The China Loan Prime Rate setting was unchanged with the 1 year 3.85% and 5 year 4.65%.
This was expected.
More to come…
The PBoC Interest Rate Decision is announced by the People´s Bank of China. If the PBoC is hawkish about the inflationary outlook of the economy and rises the interest rates it is positive, or bullish, for the CNY. Likewise, if the PBoC has a dovish view on the Chinese economy and keeps the ongoing interest rate, or cuts the interest rate it is negative, or bearish.Full Article
Silver refreshes weekly top to $25.48, currently up 0.90% around $25.40, during early Wednesday. The white metal broke a downward sloping trend line from January 06 the previous day but is currently battling the 200-bar SMA amid normal RSI conditions.
Given the commodity’s sustained break of prior resistance, silver is likely to cross the 200-bar SMA level near $25.50.
Following that, 100-bar SMA level of $26.05 and December-end tops near $26.60/65 can test the silver bulls ahead of directing them to the multi-day high of $27.92 and the $28.00 threshold.
On the flip side, a downside break below the immediate support line around $24.85 will highlight the $24.20/10 support zone comprising the 61.8% Fibonacci retracement of late-November 2020 to the early January 2021 upside and a descending trend line from January 11.
In a case where the bullion declines below $24.10, multiple supports around $23.60 can entertain silver sellers.
Trend: BullishFull Article
NZD/USD is showing resilience to a bearish reversal development on technical charts.
The pair confirmed a head-and-shoulders (H&S) breakdown on the 4-hour chart signaling a trend reversal lower on Friday. The breakdown opened the doors for a sell-off to 0.6980 (target as per the measured move method).
So far, however, the sellers have struggled to penetrate the psychological level of 0.71. Meanwhile, the upside remains capped at the H&S neckline resistance (former support).
The bias would remain bearish while the pair is held below the neckline, currently at 0.7140. A break above that level would invalidate the bearish outlook and shift risk in favor of a rally to resistance at 0.7240.
GBP/JPY has run-up in a strong impulse to test the resistance of the daily M-formation and the following is a top-down analysis that arrives at a bullish bias across the time frames.
The monthly chart shows that the price is testing the resistance and would be expected to continue deeper into the supply zone following the correction of the bullish recovery.
Bulls have moved off the support in a strong rejection which could see the resistance give. However, if there is a correction, another test of the 38.2% Fibonacci would be in order.
The price has run to the resistance of the M-formation’s neckline in a strong rejection from the lows. The resistance would be expected to give way to such momentum.
The 4-hourly chart is bullish with the price above the 20 moving average and MACD above zero.
The market is also trading above resistance which is now expected to act as support on a retest,Full Article
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GBP/USD drops to 1.3637 during Wednesday’s Asian trading. In doing so, the cable reverses intraday gains after recently rising for two consecutive days. Market’s cautious sentiment before Biden’s inauguration ceremony and the UK Consumer Price Index (CPI) could be traced for the latest weakness in the pair prices. Also weighing on the quote could be the coronavirus (COVID-19) and Brexit concerns.
As per The Guardian’s latest update, “Public Health England said a further 1,610 people have died within 28 days of testing positive for Covid-19 – the highest number of UK deaths reported on a single day since the outbreak began.” It should also be noted that Germany’s extended lockdown till February 14 and fears of a vaccine shortage in New York and Canada also weigh on the risks.
Furthermore, the Daily Express came out with the news suggesting UK PM Boris Johnson’s rejection to the hints for the European Union’s (EU) likely request to extend the Brexit deal until April. “Boris Johnson has issued a warning to the EU that the Brexit deal signed between the two sides last month must be ratified by February 28,” the news said. In return, The Telegraph mentions that the bloc’s Finacial Services Commissioner warns that market access to UK firms will only come if Government divulges plans to diverge from EU rules.
Earlier, comments from incoming US Treasury Secretary Janet Yellen, indirectly criticizing China and President Donald Trump’s investment plans, roiled the mood.
Amid these plays, stock futures in the US and the UK remain mildly bid while Asian equities trade mixed by press time.
Moving on, the UK’s inflation data for December becomes the immediate catalyst to watch ahead of the US President-elect Joe Biden’s White House entry. “We look for headline inflation to edge up to 0.6% y/y in December (market forecast 0.5%), in line with the BoE’s forecast from the November MPR. We look for underlying details to show core CPI rising to 1.4% y/y (market expectations 1.3%), before likely slipping down to about 1.0% y/y through Q1. That being said, inflation will continue to be difficult to read, given that some sectors still remain largely shut. The BoE will likely be watching labor market developments more closely for clues into future inflationary pressures, rather than current inflation reading,” said TD Securities ahead of the UK CPI data.
21-day SMA around 1.3590 offers immediate support while the GBP/USD bulls target the monthly top near 1.3710.Full Article
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The Bank of Canada is widely expected to keep monetary policy and quantitative easing unchanged at its meeting on Wednesday in spite of new COVID-19 provincial lockdowns and a slowing economy.
Overnight lending will stay at 0.25% and the and the purchase program at C$4 billion a month though Ontario recently issued a stay-at-home order and most of the country is under some combination of social and business restrictions.
There has been some media speculation that the BoC might reduce its base rate by an amount less than the standard 0.25%, a so-called micro-cut, in light of the growing drag of the pandemic on performance in 2021. But with analyst expectations nearly uniform for a status quo meeting, that seems unlikely.
