The Aussie did not move much in the previous week attributed to lack of new information or surprise.
The Reserve Bank of Australia (RBA) held a meeting on Tuesday. The policymakers sit on their hands, largely in line with the market expectations. RBA was optimistic about the economic outlook, but it also forecasted that both inflation and employment could not reach official targets before 2024, so it is unlikely to see any new moves on monetary policy in the near future.
The pandemic and long-term bond yield would persist to affect the forex market, but there was no significant change last week. As a result, the AUD has just slightly rose by 0.13% for the whole week.
The dollar bears have dominated the market since Monday, the greenback thus pulled back by 0.89% from the half-year high.
The market was looking closely at the Biden’s $2 Trillion infrastructure plan. Biden has purposed to raise the corporate tax rate from 21% to 28%. Nonetheless, the news reported that he would accept a 25% tax rate in order to gain supports from the Republicans. Thanks to a cut of the budget from $4 Trillion anticipation, plus the potential reduction of corporate tax rate hike, the bullish sentiment started to calm down. In addition, several Fed governors, including Powell, Neel Kashkari and James Bullard, restated that the inflation pressure was expected to be temporary, and it was necessary to maintain the policy to support full employment. It might relieve the worries of tightening policy earlier. Last but not least, the US 10-year treasury yield retraced from above 1.7450% to 1.6640% in a week, hampering the surge of the USD.
In general, there were some negative factors for the dollar, so the performance of USD has deteriorated for almost the whole week.
MPC Meeting of the Reserve Bank of New Zealand (RBNZ)
The next monetary policy meeting of the Reserve Bank of New Zealand (RBNZ) is scheduled for 14 April, the upcoming Wednesday.
Although the RBNZ has prepared for a negative interest rate after the breakout of the pandemic, it has kept the rate on hold at 0.25% since March 2020. According to the graph above, we can observe that New Zealand archieved a V-shaped rebound in 2020, and it is highly possible for the situations keep improving in 2021 due to vaccination program and economy reopen. Moreover, the housing price is on fire. The median house price soared by 19.3% in 2020, and trend extended in recent few months in 2021 too. Therefore, the policymakers have already remove the tool of negative rate and they are also unlikely to implement a further rate cut due to strong recovery.
However, there is no sign for rising inflation, and the long-term Kiwi Bond rates has stabilized following the US treasury rate, the pressure for raising the policy rate sooner is mild. The price of the New Zealand overnight index swaps, as shown on the table, suggests a 0% chance for changing the rate by the mid-year. It also signaling a 14% of rate hike by the end of 2021.
The WTI crude oil failed to lengthen its gains last week, experiencing a more than 3% slump.
In technical aspect, the black gold kept fluctuating around 60-mark after breaking below the uptrend channel one month ago. Furthermore, both RSI and the two-line MA have been staying flat since mid-March.
To conclude, the oil has lost strong bullish momentums in March, but the bears have not taken over the market, so the longer-term outlook of the oil is still undecided. For the near term, it is highly possible that the sideways trend would go on and the oil would oscillate around 60-interval for a fourth consecutive week.
Support: 57.50, 54.00, 50.00
Resistance: 60.00, 63.50, 67.00, 70.00
The euro performed quite well in the past week because it appreciated by 1.16% against the dollar.
Technically, the RSI is lying between the neutral zone that above 50 and there is a golden cross formed by the two-line MA. However, the mouth of the two-line MA is contracting and tends to close.
All in all, if the euro can hold its price on current level or above, the uptrend will be maintained, a further advance is very likely to occur, pushing it to 1.2000 or above. Conversely, if it continues to depreciate in upcoming few days, the upward momentums might fade out, pulling the price back to 1.1845.
Support: 1.1845, 1.1750, 1.1600
Resistance: 1.2000, 1.2180, 1.2350 chfusd
The Swiss Franc has become the best weekly performer among all major currencies as it has picked up by almost 2%.
From technical perspective, the golden cross pattern formed at the beginning of the month still appears on the four-hour chart. The RSI has also retraced from the overbought zone and the Swiss Franc is touching the lower bound of the uptrend. Nevertheless, it is very close to the 1.0840 resistance at the same time.
Therefore, the outlook for CHF is optimistic in general, it is likely to challenge the resistance at 1.0840 in this week. If it succeeds to make a breakout, more bullish momentums can be gained and extend the uptrend. Otherwise, it might return to 1.0750 support.
Support: 1.0750, 1.0670, 1.0560
Resistance: 1.0840, 1.0950, 1.1050
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