Daily Forex Analysis - 17 December 2020

USD Overview (17 December 2020)

Yesterday, USD weakened against most major currencies except CAD.

The retail sales m/m data released yesterday indicated a strong decline in consumer spending in November for the first time in six months after recovering from the impact of COVID-19.

- Core Retail Sales m/m (Actual: -0.9%, Forecast: 0.1%, Previous: -0.1% revised from 0.2%)

- Retail Sales m/m (Actual: -1.1%, Forecast: -0.3%, Previous: -0.1% revised from 0.3%)

The flash PMI data released yesterday indicated a slowdown in the rate of expansion of business activities in December due to rising virus cases.

- Flash Manufacturing PMI (Actual: 56.5, Forecast: 55.9, Previous: 56.7)

- Flash Services PMI (Actual: 55.3, Forecast: 55.7, Previous: 58.4 revised from 57.7)

Earlier today, the Federal Reserve kept interest rate unchanged and will continue to purchase at least $120 billion of bonds on a weekly basis. Also, economic projections material showed that the central bank has improved their outlook on GDP, unemployment rate and inflation for 2021.

The housing data will be released later at 2130 (SGT).

- Building Permits (Forecast: 1.55M, Previous: 1.54M revised from 1.55M)

- Housing Starts (Forecast: 1.53M, Previous: 1.53M)

NZD/USD Outlook (17 December 2020)

Overall, NZD/USD is trending upwards. Recently, NZD/USD broke above the key level of 0.71.

The New Zealand GDP q/q data (Actual: 14.0%, Forecast: 12.9%, Previous: -11.0% revised from -12.2%) released earlier today indicated a strong rebound in economic growth during the third quarter.

The New Zealand ANZ Business Confidence data (Forecast: NA, Previous: -6.9) will be released tomorrow at 0800 (SGT).

NZD/USDs next support zone is at 0.70000 and the next resistance zone is at 0.72000.

Look for buying opportunities of NZD/USD.

AUD/USD Outlook (17 December 2020)

Overall, AUD/USD is trending upwards.

The Australian employment data released earlier today indicated a decline in the number of jobs added into the economy while unemployment rate has declined.

- Employment Change (Actual: 90.0K, Forecast: 40.9K, Previous: 180.4K revised from 178.8K)

- Unemployment Rate (Actual: 6.8%, Forecast: 7.0%, Previous: 7.0%)

AUD/USDs next support zone is at 0.73900 and the next resistance zone is at 0.76800.

Look for buying opportunities of AUD/USD.

USD/JPY Outlook (17 December 2020)

Overall, USD/JPY is trending downwards. Recently, USD/JPY trended into the support zone of 103.400.

The Bank of Japan will be announcing their monetary policy decision tomorrow at a tentative timing. It is expected that the central bank will be holding the monetary policy unchanged. A press conference will take place following the monetary policy decision. During this time, there may be volatility in JPY.

Currently, USD/JPY is testing the support zone of 103.400 and the next resistance zone is at 105.600.

Look for selling opportunities of USD/JPY if it breaks the support zone of 103.400.

EUR/USD Outlook (17 December 2020)

Overall, EUR/USD is trending upwards.

The French flash PMI data released yesterday indicated that the manufacturing sector has recovered from the contractionary level while the services sector improved and is close to the neutral level of 50.0.

- French Flash Service PMI (Actual: 49.2, Forecast: 39.9, Previous: 38.8 revised from 38.0)

- French Flash Manufacturing PMI (Actual: 51.1, Forecast: 50.0, Previous: 49.6 revised from 49.1)

The German Flash PMI data released yesterday indicated an overall improvement in business activities in Germany.

- German Flash Services PMI (Actual: 47.7, Forecast: 44.1, Previous: 46.0 revised from 46.2)

- German Flash Manufacturing PMI (Actual: 58.6, Forecast: 56.4, Previous: 57.8 revised from 57.9)

The eurozone flash PMI data released yesterday indicated that business activities have improved.

- Flash Manufacturing PMI (Actual: 55.5, Forecast: 53.0, Previous: 53.8 revised from 53.6)

- Flash Services PMI (Actual: 47.3, Forecast: 41.9, Previous: 41.7 revised from 41.3)

Currently, EUR/USD is testing the resistance zone of 1.21800 and the next support zone is at 1.19800.

With the ongoing negotiation of the post-Brexit trade deal, look for short-term buying opportunities of EUR/USD if it breaks the resistance zone of 1.21800.

GBP/USD Outlook (17 December 2020)

Overall, GBP/USD is ranging across. Recently, GBP/USD broke the resistance zone of 1.34600.

The UK CPI y/y data released yesterday indicated a slowdown in the rate of inflation.

