Press review - page 480

[Sergey Golubev]

China Economy Becoming More Strict (based on the article)

USD/CNH daily price was bounced from 6.7808/6.7887 support levels to above: the price is located inside Ichimoku cloud for the ranging market condition. If the price breaks 6.8697 resistance levels on close daily bar so the bulliush reversal of the daily prrice movement may be started, otherwise - ranging inside Ichimoku cloud for the waiting for direction.

• "Over the last two weeks, since the World Economic Forum in Davos, China has been heralded as the world's savior of globalization. The country's leader, Xi Jinping, was the first Chinese president to ever attend the Forum, where he was cheered for touting the wonders of open markets. To many investors, he was a refreshing reminder of the reliable rules of global capitalism at a time when Brexit and Donald Trump are busy rewriting those rules. Yet, according to a number of investors with money at work in China, and surveys by American corporations there, the world's No. 2 economy is as protective as ever. The herald of open market capitalism is hardly open."
• "China's markets, even though they have opened in some respects over the last decade, many things are not as open as they used to be," says Rob Lutts chief investment officer of Cabot Wealth Management, a $600 million family office in Salem, Mass. Lutts recently returned from a trip to Beijing and is more bullish than bearish on China. But from his recent talks with both Chinese and American CFOs in the country, the takeaway from both sides is that there is more protection in a number of key Chinese industries. "If you talk to American executives here, they all have a China strategy but are much more concerned today about not being treated fairly than they used to be. This openness that Xi is portraying in Davos...it's good for him to be there and shows China's importance to global trade and the global market, but I would not say that China is any more open today that it was a year ago. I'd say they are more protective of their own businesses than ever."

[Sergey Golubev]

Weekly EUR/USD Outlook: 2017, January 29 - February 05 (based on the article)

EUR/USD made a move to higher ground but found it hard to continue rising. Will it make substantial falls? GDP and inflation figures stand out in a busy week.

1. Spanish Flash GDP: Monday, 7:00. Another growth rate of 0.7% is expected for Q4.
2. German CPI: Monday, data from the states during the morning and the final CPI measure is out at 13:00. After 0.7% in December, a drop of 0.5% is on the cards.
3. French GDP: Tuesday, 6:30. A stronger growth rate of 0.4% is projected.
4. German Retail Sales: Tuesday, 7:00. A bounce is on the cards now: 0.6%.
5. French CPI: Tuesday, 7:45. A drop of 0.5% is forecast.
6. Spanish CPI: Tuesday, 8:00. Another leap to 2.4% is expected.
7. German Unemployment Change: Tuesday, 8:55. A slide of 5K is predicted.
8. CPI: Tuesday, 10:00. Headline inflation is expected to continue rising, reaching 1.5%, while core inflation is expected to stand at 0.9% once again.
9. GDP: Tuesday, 10:00. This time, output is predicted to increase by 0.4%.
10. Manufacturing PMIs: Wednesday morning: 8:!5 for Spain, 8:45 for Italy, the final figure for France at 8:50, final measure for Germany at 8:55 and the final number for the whole euro-zone at 9:00.
11. EU Economic Forecasts: Wednesday, 10:00. The European Commission publishes updated economic forecasts twice a year.
12. Spanish Unemployment Change: Thursday, 8:00. A rise of 60.2K is estimated.
13. ECB Economic Bulletin: Thursday, 9:00. Two weeks after the decision which saw Draghi downing the euro with his downside risks, we get a detailed report about what the Governing Council members had in front of their eyes.
14. Services PMIs: Friday morning: 8:15 for Spain, 8:45 for Italy, the final figure for France at 8:50, final measure for Germany at 8:55 and the final number for the whole euro-zone at 9:00.
15. Retail Sales: Friday, 10:00. A rise of 0.3% is on the cards.

[Sergey Golubev]

Weekly Fundamental Forecast for Dollar Index (based on the article)

Dollar Index - "The fundamental evidence seemingly points to a steady US economy that is broadly in the same place as the last time Janet Yellen and company sat down for policy meeting. Confirming as much may do little to assuage concerns that this relatively rosy status quo will not be shattered by a sharp pivot on the fiscal side."

[Sergey Golubev]

Weekly Fundamental Forecast for GBP/USD (based on the article)

GBP/USD - "In the U.K., Parliament begins its two-day debate on the ‘Brexit’ process just ahead of the BoE interest rate decision on February 2, with the British Pound at risk of facing near-term headwinds as the region’s departure from the European Union (EU) clouds the outlook for growth and inflation. However, the Monetary Policy Committee (MPC) may continue to drop its dovish tone and reiterate price growth will ‘overshoot the target later in 2017 and through 2018’ as U.K. consumer prices expand at the fastest pace since 2014. As a result, the fresh updates to the quarterly inflation report (QIR) may sap the bearish sentiment surrounding the British Pound and fuel the near-term advance in GBP/USD should central bank officials further stress ‘there are limits to the extent to which above-target inflation can be tolerated.’"

