Euro Forecast: Trading Through Political Headwinds - Setups in EUR/JPY, EUR/USD Rates Advertisement
Euro Forecast Overview:
The Euro is proving resilient despite a resurgent US Dollar, and it now may be finding the footing needed before attempting another turn higher.
Rising political risks in Italy and the Netherlands has been shrugged off by the Euro, as has some dovish jawboning by the European Central Bank.
Per the IG Client Sentiment Index, the Euro still has a bullish bias in the short-term.
Euro Dealing with Political Risks…?
The Euro has been plagued by poor vaccination rates, trailing both the post-Brexit UK and the post-Trump US, and now dual political crises in Italy and the Netherlands have emerged. And yet…the Euro does not seemed burdened. European bond yields are not shooting higher, perhaps because the European Central Bank has issued some dovish jawboning at its recent policy meeting. But even then, the dovish remarks about the Euro hav
US Recession Watch, January 2021 - Slowing Growth Evident as Calendar Turns Advertisement
US Recession Watch Overview:
Although US Treasury yields have risen in recent weeks, 4Q’20 growth expectations have slid. A double dip recession may or may not be avoided in 1Q’21, depending upon the timing of US fiscal stimulus.
The New York Nowcast estimate for 4Q’20 GDP is at +2.58%, while the Atlanta Fed GDPNow model is pointing to loftier+7.5% growth.
Rates markets continue to forecast no change in the Federal Reserve’s main interest rate through January 2022; the Fed has pledged to keep rates low through 2023.
Making Sense of US Economic Data
FX Week Ahead - Top 5 Events: UK Jobs, Australia Inflation, Fed Meeting, Mexico & US GDP
FX Week Ahead Overview:
The last week of the month brings about the usual smattering of event risk from around the globe.
The US economy will be in particular focus over the coming days, with the first Federal Reserve rate decision of the Biden presidency and the initial Q4’20 US GDP report on the docket.
01/26 TUESDAY | 07:00 GMT | GBP Employment Change (OCT) & Unemployment Rate (NOV)
The UK economy has been plagued by the emergence of the B117 strain of COVID-19, which UK public health officials have warned is not only more transmissible, but also has a higher rate of fatality. To no surprise, with surging infection rates in the fall and UK Prime Minister Boris Johnson pushing lockdowns at the onset of winter, UK economic data is entering a dark period.
Canadian Dollar Forecast: On the Verge of a Bullish Breakout? Levels for CAD/JPY, USD/CAD Advertisement
Canadian Dollar Forecast Overview:
CAD/JPY rates look ready to trade higher as multi-year resistance is pressured. USD/CAD rates look like they want to try higher too, however, with a bullish falling wedge taking shape in recent weeks.
The first Bank of Canada rate decision of 2021 proved an ineffectual central bank that doesn’t want a stronger currency but can’t do much to stop it.
Canadian Dollar Spars with BOC, Winning
The Canadian Dollar has had a mixed January, in part thanks to the resurgent (so to speak) US Dollar. The first Bank of Canada rate decision of 2021 brought into new light policymakers’ frustration, with Governor Tiff Macklem saying that “we’ve seen this broad-based US dollar deprecation that doesn’t reflect some positive development in Canada that the exchange rate is absorbing…the exchange rate is starting to create a mate
Gold Price Forecast: What to Make of Recent Rebound? Levels for XAU/USD Advertisement
Gold Price Forecast Overview:
Gold prices have proven extremely sensitive to US Treasury yields and the US Dollar, in both directions.
Failure to climb back above the August-November 2020 downtrend warns that bull aren’t yet back in control.
According to theIG Client Sentiment Index, gold prices may soon trade higher.
Gold Prices Struggling to Regain Narrative
Gold prices have had a tough start to the New Year, with price action proving haphazard. Volatility hasn’t exploded or collapsed, leaving gold prices adrift, easily succumbing to the cross-currents presented by other asset classes, politics, fiscal stimulus speculation, and monetary policy. Gold is lacking a compelling narrative right now, and while a ‘blue wave’ presents a fundamentally bullish rationale long-term, the short-term picture is much less clear.