Positive data encourages Aussie

The AUD/USD pair is trading on the positive side. Encouraging Australian data released at the beginning of the day provided support to the pair, as the AIG Performance of Manufacturing Index improved to 58.8 in February from 55.3 in the previous month. The Commonwealth Bank Manufacturing PMI for the same month printed at 56.9 from 56.6 in January. Also, February TD Securities Inflation resulted at 1.6% YoY. The advance picked momentum in the American session, as US stocks were boosted by upbeat local data.

Monetary policy meeting of Reserve bank is in this Tuesday. Meanwhile the central bank is expected to maintain rates on hold at 0.1% and the bond-buying program unchanged, after boosting it in February by A$100 billion from mid-April.

Adding to the support of the Aussie, Australian shares continued their climb on Tuesday, with technology stocks leading gains, as a rollout of another vaccine in the United States and optimism over a coronavirus relief package boosted hopes of a quicker global economic recovery.

Wall Street rallied overnight as bond markets calmed after a month-long selloff, while the rollout of Johnson & Johnson’s JNJ.N newly authorised coronavirus vaccine and hopes of the U.S. fiscal stimulus being passed by mid-March lifted investor sentiment.

Australia’s S&P/ASX 200 index .AXJO rose as much as 1.05% to 6,860.70, its highest since Feb. 19. The benchmark finished 1.7% higher on Monday after upbeat economic data strengthened recovery hopes. The Reserve Bank of Australia on Monday also increased the size of its daily quantitative easing programme which also aided sentiment.

On the other hand, Along with US, Bonds volatility is also a concern in Australia. Australian policymakers need to intervene in the bond market to keep the yield on the 3-year bond under control last week, although there are little chances they would make an announcement on the issue this time.

Atlanta Fed President Raphael Bostic said last week that bond yields remain comparatively low, while Federal Reserve Chair Jerome Powell has also shown no undue concerns about rising bond yields.

AUD/USD 4 Hour Chart:

Support: 0.7722 (S1), 0.7675 (S2), 0.7643 (S3).

Resistance: 0.7802 (R1), 0.7834 (R2), 0.7881 (R3).

Amidst all the catalysts supporting Aussie against greenback, we expect a bullish trend for AUD/USD.

Sunak ‘s efforts supports pound

Pound is trading positively, Britain’s government plans to launch the world’s first sovereign green bonds for retail investors as part of its push to create a net-zero-carbon economy by 2050.The savings bonds are about to fund that will fund projects in areas such as renewable energy and clean transportation and will go on sale this year, the Treasury said.

Finance Minister Rishi Sunak has also committed to the launch of so-called green gilts, aimed at institutional investors, as part of his borrowing plans for the 2020/21 financial year, which will be announced in his budget statement on Wednesday. The Treasury said late on Saturday that Sunak would also use his budget statement to announce three programmes that will receive funds from the government’s 1 billion pound ($1.4 billion) Net Zero Innovation Portfolio.

Rishi Sunak said that “But it’s important ..to also have strong public finances over time.” “Interest rates have been at very low a level, which does allow us to afford slightly higher debt levels.”

“But that can always change and we’re seeing that in the last few weeks.” “We have to be acute to that possibility.”

Sunak is due to deliver his budget to parliament on Wednesday, in yet another effort to help sail the UK economy through a gradual lifting of lockdown measures that will last at least until late June.

On the other hand, The US crude oil production averaged 11.063 million barrels per day in December 2020, marking a drop of 58,000 barrels per day from the preceding month, according to the Energy Information Administration’s latest monthly report.

The decline seems more significant year-on-year. The average production in December 2019 was over 12.8 million barrels per day.  Output averaged just 9.7 million barrels per day in the week ended Feb. 19, according to EIA estimates. The dramatic weekly drop was likely due to the Texas Freeze, which curtailed refinery and crude oil production.

GBP/USD 4 Hour Chart:

Support: 1.3863 (S1), 1.3806 (S2), 1.3724 (S3).

Resistance: 1.4001 (R1), 1.4083 (R2), 1.4140 (R3).

All the catalysts favor the British pound against the greenback and we expect a bullish trend for GBP/USD.