[Sergey Golubev]

Weekly Fundamental Forecast for USD/JPY (based on the article)

USD/JPY - "With continued strength in Japanese markets, we will likely see the bank shift their yield target higher; but this is unlikely to happen until more-confirmed signs of recovery are seen. The Bank of Japan has been attempting to be more transparent with capital markets as ‘surprise’ moves like enacting negative rates worked out terribly. From a macro-economic standpoint, this recent rally is in the very early, immature stages, with the primary driver being a very unpredictable and unquantifiable variable (Trump); and the Bank of Japan will likely want additional information before making any significant shifts or even signaling such a shift that might potentially hinder the prospects of a continued recovery in Japanese economic activity. The forecast for next week on the Yen will be set to bearish."

[Sergey Golubev]

Weekly Fundamental Forecast for USD/CAD (based on the article)

USD/CAD - "Next week provides YoY GDP data from November on Tuesday where we’ll look for an improvement on the prior reading of 1.5%. One of the clearer markers for a potential relative gain of the Canadian Dollar to the USD is the spread tightening between US and CA Government 2Yr yields. From July to November, we saw the spread between US & CA Government 2 Yr yields widen from .0591 on July 5 to a high of .4788 between the two on December 28. The US 10-year premium more than doubled from last springs low of 32 bp to 81 bp high in late-November. On December 28, USD/CAD traded to 1.3598 as a widening spread favors USD strength in the current environment and a narrowing or stabilization of yield spreads leads to a stronger CAD and relatively weaker USD. If the yield continues to narrow, we may see further CAD strength from a combination of positive economic surprises. When looking at the chart, a break below 1.3000 would help validate that we’re seeing a resumption of CAD strength through a long-term barrier of support on USD/CAD and resistance on CAD. The spreads are always worth watching because a widening of the spreads again could mean the USD strength that has been dormant in January is resuming."

[Sergey Golubev]

Weekly Fundamental Forecast for USD/CNH (based on the article)

USD/CNH - "Two major event risks from China’s counterpart is Fed’s February rate decision on Wednesday and the U.S. January Non-farm Payroll (NFP) print on Friday. The USD/CNH has been retracing within a range after the offshore Yuan strengthened to a two-month high. Within such a context, moves from the U.S. side may give out more clues on the next trend for the Dollar/Yuan. For Fed’s release on Wednesday, the benchmark interest rates will likely remain unchanged, with an odds of only 12% of a rate hike. There will be no updates on economic forecasts and no press conference from Chair Yellen; the major focus will be on the sentiment in Fed’s minutes. Also, the January U.S. labor market report is expected to heavily weigh on the Dollar/Yuan after China’s onshore markets reopens. Two weeks ago, Yellen addressed on positive development in the labor market. If the NFP print on Friday came in stronger, it will provide more support to the U.S. Dollar."

[Sergey Golubev]

Markets To Watch In The Week Ahead: Brent Crude Oil (based on the article)

Daily price is on ranging market condition within 53.85/57.19 levels with the symmetric pattern to be formed by the price to be crossed for direction. If the price breaks 57.19 resistance level to above so the 58.47 resistance will be the nearest target to re-enter.

• "The March crude oil contract was a bit lower last week as the range was tighter than the previous two weeks. There is still key resistance in the $56 area, line a, and a move above this level would really get the market's attention. Prices are still holding above the 20-week EMA at $51.66."
• "There is long-term support in the $45 area, line b. The weekly OBV is still above its WMA and is in a long term uptrend. The HPI made a new high in late 2016 but has dropped slightly below its WMA. It is still above the key support at line d."

[Sergey Golubev]

Markets To Watch In The Week Ahead: The S&P 500 (based on the article)

Daily price is located far above Ichimoku cloud in the bullish area of the chart. The price is trying to cross 2,300 resistance to above for the bullish trend to be continuing. Alternative, if the price breaks 2,282/2,277 support levels to below so the secondary correction within the primary bullish trend will be started.

• "The S&P 500 advance/decline line broke out ahead of prices as it had been in a solid uptrend since early December, line c. A strong close this week will suggest prices are ready to accelerate on the upside. The weekly A/D line has also made a new high."

[Sergey Golubev]

Markets To Watch In The Week Ahead: Nasdaq 100 (based on the article)

Daily price is on bullish market condition located above 200-day SMA: the price is testing 51.67 resistance level to above for the bullish trend to be continuing.

• "The weekly Nasdaq 100 A/D line broke out to the upside in early January, point c, and it has not turned sharply higher."