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BoC likely a non-event, CAD/JPY retreats but outlook stays bullish

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ActionForex.com

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Mar 10 21, 03:30 GMT

BoC is generally expected to keep monetary policy unchanged today. Overnight rate will be held at effective lower bound of 0.25%. The size of asset purchases will also stay unchanged at CAD4B per week. There will be no press conference and updated economic projections will not be released until April. So, today’s announce is more likely a non-event than not.

Nevertheless, the central bank should acknowledge the better-than-expected developments since the January meeting. There have been increasing speculations that the central bank will reduce the size to CAD3B per week at the April meeting. We will see if there will be hints of such as move in the policy statement.

Some BoC previews:

Canadian Dollar is currently trading as the strongest for the month, partly helped by strong rally in oil price. CAD/JPY retreated mildly after hitting 86.35 earlier this week. Some consolidations would likely be seen first but overall outlook will stay bullish as long as 83.59 support holds. We’d expect the up trend form 73.80 to extend to 161.8% projection of 74.76 to 81.91 from 77.91 at 89.47 down the road.

OECD upgrades 2021 global growth forecasts by 1.4% to 5.6%

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ActionForex.com

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Mar 09 21, 12:02 GMT

OECD upgraded 2021 global growth forecasts as “prospects for a stronger economic recovery from the COVID-19 pandemic have improved with the gradual global vaccines rollout and stronger support from fiscal policy although gaps in economic performance are increasing across and within countries.”

Comparing with December projections:

World GDP growth was revised up by 1.4% to 5.6% in 2021, revised up by 0.2% to 4.0% in 2022.
G20 GDP growth was revised up by 1.5% to 6.2% in 2021, revised up by 0.4% to 4.1% in 2022.
US GDP growth was revised up by 3.3% to 6.5% in 2021, revised up by 0.5% to 4.0% in 2022.
Eurozone GDP growth, however, was revised up by only 0.3% to 3.9% in 2021, revised up by 0.5% to 3.8% in 2022.
China GDP growth was revised down by -0.2% to 7.8% in 2021, unchanged at 4.9% in 2022.
India GDP growth was revised up by 4.7% to 12.6% in 2021, revised up by 0.6% to 5.4% in 2022.

“Speed is of the essence,” said OECD Secretary-General Angel Gurría. “There is no room for complacency. Vaccines must be deployed faster and globally. This will require better international co-operation and co-ordination than we have seen up to now. It is only by doing so that we can focus our attention on building forward better and laying the foundations for a prosperous and lasting recovery for all.”

Full release here.

DOW hit intraday record high, NASDAQ underwhelmed again

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ActionForex.com

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Mar 09 21, 04:53 GMT

US stocks ended mixed overnight, probably on sector rotation. DOW closed up 306.14 pts or 0.97% at 31802.44. That came after hitting intraday record high at 32148.04. However, S&P 500 dropped -20.59 pts or -0.54% to close at 3821.35. NASDAQ dropped deeply by 310.98 pts or -2.41% to close at 12609.16.

DOW draw strong support from 55 day EMA to extend recent up trend. Though, upside momentum is still relatively weak, as seen in daily MACD. It’s also capped below near term channel resistance. Nevertheless, outlook will stay bullish as long as 30547.53 support holds. We’d still expect DOW to crawl towards 61.8% projection of 18213.65 to 29199.35 from 26143.77 at 32932.93, which is close to 33k handle.

While NASDAQ dropped notably overnight, it’s actually still contained above last week’s low at 12397.05. Our view is unchanged that fall from 14175.11 is seen as correcting the rise from 10822.57 only. Strong support is expected at 12074.06 (61.8% retracement of 10822.57 to 14175.11 at 12103.24) to bring rebound. That should set the base for up trend resumption later.

However, sustained break of 12074.06 will argue that NASDAQ is already correcting the whole up trend from 6631.42. In this case, deeper, medium-term, correction, could be seen through 10822.57 support.

China exports and imports jumped in Jan-Feb period, Hong Kong HSI not impressed

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ActionForex.com

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Mar 08 21, 03:45 GMT

Released during the weekend, China’s exports, in USD term, surged 60.6% yoy in the period of Jan-Feb, well above expectations of 38.9% yoy. Imports also rose 22.2% yoy, above expectation of 15.0% yoy. Trade surplus came in at USD 103.3B, much wider than expected USD 60.0B.

The impressive data could be distorted by usual volatility for the January to February period. Additionally, the strong growth partly reflected the low base set in 2020. Nevertheless, some analysts still noted the strong rebound in both global and domestic demand.

Stock traders were not too impressed with the data though. Hong Kong HSI quickly reversed initial gains and it’s currently down -1.6%, or -470 pts, at the time of writing. Immediate focus is now on last week’s low at 28513.13. Break there will extend the correction from 31183.35.

Still, key support lies in 38.2% retracement of 21139.26 to 31183.35 at 27346.50. As long as it holds, the up trend from 21139.26 is still in favor to resume at a later stage.