the price faced a constrained supply against the evidence of wider adoption.
The world’s biggest cryptocurrency hit as high as $61222.22 on Saturday, the highest in April 2021. Later on, it moved lower below the $59,000 level on Sunday.
Overall, the BTC price was 116% higher since this year’s low of $27,734 on January 4. Later on, the price soared above the $60,000 level as soon as the US President signed a $1.9 trillion fiscal stimulus package into law.
According to some prominent analysts, the price has a higher possibility of crashing downside until it gets a strong position above the $60,000 level.
Ripple’s XRP saw a significant boost of Ripple’s legal defense, while Ripple Lab won its bid to compel the US Securities and Exchange Commission to produce the agency’s legal documents and internal discussion about Bitcoin and Ether.
According to the US Magistrate, Ripple’s major legal developments try to bolster its “fair notice” defense against the current lawsuit. SEC filed a lawsuit in December 2020 against Ripple due to sales of unauthorized XRP of ver $1.38 billion.
However, Ripple’s XRP got a bullish momentum on the news regarding the lawsuit, and investors are waiting for further bullish indications in the future.
Overall, investors may see a clear price direction as soon as the US retail sales releases. Moreover, another important event for this week would be the Chinese GDP. Any bullish sign in the US economy might create an immediate bearish pressure in most of the major currency pairs like the EURUSD, GBPUSD, AUDUSD, and NZDUSD.
What do you expect from the US Retail Sales? Let us know in the comment section below!