Weekly Outlook 18 May To 23 May 2020

Weekly Outlook 18 May To 23 May 2020

17 May 2020 11:57 AM
 

USD/INR - Looking forward, April month Retail Sales, Michigan Consumer Sentiment Index for May, and certain other activity numbers from the US will be the key for the pair traders. An increase in Crude Oil Inventories is expected, because of weaker demand. FOMC will publish the Minutes of its latest meeting. While forecasts suggest a decrease in Building Permits for the month of April, likely recovery in Empire State Manufacturing Index and Existing Home Sales might play its role to guard the pair’s upside.

INR

Date

Time

Event

Forecast

Previous

May 22, 2020 (Fri)

11:30

FX Reserves (Apr)

 

485.3B

USD

Date

Time

Event

Forecast

Previous

May 19, 2020 (Tues)

18:00

Building Permits (Apr)

1.100M

1.350M

May 20, 2020 (Wed)

20:00

Crude Oil Inventories

4.147M

-0.745M

May 20, 2020 (Wed)

23:30

FOMC Meeting Minutes

 

4.590M

May 21, 2020 (Thurs)

18:00

Philadelphia Fed Manufacturing Index (May)

-47

-56.6

May 21, 2020 (Thurs)

18:00

Initial Jobless Claims

 

2981K

May 21, 2020 (Thurs)

19:30

Existing Home Sales (Apr)

-8.1%

-8.5%

Technical Outlook –The volatility in Rupee has recently touched its two months low of 8.46% indicating that option premiums would be cheaper and a good time to hedge. There are gaps yet to be filled at 76.62 and 75.20. The relative strength index (21) indicates a consolidation implying no trend.

EUR/USD - In the coming week, the German ZEW Economic Sentiment will be released. The Economic sentiment in the country is seen improving, while for the whole union it is expected to have declined. Manufacturing PMI and Services PMI for the month of May are also relevant. Considering the economies are slowly recovering, the fundamentals are expected to increase a bit from record lows. While macroeconomic data may not immediately, but will eventually help to shape markets’ sentiment.

EUR

Date

Time

Event

Forecast

Previous

May 19, 2020 (Tues)

14:30

German ZEW Economic Sentiment

-2.1%

0.0%

May 20, 2020 (Wed)

14:30

CPI (YoY) (Apr)

0.4%

0.4%

May 22, 2020 (Fri)

13:00

German Manufacturing PMI (May)

39.0

34.5

Technical Outlook – The pair is rangebound and seems to have an unchanged resistance at 1.10 levels which is also strengthened by 144-day SMA. A steady support can be seen at 1.076 which has been tested multiple times. The RSI (21) lies at 46.15 which is neutral.

GBP/USD - The upcoming week will start with the release of The Unemployment Rate and Average Earnings figures for March, which captures the image of the economy at the beginning of the lockdown. Considering the government’s furlough scheme, the Claimant Count Change for April is expected to increase. Crash in energy prices and even a 1% decline in CPI (YoY) might impel the BOE to push for the steepest rate yet. Retail sales statistics for April is an important indicator of consumer spending in which a considerable downfall is expected. 

GBP

Date

Time

Event

Forecast

Previous

May 19, 2020 (Tues)

11:30

Average Earnings Index +Bonus (Mar)

3.0%

2.8%

May 19, 2020 (Tues)

11:30

Claimant Count Change (Apr)

172.5K

12.1K

May 20, 2020 (Wed)

11:30

CPI (YoY) (Apr)

1.5%

1.5%

May 21, 2020 (Thurs)

14:00

Manufacturing PMI

 

32.6

May 21, 2020 (Thurs)

14:00

Services PMI

 

13.4

May 21, 2020 (Thurs)

14:00

Composite PMI

 

13.8

May 22, 2020 (Fri)

11:30

Retail Sales (MoM) (Apr)

 

-5.1%

Technical Outlook – Consolidation can be witnessed through the trendlines. 200-day SMA indicates a resistance of 1.26 also matched through the trendline. The support can be seen at 1.21 levels. MACD (5,35,5) is below the signal line indicating a bearish trend. The RSI (21) currently at 39.65 is neutral.

USD/JPY - Japan’sfirst quarter GDP is expected to decline 4.6% and an annualized which, after -7.1% in the last three months of 2019 would enter Japan into its fourth recession since the financial crisis.  Quarterly GDP is forecast to drop 1.2% after -1.8% in Q4. Industrial production in March is expected to be unchanged on revision at -5.2% (YoY) and -3.7% (MoM). Exports are expected to plunge 22.7%almost double the March decline of 11.7%. It would be the 17th straight month of decreases.

JPY

Date

Time

Event

Forecast

Previous

May 18, 2020 (Mon)

5:20

GDP (QoQ) (Q1)

-1.2%

-1.8%

May 21, 2020

(Thursday)

5:20

Exports (YoY) (Apr)

-22.7%

-11.7%

May 21, 2020

(Thursday)

5:20

Trade Balance (Apr)

-560.0B

5.4B

Technical Outlook – Bollinger bands indicate reduced volatility as the currency continues its consolidation. A major support level can be seen at ¥105.60 and resistance at ¥107.15. The currency faces downward pressure, following the longer trend. Rallies are to be sold into unless of course we somehow break above the ¥109 level, which is very unlikely.