EUR/USD Weekly Forecast (01st March 2021 – 05th March 2021)

Fundamental view:

The Euro shot higher during the course of the week to reach towards 1.22 level before falling.  Long-term US Treasury yields soared, while shorter-term ones also a made a progress, although to a lesser extent. Bonds were sold off in anticipation of higher inflation and prospects for massive stimulus boosted spending.  The market has already priced in US President Joe Biden’s $1.9 trillion stimulus package. On employment, Powell said that the real unemployment rate could be closer to 10%, adding that there’s a long way ahead of full employment.  When asked about yields, he said that he is not concerned about it, as it’s tied to optimism about the outlook. US policymakers still believe an economic comeback will come later in the year, despite the ultra-loose policy will likely extend into the next one.

US Chicago Fed National Activity Index on 22nd Feb and Europe GfK Consumer Climate & Europe Consumer Confidence Index on 25th Feb created downtrend whereas US HPI yearly report on 23rd Feb and US EIA Crude Oil Stocks Change & US EIA Cushing Crude Oil Stocks Change on 24th Feb created uptrend for the pair.

The major economic events deciding the movement of the pair in the next week are ECB President Lagarde Speech, US ISM Manufacturing PMI at Mar 01, US ADP Nonfarm Employment Change, US ISM Non-Manufacturing PMI at Mar 03, Europe Retail Sales monthly report, Fed Chair Powell Speech at Mar 04, and US Nonfarm Payrolls at Mar 05.

EUR/USD Weekly outlook:

Technical View:

Last week’s high was 0.60% higher than the previous week. Maintaining high at 1.2243 and low at 1.2062 showed a movement of 181 pips.

In the upcoming week we expect EUR/USD to show a bearish trend. The currency pair is trading below the 200 Simple Moving Average and the MACD trades to the downside. A solid breakout below 1.2009 may open a clean path towards 1.1945 and may take a way down to 1.1828. Should 1.2189 prove to be unreliable resistance, the EURUSD may raise upwards 1.2306 and 1.2370 respectively. Chart formation of a Bearish butterfly pattern in H4 chart sets prospects for a bearish trend. Spinning top formation in H4 chart escalates the expectation for a bearish trend.

Preference
Sell: 1.2078 target at 1.1926 and stop loss at 1.2194

 

Alternate Scenario
Buy:  1.2194 target at 1.2369 and stop loss at 1.2078

GBP/USD Weekly Forecast (01st March 2021 – 05th March 2021)

Fundamental view:

The British pound rallied during most of the week to reach towards the 1.41 handle. The pound has rallied after UK PM Johnson presented a compelling exit strategy. “Incomparably better” – was the word Prime Minister Boris Johnson has described Britain’s position in the summer, after laying out a much-anticipated exit plan. The pound is boosted with the news on the other hand, the dollar declined as Treasury yields have been slowing their upward march. US stimulus, a full buildup to Nonfarm Payrolls and Britain’s vaccine statistics are all crucial to the next moves. The rapid move sent stocks sinking and the dollar surging on a mix of higher returns and safe-haven flows. GBP/USD badly suffered from a fall below 1.40.

The major economic events deciding the movement of the pair in the next week are UK Markit/CIPS Manufacturing PMI, US ISM Manufacturing PMI at Mar 01, UK MPC Member Tenreyro Speaks, US ADP Nonfarm Employment Change, US ISM Non-Manufacturing PMI at Mar 03, Fed Chair Powell Speech at Mar 04, and US Nonfarm Payrolls at Mar 05.

GBP/USD Weekly outlook:

Technical View:

Last week’s high was 1.44% higher than the previous week. Maintaining high at 1.4238 and low at 1.3888 showed a movement of 350 pips.

In the upcoming week we expect GBP/USD to show a bullish trend.  The currency pair is trading above the 200 Simple Moving Average and the MACD trades to the downside. A solid breakout above 1.4142 may open a clean path towards 1.4365 and may take a way up to 1.4492. Should 1.3792 prove to be unreliable support, the GBPUSD may sink downwards 1.3665 and 1.3442 respectively. Chart formation of bullish Alt bat pattern in H4 chart favors prospects of a bullish trend. Hammer pattern formation escalates the expectation for a bullish trend.

Preference
Buy: 1.3919 target at 1.4141 and stop loss at 1.3788

 

Alternate Scenario
Sell: 1.3788 target at 1.3583 and stop loss at 1.3919