Weekly Outlook 22nd June to 27th June 2020

Weekly Outlook 22nd June to 27th June 2020

21 Jun 2020 02:01 PM
 

USD/INR- Resurgence of new coronavirus infections around the world are diminishing hopes for a quick recovery from the adverse economic consequences of COVID-19. The current border stand-off between India and China is further weakening sentiments for the currency. On the contrary, India’s forex reserves rose by $5.942 billion to touch a lifetime high of $507.644 billion in the last week, aided by a significant bounce in foreign currency assets. The upcoming week does not offer much to INR.

INR

Date

Time

Event

Forecast

Previous

26th June, 2020

17:00

FX Reserves (USD)

 

501.70B

USD

Date

Time

Event

Forecast

Previous

 22nd June, 2020

19:30

Existing Home Sales (MoM) (May)

4.38M

4.33M

23rd June, 2020

19:30

New Home Sales (MoM) (May)

630K

623K

24th June, 2020

20:00

Crude Oil Inventories

-0.152M

1.215M

25th June, 2020

18:00

Core Durable Goods Order (MoM)

-0.1%

-7.7%

25th June, 2020

18:00

GDP (QoQ) (Q1)

-5.0%

-5.0%

25th June, 2020

18:00

Initial Jobless Claims

 

1508K

 Technical Outlook – Rupee weakened to a three-week low in the last week. Strong support is maintained at 75.337. The downward gap from 76.6259 to 76.4672 and upward gap from 75.6065 to 75.7163 are yet to be filled. If the rupee crosses the 76.6 level, it can steer towards new record lows, else it is expected to hold steady. RSI (14) is moving steadily around 61. MACD is indicating an upward movement in the pair.

EUR/USD- The EU video summit held on Friday was just the first step in the intense discussions that could culminate with a deal in July, if the member states overcome their differences. The upcoming week will be quite a busy one with relevant data coming up from both Europe and US. The EU will provide preliminary estimate of June Consumer Confidence developing to -15 from -18.8. The US will publish May Durable Goods Orders and the final figure of GDP (Q1).

EUR

Date

Time

Event

Forecast

Previous

23rd June, 2020

13:00

German Manufacturing PMI (Jun)

39.2

36.6

23rd June, 2020

13:30

Manufacturing PMI (Jun)

38.0

39.4

23rd June, 2020

13:30

Services PMI (Jun)

25.0

30.5

24th June, 2020

13:30

German Ifo Business Climate Index

78.3

79.5

Technical Outlook – RSI(14) is at neutral level. The 610 SMA is forming strong resistance, which has been tested multiple times and is moving close to the current Resistance trendline- at 1.1378. The 144 SMA and 233 SMA have also proved to be strong resistance lines in the past which were breached a couple of weeks ago. The two SMAs might form a support for Euro in future as it can also be seen converging with the support line. Support is at 1.0985. Euro can strengthen, unless the greenback picks up on upbeat US data coupled with an unenthused market mood.

GBP/USD- UK coronavirus cases edge lower- statistics remain crucial to the pound as they lead the path towards reopening of the economy. Brexit talks on hold, will resume by June end, which provides an interval to the saga. Yet any significant statement by Johnson or others could swing the pound.  In the upcoming week, figures on Tuesday and new government measures are of interest.

GBP

Date

Time

Event

Forecast

Previous

23rd June, 2020

14:00

Composite PMI

 

30

23rd June, 2020

14:00

Manufacturing PMI

 

40.7

23rd June, 2020

14:00

Services PMI 

 

29

25th June, 2020

16:00

BoE FPC Meeting Minutes

 

 

Technical Outlook – GBP/USD has fallen below its uptrend support line which has been forming strong support since the dark days of March. Its recent swing also sent it below 89 SMA which is another bearish sign and shows the possibility for more falls. Strong resistance at 1.2737. The 233 SMA too has been forming resistance in the past which has been tested multiple times. RSI (14) is neutral.

USD/JPY- While the risk trade has subsided, the still existent pandemic has sufficient potential to disrupt the markets. The catalyst would be increasing cases and thus further imposed restrictions in many states in the US and other economies. A strong economic recovery will benefit the more flexible and larger US economy than the export-oriented Japan economy, and thus the US Dollar. But this progress would require a pull back of coronavirus threat to problematic levels.  In the upcoming week, June’s preliminary PMI releases are due which are not expected to influence much. Inflation figures due in the second half of the week may draw some interest.

JPY

Date

Time

Event

Forecast

Previous

23rd June, 2020

06:00

Services PMI

 

26.5

24th June, 2020

05:20

BoJ Summary of opinions

 

 

26th June, 2020

05:00

Tokyo Core CPI (YoY) (Jun)

0.2%

0.2%

Technical Outlook – The slight fall back on the week dropped the RSI into a mild negative territory. But it is still neutral, as an effective indicator. The price action in the cloud shows consolidation in the pair. In addition to this, the leading Span A is below leading Span B which shows a downtrend in the pair for most of the upcoming week, after which the cloud is bullish. Strong resistance at 108.48 and support at 105.97.