Last week, the GBP made a surge for consecutive five weeks and closed around the weekly high.
Even though the most recent retail sales released on Monday showed the consumer spending in January plunged again after May under the reintroduced lockdown, the British pound still printed green bars before Thursday.
GBP then retraced a bit on Thursday, but it edged up quickly on the following day amid the better-than-expected 2020 final quarter’s GDP. The figure published was 1% which was much higher than the 0.5% market consensus. It also acted as a catalyst for GBP to break the resistance at 1.3850 again.
The dollar depreciated against all the major counterparts in the previous week, making an almost 0.7% slump.
The first downside driver might be the less than impressive economic data. The U.S. NFIB small business index dropped from 95.9 to 95.0. Jobless claims remained far above the 665,000-peak during the 2008 Financial Crisis.
Apart from the unencouraging figures, the Fed stated again the low interest rate would be held in order to achieve full employment. It might be another factor for the weak dollar.
2021 January Retail Sales Report (US & Australia)
The US is going to release its January Retail Sales Report on upcoming Wednesday. The latest report shows the December retail sales decreasing 0.7% since November, but rising 2.9% compared to the same time last year. It is the third consecutive month of dropping consumption because of high level of unemployment, ongoing pandemic and lack of government’s financial support. Among all thirteen categories, electronics & appliance stores and food & beverage stores were the worst performer, plummeting by 4.86% and 4.47% respectively.
President Joe Biden has unveiled a $1.9 trillion additional coronavirus pandemic relief package in order to tackle the pandemic and revive the staggering economy. The package includes direct relief to households and small businesses. For example, one of aids for individuals will be a pivotal third stimulus check for $1400. The proposed additional relief is expected to boost the consumption in the near future. Furthermore, the number of COVID-19 infected cases has kept declining since January. It is likely to benefit the store retailers a lot and be a driver pushing the retail sales. The market expects the figure will turn positive in January, surging for 0.7% compare to December.
Australia is going to release the retail sales data of January on Friday. The retail sales of Australia in December slumped by 4.1% when compare with November, but it rose by 9.6% in annual term. The tumble was mainly recorded in household goods, department stores and clothing.
The market has a more positive outlook on January’s retail sales as the outbreak of virus in some states has been controlled, mobility restrictions imposed since December were largely lifted in early January. In addition, the employment figures also remain strong recently. These factors support for the rebound of retail sales in January.
The WTI crude oil had outstanding performance in the previous week. It at the end successfully broke out the significant resistance at 60.00.
Technically, the outlook for the black gold is quite optimistic based on two-line MA and RSI. The fast MA pass the slow MA from below again and formed a golden cross again. Moreover, the RSI has already returned into the neutral zone. Both indicators thus signal that the bullish momentums of oil persist.
As the price has just broken above the 60.00 interval, it may take some time to stay firmly above the level. Therefore, it is likely to continue the uptrend and move further north after resting around 60.00 for a while.
Support: 60.00, 54.00, 51.50
Resistance: 66.50, 77.00
The British pound made a 0.85% surge last week and broke out the upper resistance level at 1.3850, reaching the high point since mid-2018.
For technical aspects, the price is standing firmly above the 1.3850 resistance and the golden cross is still maintained in the two-line MA, but the RSI has stepped into the overbought zone.
All in all, it is possible to see the pound making a corrective pullback in the near future and the retracement may occur when the price touches the resistance line of trend channel. Nonetheless, the uptrend is highly possible to resume after the temporary downside movement is resisted by support level.
Support: 1.3850, 1.3520, 1.3180
Resistance: 1.4350, 1.5000
The Australian dollar appreciated near 1.1% against US dollar and has become the best weekly performer among all major currencies.
According to the two-line MA, the golden cross indicates the AUD would keep bullish in the medium to long run. In addition, the RSI is recording 66.092 which also support for further upward move in the short term.
However, the price is very close to the strong resistance (support) at 0.7800, it takes time for confirming the breakout. Therefore, the AUD may fluctuate slightly around the level for some period of time and extend its uptrend later.
Support: 0.7800, 0.7600, 0.7410
Resistance: 0.8140, 0.8650
The views or opinions as expressed in the above article represent the personal views or opinions of the author and do not represent those of Gemini Capital LLC (“GC”). GC has no obligation to independently check or verify the author of the article and the information provided in the article. Accordingly, GC does not take responsibility for such article.
This material is for general information purposes only and is not intended as (and should not be considered to be) financial, investment or other advice on which reliance should be placed. GC is not authorized to provide investment advice. No opinion given in the material constitutes a recommendation by GC or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person.
Trading with GC can result in losses that exceed your deposits. Consumers should ensure they understand the risk and seek independent financial advice if necessary.
Gemini Capital LLC is a company duly incorporated in Saint Vincent & The Grenadines and registered by the Financial Services Authority (‘FSA’) under Number 228 LLC 2019. Our registered address is located at Hinds Building, Kingstown, Saint Vincent and the Grenadines.
All investments entail risks and may result in both profits and losses. In particular, trading leveraged derivative products such as Foreign Exchange (Forex) and Contracts for Difference (CFDs) carries a high level of risk to your capital. All these derivative products, many of which are leveraged, may not be appropriate for all investors. The effect of leverage is that both gains and losses are magnified. The prices of leveraged derivative products may change to your disadvantage very quickly, it is possible for you to lose more than your invested capital and you may be required to make further payments. It is important that you understand that with investments, your capital is at risk. Past performance is not a guide to future performance. It is your responsibility to ensure that you make an informed decision about whether or not to invest with us. Before deciding to invest in any financial product, you should carefully consider your investment objectives, trading knowledge and experience and affordability. You should seek independent professional financial advice if you do not understand the risks involved. You should only trade in Forex and CFDs if you have sufficient knowledge and experience of the risks involved in trading such products and if you are dealing with money that you can afford to lose. GC assumes no liability for any loss sustained from trading in accordance with a recommendation. This website, including the information and materials contained in it, are not directed at, or intended for distribution to or use by, any person or entity who is a citizen or resident of or located in the United States or any other jurisdiction where such distribution, publication, availability or use would be contrary to applicable law or regulation.
GC Markets is the trading name of Gemini Capital LLC. Gemini Capital LLC (“GC”) is a company duly incorporated in Saint Vincent & The Grenadines and registered by the Financial Services Authority (‘FSA’) under Number 228 LLC 2019. GC is also registered as a Money Services Business (“MSB”) with the Financial Transactions and Reports Analysis Centre of Canada (“FINTRAC”) under Number M20513484 and registered with National Futures Association (“NFA”) of United States of America under Number 0533039. Our registered address is located at Hinds Building, Kingstown, Saint Vincent and the Grenadines.
Kindly click the button below to register via Facebook Messenger