Weekly outlook 25 May to 30 May 2020

Weekly outlook 25 May to 30 May 2020

24 May 2020 12:45 PM
 

Weekly outlook 25 May to 30 May 2020

USD/INR- In the upcoming week for USD, consumer confidence, the second estimate of first-quarter GDP and jobless claims are coming up. Consumer confidence is important information as consumption is the primary driver behind GDP. If the confidence remains low, it will decrease the propensity to consume which will slow down the speed of economic recovery. On the other hand, Rupee is expected to depreciate following the RBI repo rate cut by 40 bps.

INR

Date

Time

Event

Forecast

Previous

May 29, 2020

15:30

Federal Fiscal Deficit (Apr)

 

10,364.85B

May 29, 2020

17:00

FX Reserves (USD)

 

487.04B

May 29, 2020

17:30

GDP Quarterly (YoY) (Q4)

2.1%

4.7%

USD

Date

Time

Event

Forecast

Previous

May 26, 2020

18:30

CB Consumer Confidence (May)

88

86.9

May 26, 2020

19:30

New Home Sales

490K

627K

May 28, 2020

18:00

Core Durable Goods Orders (MoM) (Apr)

-14.0%

-0.2%

May 28, 2020

18:00

GDP (QoQ) (Q1)

-4.8%

-4.8%

May 28, 2020

18:00

Initial Jobless Claims

 

2438K

May 28, 2020

19:30

Pending Home Sales (MoM) (Apr)

-15.0%

-20.8%

May 28, 2020

20:30

Crude Oil Inventories

 

-4.983M

Technical Outlook –The relative strength index (14) is at 53.43 which is neutral. The pair seems to have resistance at 76.190 and support at 75.24. Multiple price gaps are yet to be filled, 76.6250 – 76.35 (down gap and partially closed), 76.13 – 75.99 (down gap) and 75.2050 – 75.67 (up gap and partially closed). The Ichimoku cloud suggests that USD/INR price might increase, leading to Rupee depreciation.

EUR/USD- The upcoming week starts with German GDP data release. Covid-19 has pushed the economy into a technical recession, thus the GDP is expected to contract. The Franco-German effort towards coronavirus relief package has given some hopes. Meanwhile, growing US-Sino tensions are weighing on the market sentiment and boosting dollar.

EUR

Date

Time

Event

Forecast

Previous

May 25, 2020

11:30

German GDP (QoQ) (Q1)

-2.2%

0.0%

May 25, 2020

13:30

German Ifo Business Climate Index (May)

78.8

86.1

May 29,202

11:30

German Retail Sales (MoM) (Apr)

-12%

-5.6%

May 29,2020

14:30

CPI (YoY) (May)

0.1%

0.3%

Technical Outlook – The pair seems to have an unchanged resistance at 1.10 levels.  A steady support can be seen at 1.076 which has been tested multiple times. The Span A (green line) is below Span B (red line) forming a red cloud- this shows that the pair is bearish. The RSI (14) lies at 50.22 which is neutral.

GBP/USD- The economic calendar is light, with the only noteworthy release being consumer confidence, which will have a negative impact on the pair. Speculation about negative rates remain, yet Brexit may overtake it. 2nd June deadline will drive the EU and the UK to agree or prolong its current expiry at year-end or conclude a deal. This pressure may push each side to compromise and strike an accord something that appears unlikely for now. If Britain insists on refusing to elongate the implementation phase, it'll revert to World Trade Organization terms in 2021, an unfavorable prospect for investors.

GBP

Date

Time

Event

Forecast

Previous

May 29, 2020

4:31

Consumer Confidence (May)

-35

-34

 Technical Outlook – The week ended with the formation of an inverted hammer and it looks likely that we could keep on going lower. A breakdown underneath the base of the candle would open up a severe downfall. Support can be seen at 1.20 level while the resistance lies at 1.23. The RSI (14) has been forming lower highs and lower lows, indicating weaker confidence in the currency.

USD/JPY- Japanese markets are highly sensitive to moves in US-China relations and trade fall-out. That will dominate the news next week. An escalation is expected to be negative for equities, but positive for the JPY as a haven currency. Key data releases include Industrial production (YoY Apr) and unemployment rate (Apr), Retail Sales (YoY Apr) and CPI (YoY May) all of which are expected to have a muted impact on the currency. There is little to choose between the pandemic economic collapse in the two countries, and though the Markit PMI may hold promise for the US other statistics likely will not.

JPY

Date

Time

Event

Forecast

Previous

May 29, 2020

5:00

Unemployment Rate (Apr)

2.7%

2.5%

May 29, 2020

5:00

Tokyo Core CPI (YoY) (May)

-0.2%

-0.1%

May 29, 2020

5:20

Retail Sales (YoY) (Apr)

-11.7%

-4.6%

May 29, 2020

5:20

Industrial Production (MoM) (Apr)

-5.1%

-3.7%

Technical Outlook – The pair has been in a fading rally, forming consistent lower highs and lower lows. The movement is stuck between a 400-point range. The directional movement index (DMI 25) indicates a weak trend.  The strong resistance at 107.6 levels remains unchanged as the 200 day (SMA) also lies there. The support can be seen at 105.20. The RSI is neutral at 53.07.