The New Zealand dollar plummeted last week, depreciating by 2.26% against the dollar.
The slump since Tuesday was driven by the new measures aiming at curbing housing price. The New Zealand government will extend the “bright-line” test from 5 years to 10 years, cancel the mortgage interest deductibility, and plan to increase housing supply. The market therefore was worried about the consumption and thus the pace of economic recovery, the previous expectation on rate hike in the near future faded out. Therefore, the investors quickly repriced the NZD and it led to a 2.30% drop of NZD within one day.
Although the kiwi finally stabilized on Friday, the losses were too large to be compensated, so it became the worst performer among all major currencies.
The euro extended its losses last week, the price failed to maintain above the strong resistance at 1.18250.
Although the flash composite PMI posted 52.5 which was much better than anticipated thanks to the strong growth of German manufacturing sector, the downside movements of EUR did not be resisted.
There were several catalysts for continuous downtrend of euro, including the rising long-term bond yield, renewed lockdowns under revived pandemic, and the uncertainty on EU-China investment deal.
All in all, the EUR was mainly determined by the aforementioned factors, so the bearish pressure has persisted in recent weeks.
The Tankan (Short-Term Economic Survey of Enterprises in Japan)
The Bank of Japan (BoJ) is going release the first Tankan (Short-Term Economic Survey of Enterprises in Japan) of year 2021 on the upcoming Thursday.
The market forecasts that both the large manufacturers and non-manufacturers will show a more positive mood in the first Tankan of 2021. According to the Reuters Tankan Index, the business conditions improved continuously in the first quarter, with the index surging from -9 to 6 in recent three months.
The big manufacturers are optimistic thanks to the solid external demand, the Tankan Large Manufacturing Index is likely to rise from -10 to 0. Among all industries, chemicals and oil refinery/ceramics are the leading players.
On the other hand, inspite of less infections, the vaccination progressed slowly and the restrictions are still maintained in Q1, the services sector’s pessimism thus would persist, and the non-manufacturers’ index is likely to stay in negative zone.
Last but not least, both sectors may show their positive prospect about the second quarter because of foreseeing looser containment measures if the pandemic keeps improving and more people join the vaccination program.
The WTI crude oil dropped for three consecutive weeks, but the slump of last week contracted from 6.33% to 1.02%.
In technical aspect, the two-line MA is forming a death cross, and the RSI has already broken below 50-mark. In addition, the price has failed to be confined within the uptrend channel for several days.
The outlook for the oil tends to be negative, the price of the black gold may fluctuate around the 60-interval for some time and it is likely to move further south later. The pessimistic situation can be reverse only if the price climbs up to above 63.5 in within short period of time due to some stimulus or favourable news.
Support: 58.50, 54.00, 50.00
Resistance: 60.00, 63.50, 67.00, 70.00
The sterling fell for the second week, although it dropped over 1.3% at the beginning, the price rebounded later, so the slump was reduced to 0.56% by the end of the week.
Technically, despite plummeting below the sideways channel for a few days, the GBP has returned to the channel. Moreover, both RSI and two-line MA generate a slight bullish signal.
The breakout into the sideways zone has not yet be confirmed, and the price is now fluctuating around the lower bound of the zone. If GBP successfully holds above the support level, the outlook tends to be positive, and it is expected to go further upwards in the upcoming one to two weeks.
Support: 1.3770, 1.3450, 1.3150
Resistance: 1.4000, 1.4350, 1.4700
USD Index (H4)
After a three-week challenge, the greenback finally broke the resistance level at 92.50 on previous Thursday.
From technical perspective, the RSI is staying inside the neutral zone that above 50-mark. Furthermore, the golden cross formed by two-line MA still persist, and the price keeps moving between the uptrend channel.
All in all, the bullish momentums remain strong in the market and it is able to push the greenback to a higher position. However, the 92.50 resistance is quite significant that the USD may require more time to confirm the breakout, so it is possible to make a small retracement in recent days.
Support: 92.50, 91.50, 90.00
Resistance: 93.90, 94.75, 97.70
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