After the weaker NFP, US Dollar lost its momentum against other major currencies. Now, investors’ focus shifted to ECB and US CPI. Get more insights for the new trading week with AtoZ Markets’ Forex Weekly Fundamental Forecast.
June 07, 2021, | AtoZ Markets–US Non-Farm Payroll came at 559K, where the projection was at 645K. The weaker-than-expected result allows investors to rely on a weaker dollar. Moreover, the unemployment rate decreased from 6.1% to 5.8%, increasing the bearish possibility on the broader US Dollar outlook.
Forex Weekly Fundamental Outlook- ECB and US CPI
This week, investors will see some valuable fundamental releases that may provide a direction for the market. As per our view, any weaker US releases will create more bearish pressure on the US Dollar. Let’s see what is waiting for us this week:
- BOC Rate Statement- Wednesday
- ECB Monetary Policy Statement- Thursday
- ECB Press Conference- Thursday
- US CPI m/m- Thursday
Now, move to the weekly forecast from EURUSD:
The US Dollar became stronger against the Euro throughout the week, but the momentum for EURUSD changed on Friday.
The Federal Reserve announced that it would wind down the Pandemic emergency program, which started in 2020. This program holds $5.21 billion company bonds and $8.56 billion Exchange-traded-funds that hold corporate debts. As per the Fed’s expectation, this portfolio sale will be finished by the end of 2021.
The sign of tightening economic policies with strong data influenced investors to believe in a strong NFP. Unfortunately, the Payroll reports for May added 559K jobs only, missing expectations. Moreover, the unemployment rate fell from 6.1% to 5.8%, where the expectation was 5.9%. Since the news release, the US Dollar became weaker against the Euro and made a sharp bullish move in EURUSD from the $1.20 level.
On the other hand, European data remained above the expectation, with a possibility of economic progress. However, inflation remained subdued while the March reading is pointing at 0.9%. The German retail sales missed the expectation by coming down by 5.5%, while EU sales lost 3.1% at the same time.
This week, investors will focus on ECB and US CPI. Currently, the ECB monetary policy meeting will be held on Thursday, where the main focus will be the risks of pandemics.
As per the most recent data, the UK economy saw a decent end of Q1, where the economy has expanded by 2.1%. Due to limiting lockdowns and business operations, investors might see better-than-expected results in the April GDP. Moreover, the strong PMI numbers are providing support to the economy.
The limitation of lockdowns put an optimistic view of Q2 economic performance in the UK based on the last three months’ performance. The manufacturing activity in March showed an increase of 2.1%, above the expectation. Moreover, the construction output moved by 5.8%, while industrial production had a good month.
Based on the recent survey from CBI, the manufacturing output from March to May has been faster since December 2018. It provides an idea about further growth in the UK economy with a possibility of showing another 2% increase later this week.
On the other hand, the US Dollar is struggling with the Pound while the most recent NFP data increased the bullish possibility in GBPUSD. This week, investors will focus on ECB and US CPI where the current expectation decreases from 0.8% to 0.4%. Any weaker-than-expected actual report might create bullish pressure on GBPUSD.
Canadian GDP data showed a weaker report than consensus. The Canadian economy grew 5.6%, while the consensus was at 6.8%. The miss in GDP came from the broader weakness of virus spread that affected household consumption. However, the residential investment remained strong with a favourable financing condition. Another positive price director for the Canadian Dollar is the Oil price that continues to push higher.
Despite the weakness in Q1 GDP, analysts are still optimistic about the Canadian economy. Local Covid cases are coming down while the Canadian economy has demonstrated a fair degree of resilience throughout the pandemic.
Bank of Canada started to taper the asset purchase program, which signals an upcoming rate hike in the coming quarters. Currently, the Bank of Canada may continue tapering asset purchase programs as a primary phase of a rate hike.
This week, the Bank of Canada will discuss economic policies where the current expectation is a hawkish tone. Moreover, any rate hike from the current 0.25% would create a massive bearish pressure in the USDCAD pair.
GameStop Corporation [GME]
If any share shows massive volatility without any fundamental release, GameStop would be the first option for 2021. Despite the volatility, the most recent price shows that GameStop investors are struggling for some time due to the increase in sales.
The online game stores started to dominate the market as the pandemic influenced people to buy games with just one click. Therefore, GameStop changed its business operation by closing 100’s of stores during the pandemic.
As per the recent financial data, GameStop’s revenue has been falling since 2018. Therefore, the current CEO, Ryan Cohen, needs to consider the business as a streamlined operation. The current expectation on earnings per share is at $0.2 a share that may influence sellers to join the party for the coming week.
The keynote event is approaching for Apple to update Apple products, especially the Apple architecture.
As per the recent report, the new M1 chip in Macbook Pro, MacBook Air, and iMac showed a decent chance in the operating system. The change in the operating system came when PC use was increasing due to lockdowns and shutdowns. The company will provide its plan for the upgrade in iOS, iPadOS, macOS, and watchOS.
Investors will focus on how privacy settings are collecting data on an app-by-app basis. The recent change of iOS forces developers to ask permission from app users and tracks identifiers. Any sign development of this feature by making it user-friendly will create a bullish pressure on the Apple Stock.
British American Tobacco [BAT]
In April 2021, Tobacco stock faced a bullish momentum as soon as the US cut the legislation that sets a nicotine amount a cigarette can hold at an unaddicted level. However, the other side of the decision says that nicotine levels do not make any cigarette addictive.
On the other hand, people became aware of getting health-conscious during the pandemic, which may negatively affect the tobacco market. Therefore, any tobacco company that expands the business on other products like e-cigarettes or vape may dominate the market.
Last year, BAT saw a 15% surge in new category products that made the company confident to set a £5bn revenue target by 2025. However, following the recent bullish pressure from the change in legislation, BAT may show a bearish correction this week before moving up again.
Investors are watching Bitcoin with massive selling pressure; especially from retail buyers. The thing becomes interesting as soon as Elong Musk gave another market-convulsing tweet.
Despite the bearish market momentum, some on-chain metrics are suggesting that the upside possibility is waiting.
Anyways, the price moved down sharply as soon as the head and shoulder pattern forms. The price broke below the $40,000 level with an impulsive bearish pressure and reached to $30,000 level.
In the present price condition, the pennant pattern is an alarming sign for bulls. So, to remain positive for BTC buyers, investors should find a reason for the movement with technical support.
Following Bitcoin, other cryptocurrencies showed a massive bearish pressure, and Dogecoin is not an exception. However, the recent price action and market sentiment may provide a bullish possibility to the price.
Earlier, Dogecoin made multiple bullish pressure, came from Elon Musk’s tweet saying Dogecoin as a payment method to Tesla.
After a strong bullish leg, the current price consolidates that may take the price higher towards the $0.5597 level within this week.
Overall, investors will see a clearer view of the price after releasing the ECB and US CPI news. Based on the present price context, any weaker US release may create an aggressive bearish pressure on the US Dollar.
Investors are focusing on ECB and US CPI. Can US Dollar become stronger? Let us know in the comment section below!