Data Analysis for 11th – 15 Jan 2021

VIX: $21.56

Important fundamental releases: 11th to 15th January

Latest Central Bank statements:

USD FOMC: 16^th December 2020

Economic activity and employment have continued to recover but remain well below their levels at the beginning of the year.
Weaker demand and earlier declines in oil prices have been holding down consumer price inflation.
The path of the economy will depend significantly on the course of the virus.
IR: Maintain current rate 0 to 0.25%. Will maintain target range until labor market conditions have reached levels consistent with the committee’s assessments of maximum employment and inflation has risen to 2% and are on track to exceed it.
Will continue QE until the committee outcome has been achieved.

CAD Bank of Canada Dec. 9th, 2020

Economy: Stronger demand is pushing up prices for most commodities, including oil. (Bullish(strength) for the currency)
Interest Rates: Bank of Canada will maintain its Interest Rate target 0.25%. Will continue their QE (Quantitative Easing- is a form of unconventional monetary policy in which a central bank purchases long-term securities from the open market in order to increase the money supply and encourage lending and investment. Or, also called “Printing Money”. CPI- Core Price Index close (is a measure of the average change overtime in the prices paid by urban consumers for a market basket of consumer goods and services.) at $4 billion per week.
Inflation: CPI inflation picks up to 0.7%

CHF Swiss National Bank: September 2020

GDP expects to stay below pre covid crisis level, shrink 5% since the start of the crisis.
Inflation: Inflation rate is (-0.6%) expected to edge back to positive. They are paying attention to inflation rate
IR: Keeping interest rate at -.075%
Willing to intervene more strongly in the foreign exchange market.

GBP Bank of England Nov 5th 2020

Inflation target at 2%
Will maintain bank rate at 0.10%
Will continue their version of QE
- Will increase UK government bond purchases by an additional 150Billion Pounds to meet inflation target in the medium term.
SIgns that consumer spending has softened across a range of indicators & investment intentions have remained weak.
Household spending expected to pick up in 2021 Q1 as covid restrictions loosen.
Outlook of the economy remains unusually uncertain.
- depends on the evolution of the pandemic and measures taken to protect public health, as well as the nature of, and transition to, the new trading arrangements between the European Union and the United Kingdom.

JPY Bank of Japan December 17th, 2020

Decided to follow yield curve control
- Interest rates will remain at -0.10%
- Will purchase a necessary amount of Japanese government bonds (JGBs) without setting an upper limit so that 10-year JGB yields will remain at around 0%.
WIll continue their version of QE (buying Japanese government bonds) for another 6 months until September 2021.
The Bank will be monitoring if the CPI exceeds 2%.
Will extend the duration of the Special Program to support financing in response to the Covid-19 by 6 months until the end of September 2021.

EUR ECB Dec 10th, 2020

Will maintain Interest rates at 0.00%
- Will remain at this level until the Governing council sees inflation outlook get close to but below 2% within their projections.
Increase their PEPP by 500 Billion Euros
- Will extend this program until March 2022 and/or it determines that the coronavirus crisis phase is over.
- Inflation goal of 2% ceiling. Will keep interest rates unchanged at 0.00%, 0.25% and -0.50% respectively. ECB will continue its PEPP – Pandemic emergency Purchase programme. Asset purchase program will continue at 20billion euro per month. Will end shortly before increasing interest rates*

NZD: RBNZ November 2020

Employment : maximum sustainable employment

Will continue their QE program for a long time, and prepared to give more support
Restrict high risk lending in housing market
Leave interest rates at current level .25%
Keep inflation between 1% & 3%

AUD: RB Of Australia 1/12/20

Will maintain interest rates at 1%. Given the outlook, is not expected to increase for at least 3 years.
Will continue their QE
Australia’s economic recovery is under way and recent data have been better than expected.
- GDP would not reach its end of 2019 levels until the end of 2021.
- GDP expected to grow around 5% 2021 and 4% over 2022
Inflation forecast to be 1% in 2021 and 1.5% in 2022.
RBA will focus on addressing the high rate of unemployment.
The Bank’s policy response has lowered interest rates across the yield curve, which will assist the recovery by: lowering financing costs for borrowers; contributing to a lower exchange rate than otherwise; and supporting asset prices and balance sheets.

Interest Rates

Currencies vs Gold as a measure of strength

3 Month Currency Strength (vs. Gold)

Comparing Currency Strengths:

Market Sentiment

CAD

Speculators are net-long by 14,524 orders. 618 long orders were closed, 226 Short orders were added. Conclusion: Neutral

CHF

Speculators are net-long by 9,372 orders. 4,110 long orders were closed, 1,695 Short orders were closed. Conclusion: Neutral; May be setting up selling CHF, due to the 80% longs on the Speculative side, and 20% are long on the commercial side.

GBP

Speculators are net-long by 3,665 orders. 209 long orders were closed, 958 Short orders were added. Conclusion: Neutral

JPY

Speculators are net-long by 50,190 orders. 5,586 long orders were added, 2,746 Short orders were also added. Conclusion: Long, But look for trend reversal soon, Too many

EUR

Speculators are net-long by 142,991 orders. 1,984 long orders were added, 2,069 Short orders were also added. Conclusion: Neutral, But look for pressure on the sell side due to previous % long had hit the 80% mark.

NZD

Speculators are net-long by 11,996 orders. 1,287 long orders were closed, 749 Short orders were also closed. Conclusion: Neutral

AZD

Speculators are net-short by 3,907 orders. 5,911 long orders were added, 3,312 Short orders were also added. Conclusion: Long