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ATFX Market Outlook, 2020 Feb 21
Personal opinions today:
Today's focus will be on Global PMI for manufacturing and services for February, as well as the Eurozone final CPI for January. The market is predicting that economic data in Europe will be weak and that U.S. data will likely outperform. Recently we found the US data strength, the dollar index rose and the dollar against major currencies fell. But market expectations are already priced in. If U.S. manufacturing and services PMI for February do not come in higher than expected tonight, investors could adjust to the dollar's gains, while Dow futures and global stocks could fall on investment lose confidence.
The global economy uncertain, the gold price rose sharply, and the gold price broke through 2012 high. Crude oil prices rose on the back of OPEC’s meeting to cut output early next month and a drop in crude inventories last week. But the release today of PMI for manufacturing and services in Europe and the United States could limit the rise in crude oil prices amid weak data forecasts.
[Important financial data and events]
Note: * refers to the degree of importance
07:30 Japan core CPI for January ***
16:15 French Manufacturing PMI for February ***
16:30 German Manufacturing PMI for February ***
17:00 Eurozone Manufacturing PMI for February
17:30 UK Manufacturing and Services PMI for February ***
18:00 Eurozone CPI final for January ***
21:30 Canada Retail Sales for December **
22:35 Federal Reserve's Kaplan speech **
22:45 U.S. Markit Manufacturing PMI for February ***
22:45 U.S. Markit Service PMI for February ***
23:00 U.S. Existing Home Sales in January **
In European trading today, Germany and the Eurozone released their preliminary Manufacturing PMI for February, while the Eurozone released its final CPI for January. These data are critical for the Euro, affecting the Euro/dollar and euro-related crosses rates and more likely indirectly affecting the Swiss franc. The Euro will struggle to recover its recent losses against the dollar if the data turns out to be weaker than market expectations, especially if the Eurozone final CPI for January is lower than market expectations of 1.4%. It could test 1.0780 support before testing another important support level at 1.0720. If the data mentioned above beat market expectations, the Euro/dollar could test the 1.0830 resistance or break the resistance level.
British retail sales rose in January and the pound rose. But sterling fell on expectations of a fall in the UK manufacturing purchasing managers' index for February and last night's strong us data. Separately, Britain will formally discuss a Brexit deal with the EU’s Brexit committee. Fears of a split in discussions or opposition from the European Union could hurt the pound. But on the basis of past European commission attitudes, generally positive. If the EU accepts the Brexit deal, it could boost the pound. However, the EU has not yet responded to the terms of the Brexit deal, and the pound is still following the UK and us economic data. It is believed that the pound is still likely to operate within the 1.28 to 1.29 level.
The RBA issued minutes of its monetary policy meeting, saying it was considering further interest rate cuts to stimulate the economy. In addition, Australia's weak job data, the strong dollar trend further bearish the Australian dollar. Fundamental and technical analysis to change the direction of the AUDUSD, estimates that the Australian dollar continued to lower the dollar during this period, also indirectly bearish New Zealand dollar.
Dollar to yen
The FOMC minutes, which showed that continued low-interest rates were more likely to be cut when needed, bullish the rally in global stock markets. Dow futures and the Nikkei index rose, with the dollar/yen. But investors need to pay attention, Japan's fiscal year is approaching, capital flows back to Japan, yen capital demand rise, the dollar/yen could reverse the decline at any time. The preliminary recommended target level is 109 or 108. At present, technical resistance level although adjusted to 112.45 and 112.55 between. But keep an eye out for the risk that the dollar will fall against the yen.
As US crude oil prices rise, the Canadian dollar gains. But oil prices failed to rise further and the Canadian dollar stalled. One of the key factors tonight, Canada releases Retail Sales data. Recently, Canada CPI rose in January. Estimates for Canada Retail Sales data are higher in Canadian dollars but may be limited. Investors focused on OPEC production cut meetings, continue to bullish oil prices, hope to indirectly bullish the Canadian dollar.
US crude futures
The U.S. economy growth strength, the federal reserve continues to keep monetary policy low and oil prices bullish. Separately, OPEC offered to cut output and held a meeting on March 6 to discuss it. Oil prices are expected to stabilize for now. Technically, crude oil is trading at $54 a barrel, having tested the $54.60 barrier yesterday but failed to breakthrough. If crude falls below $53.35 support or looks below $52.90 or $52.55 support.
Low-interest rates and loose monetary policy by Central Banks around the world have helped boost demand for gold as hedging. In addition, the fed's reduced purchase of bonds could send Dow futures lower and some of the hedge money flowing into gold, which is trading above $1,600. Technical analysis, gold prices have reached the key resistance range. If $1,625 significant resistance breaks, look for $1,650. Instead, the short-term price of gold has begun to adjust and is expected to test support at $1,613, with a breakout at $1,600 or less.
U.S. Dow Jones industrial average futures US30
Dow futures fell despite strong U.S. economic data strength and expectations for a rise in U.S. Manufacturing and Services PMI tonight. Believe, after the federal reserve announced to reduce the size of the purchase of bonds, reduce the market liquidity, adverse to the financial market. And uncertainty about the global economy sent Dow futures lower. Last night, Dow futures had a down test on the 29080 support level, temporarily advised to watch for a rebound up 29225 resistance. Watch for U.S. data and global sentiment tonight, as Dow futures break through the resistance of 29225 and could test the resistance of 20410. Note the support bits below, 29080 and 28930. More important support bit at 28790.
9880/ 10055 resistance
9350 / 9150
Support Investors worried the federal reserve to reduce the size of the purchase of bonds, the market liquidity reducing, affecting the financial markets and US economic growth. During the Dow future rose before FOMC minutes, the bitcoin test lower price. If Dow future keeps downward, the bitcoin would be upward.
Enjoy trading! The content is for reference only. Please do ensure that you understand the risk.
Registered Australian Accountant/ Certified Professional Manager / Certified Financial Advisor Experienced Investor / Media Market Commentator Martin Lam has Over 17 years’ experience in global investment market. Familiar with the worldwide stock indices, precious metals such Gold and Silver, Crude oil and Forex. He operated Martin Currency Trading Company and had partnership with a number of well-known international financial corporations and institutions. Before he join ATFX, he was TeleTrade Greater China development and Sales Director. Mr. Lam attends Hong Kong Now TV and China CCTV finance channel once a week. He also had regularly invited by different media, such as DBC Digital Financial Channel, Hong Kong Economic Times, The Standard, Ming Pao to share his experience to trade in Forex, Precious metals, Crude oil and worldwide stock indices
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