The BoC dropped its overnight rate to 0.25% on March 27, two weeks after the Federal Reserve and has offered no estimate for a return to normal levels.
Bank of Canada overnight rate
The Fed has been equally mum with Chairman Jerome Powell saying that rates will stay very low until the US economy is fully recovered. The bank’s latest Projection Materials have the fed funds rate at its current level of 0.25% through the end of 2023.
The Canadian dollar reached an almost three-year high against its US counterpart last week at 1.2625. Its steady ascent after the end of the market panic in March had initially been due to the withdrawal of the US dollar’s pandemic premium. However, in last two months of the year the deteriorating American economy, particularly the labor market, and surging oil prices took over as energizing factors.
West Texas Intermediate (WTI) began rising in early November anticipating a global recovery in the second and third quarters of 2021. By late in the month WTI had broken through resistance at $44 which had been the top after the March collapse. Though the commodity was rejected at $54 last week after three attempts that has done little to alter WTI’s buoyancy in the light of the expected global rebound next year as vaccine distribution gradually curtails the pandemic.
The United States is Canada’s largest trading partner and a strong currency could hinder the economy’s recovery.
Bank of Canada Governor Tiff Macklem said that “recent Canadian dollar appreciation is hurting competitiveness of Canadian exporters in the US market. The policy statement of the December 9 meeting noted that, “A broad based decline in the US exchange rate has contributed to a further appreciation of the Canadian dollar. “
The modest increase in US Treasury rates in the New Year, has helped the USD/CAD bounce from its recent low. The yield on the 10-year bond rose above 1% for the first time since March on January 6 and closed at 1.138 on January 12.
Markets are also anticipating a massive stimulus package from the incoming Biden administration which takes office on January 20.
Information released subsequent to the last BoC meeting on December 9 has shown the effect of the widespread lockdown.
The Ivey Purchasing Managers’ Index dropped to 46.7 in December, far below November’s 52.7 and the 54.7 forecast. It was the first month in contraction since May.
Net Change in Employment in December was negative for the first time since April, shedding 62,600 jobs, more than double the -27,500 estimate. Manufacturing Sales in November were weak, falling 0.6% on a -0.1% forecast and October’s 0.2% increase.
Net Change in Employment
While monthly GDP in October came in at 0.4%, slightly better than the 0.3% expectation, that will be small comfort to the BoC governors as the new lockdowns arrived in November and December.
The expected status quo rate decision will have limited effect. The commentary over a so-called micro-cut is not taken seriously by the markets. Focus will be on the characterization of the Canadian economy in the policy statement and Governor Macklem’s press conference.
Markets already anticipate that the BoC will be on hold for a prolonged period and the Governor is unlikely to disabuse that notion. But an optimistic economic assessment by the bank could send the USD/CAD lower.
On the other hand Mr. Macklem has voiced concern over the strong Canadian dollar. He may choose to blunt the loonie’s gains by emphasizing the limited potential for inflation despite the extended zero rate regime or perhaps by mentioning the positive effect on the American economy of a new stimulus package.
Either way, with markets closely attending the interplay between the pandemic and economic data, rhetoric, whether written from the BoC or verbal from the Governor, will have scant lasting impact on the USD/CAD.Full Article
The strategy explains why the spread between Italian and German debt has stayed remarkably stable despite the recent political crisis in Italy.
The strategy is slightly different from the yield curve control implemented by the Bank of Japan (BOJ) and the Reserve Bank of Australia (RBA). These central banks target some bond yield and pledge to buy enough bonds to keep the pinned at the target rate. The BOJ targets 0.1% on a 10-year yield, while the RBA targets the three-year yield at around 0.25%.
BTC/USD rises to $36,158, up 0.55% intraday, during early Wednesday’s trading. The famous cryptocurrency pair recently reversed from $35,654 while staying inside a symmetrical triangle established since January 04.
Not only the recent recovery moves but the quote’s successful trading above 200-bar SMA amid upbeat RSI and MACD also suggest the quote’s further upside.
As a result, BTC/USD buyers should keep their eyes on the triangle resistance, at $38,325 now, for fresh entry while targeting the latest record top near $42,000.
It should, however, be noted that the $50,000 round-figure will lure the bulls past-$42,000.
Meanwhile, a downside break of the stated triangle’s support, currently around $35,200, will trigger fresh declines to a 200-bar SMA level of $31,100.
Though, any further weakness past-$31,100 may not hesitate to challenge the $30,000 threshold and monthly low near $27,780.
Trend: BullishFull Article
EUR/USD is trading close to 1.2140, representing marginal gains on the day.
The 4-hour chart shows a falling wedge breakout on the 4-hour chart, a bullish reversal pattern. The pattern indicates the corrective pullback from highs near 1.2350 has ended, and the bulls have regained control.
The breakout is backed by a double bottom bullish breakout on the 4-hour chart Relative Strength Index. On the way higher, the pair may encounter resistance at 1.2178 and 1.2223.
Tuesday’s low of 1.2074 is the level to beat for the bears.
Further to the prior analysis, USD/JPY Price Analysis: Bulls await a breakout of consolidation, DXY weighs, bulls have taken the reins and pushed the price over the line.
The prior analysis illustrated the critical resistance.
Bulls will now need to overcome the resistance structure of the recent highs from which the position’s stop-loss could be moved to breakeven.Full Article