- CPI y/y (Actual: 0.3%, Forecast: 0.6%, Previous: 0.7%)

- Core CPI y/y (Actual: 1.1%, Forecast: 1.4%, Previous: 1.5%)

Also, the UK flash PMI data released yesterday indicated that the manufacturing sector continued to expand at a faster pace while the services sector moved closer towards ending the contraction.

- Flash Manufacturing PMI (Actual: 57.3, Forecast: 55.9, Previous: 55.6 revised from 55.2)

- Flash Services PMI (Actual: 49.9, Forecast: 50.5, Previous: 47.6 revised from 45.8)

The Bank of England will be announcing their monetary policy decision later at 2000 (SGT). It is likely that the central bank will be holding monetary policy unchanged due to the ongoing post-Brexit trade negotiation.

GBP/USDs next support zone is at 1.34600 and the next resistance zone is at 1.38160.

With the ongoing negotiation of the post-Brexit trade deal, look for short-term buying opportunities of GBP/USD.

USD/CAD Outlook (17 December 2020)

Overall, USD/CAD is trending downwards. Recently, USD/CAD bounced off the resistance zone of 1.27900.

The Canadian CPI m/m data (Actual: 0.1%, Forecast: 0.0%, Previous: 0.4%) released yesterday indicated a slowdown in the increase of inflation.

USD/CADs next support zone is at 1.25720 and the next resistance zone is at 1.27900.

Look for selling opportunities of USD/CAD.

GBP/JPY Outlook (17 December 2020)

Overall, GBP/JPY is ranging across. Recently, GBP/JPY trended into the resistance zone of 140.000.

The UK CPI y/y data released yesterday indicated a slowdown in the rate of inflation.

- CPI y/y (Actual: 0.3%, Forecast: 0.6%, Previous: 0.7%)

- Core CPI y/y (Actual: 1.1%, Forecast: 1.4%, Previous: 1.5%)

Also, the UK flash PMI data released yesterday indicated that the manufacturing sector continued to expand at a faster pace while the services sector moved closer towards ending the contraction.

- Flash Manufacturing PMI (Actual: 57.3, Forecast: 55.9, Previous: 55.6 revised from 55.2)

- Flash Services PMI (Actual: 49.9, Forecast: 50.5, Previous: 47.6 revised from 45.8)

The Bank of England will be announcing their monetary policy decision later at 2000 (SGT). It is likely that the central bank will be holding monetary policy unchanged due to the ongoing post-Brexit trade negotiation.

The Bank of Japan will be announcing their monetary policy decision tomorrow at a tentative timing. It is expected that the central bank will be holding the monetary policy unchanged. A press conference will take place following the monetary policy decision. During this time, there may be volatility in JPY.

Currently, GBP/JPY is testing the resistance zone of 140.000 and the next support zone is at 137.500.

With the ongoing negotiation of the post-Brexit trade deal, look for short-term buying opportunities of GBP/JPY if it breaks the resistance zone of 140.000.

EUR/JPY Outlook (17 December 2020)

Overall, EUR/JPY is trending upwards. Recently, EUR/JPY has bounced off the resistance zone of 126.700.

The French flash PMI data released yesterday indicated that the manufacturing sector has recovered from the contractionary level while the services sector improved and is close to the neutral level of 50.0.

- French Flash Service PMI (Actual: 49.2, Forecast: 39.9, Previous: 38.8 revised from 38.0)

- French Flash Manufacturing PMI (Actual: 51.1, Forecast: 50.0, Previous: 49.6 revised from 49.1)

The German Flash PMI data released yesterday indicated an overall improvement in business activities in Germany.

- German Flash Services PMI (Actual: 47.7, Forecast: 44.1, Previous: 46.0 revised from 46.2)

- German Flash Manufacturing PMI (Actual: 58.6, Forecast: 56.4, Previous: 57.8 revised from 57.9)

The eurozone flash PMI data released yesterday indicated that business activities have improved.

- Flash Manufacturing PMI (Actual: 55.5, Forecast: 53.0, Previous: 53.8 revised from 53.6)

- Flash Services PMI (Actual: 47.3, Forecast: 41.9, Previous: 41.7 revised from 41.3)

The Bank of Japan will be announcing their monetary policy decision tomorrow at a tentative timing. It is expected that the central bank will be holding the monetary policy unchanged. A press conference will take place following the monetary policy decision. During this time, there may be volatility in JPY.

Currently, EUR/JPY is moving towards the resistance zone of 126.700 and the next support zone is at 124.750.

With the ongoing negotiation of the post-Brexit trade deal, look for short-term buying opportunities of EUR/JPY if it breaks the resistance zone of 126.700.