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GBP, JPY, CAD Forecast: As we watch some of the biggest movers today and as of recent, check out our forecast on these three forex currencies.

GBP Forecast

The pound continues to look bullish on most accounts as investors expect a total of 4 rate hikes from the BOE this year after the 15 basis point raise in December. With heavy bearish sentiment by retail traders and COT data, the pair keeps pushing up but is now slowing the pace as the pound-dollar cross is down -0.23% today.

Additionally, fears of Omicron slowing the global economy have staggered the major pairs going into the New Year, but the sterling was able to outpace most currencies with the anticipation of future rate hikes while trying to lock in their 2% inflation target. GBP seems mostly bullish over the yen and loonie for this week’s forecast. 

GBP, JPY, CAD Forecast
Price extended downward on the 1D timeframe and is now resting on support in the 156.200s. Additional support lies below around 154.700s.

JPY Forecast

With a near-certain continuation of the decade-long loose monetary policy, investors do not expect the yen to see much demand in the coming months while other major governments attempt to increase their hawkish stances toward the economy and fiat money. 

Thus, the negative (-0.1%) interest rate could be starting to look less attractive to banks and financial institutions as other countries are tightening their monetary grips. The yen forecast looks bearish mostly against JPY, GBP, and CAD. But it looks bullish against USD this week.

GBP, JPY, CAD Forecast
The pair broke under strong support and continues to head lower to the bottom of the long-term channel on the 1D chart.

CAD Forecast

Driven primarily by oil prices, the Canadian loonie is now slowing down as we start this week. Institution interest has not been very prevalent lately, so big money shifts aren't going to be much of an influence on this currency. An article by Reuters mentioned that the quick rise in demand combined with the harsh cut-back in production has caused "backwardation". This means that global supplies will start to rise again, and this will incentivize producers to sell oil quickly causing the price of oil to drop in the coming months. Overall, CAD's forecast looks strong against the yen, but weaker against GBP and USD.

GBP, JPY, CAD Forecast
GBPCAD looks bullish after making higher highs and lows and the daily candles as today's candle is now bouncing up from support on the 200 DMA. Resistance sits right above around 1.72699.

To find more analysis, visit the A1Trading for more price predictions and forecasts.

The yen has been the most volatile across the board all day, and there a few reasons why. It seems that investors are more hesitant on the Japanese economy now that stricter monetary policy seems to be more prevalent in other countries more so than in Japan. The economy is expected to continue recovering, but it will do so at a slower pace. Super loose monetary policy for the past decade is likely to continue this year causing the yen will be consistently out of favor. Having said that, here are some yen pairs to watch on this wild trading day.

Bullish potential still seems probable for these three pairs right now although COT is buying up lots of futures contracts on the yen. However, the persistent easing drives investors away from the yen and brings them towards stronger currencies that plan to tighten monetary policy this year.

Yen Pairs To Watch

USDJPY (Dollar Yen)

yen pairs to watch

Dollar yen had a strong day as the pair flew up to the highs of 116.300s before taking a minor retrace on the 4H. Although the previous candle showed rejection from the lows, we still might see a further move downward to support which lies around 115.500s. UJ is now at the levels not seen since January of 2017.

CADJPY

Driven by higher oil prices and bond yields, the loonie gained more demand over the yen in late December. Price crossed above resistance at 91.186, but it hasn't closed above. Also, two trend lines look noticeable on the 1D timeframe, and price has broken above one of them.

GBPJPY (Pound Yen)

Across the pond, pound pairs are in a similar boat as the dollar with the expectation of higher rates going forward. This factor is helping to drive price up closer to highs around 158.239. A trend line formed on the 4H where the pair has respected that level twice. Support lies around 156.000 and 154.746 just below.

To read more about GBP pairs, click here.

Learn more about these picks and why they could be the biggest plays of the New Year. Here's our top 3 markets in forex right now.

USOil

The US is in a constant search for more productivity and supply in the oil market, and they are struggling to find it. As the largest producer and consumer of this commodity, the government and curators are looking for supply elsewhere. In an article by IBD, they mention that Biden and Tehran are in discussions with the potential to increase the amount of barrel supply by 1.4 million.

Another news source show us that pre-pandemic productivity has still not been reached in the US. However, we are expected to increase production by 670,000 bpd in 2022. The problem facing the US is that demand is outweighing supply, and that is causing a rather large move in the oil sector. However, under the Biden administration, oil production was cut setting the stage for higher prices. And if the administration decides against a proposed production increase, analysts fear a $100 price per barrel.

Having this information will help us look at pairs that rely heavily on oil production and demand.

USD

Lower production as of now is putting a weaker and uncertain valuation around the dollar. However, investors expect at least one rate hike in 2022 which they could then price into the dollar's price. Additionally, if the US can manage to boost the amount of barrels manufactured without depending on foreign sources, the USD will get stronger. The dollar index has had a great year so far after reaching as high as 8%

Tensions between Russia and Ukraine have not been pleasant for a while either, and this can have a negative impact on NATO and geopolitical agreements.

CAD

Outlook on the loonie looks stronger than the USD right now after the latest take on oil's global supply and production. Canada relies on oil demand more than the United States so a less productive US could help out Canada's currency. So, Canada needs the opposite thing to happen that the USD bulls are hoping for: less production in the US and finding supply elsewhere like Tehran and/or Canada.

Our Outlook

All three forex picks have something in common: oil production. Whether or not the US decides to up their supply will undoubtedly affect all three markets. But this also doesn't necessarily mean that one will be better than the other in the New Year. In fact, all three seem like strong picks going into 2022. Biden will likely not try to boost production, and if he does, it will probably not be by a substantial amount.

So, I think it's important to consider a market where oil demand grows, Canada's loonie gets stronger from a higher oil price per barrel, and investors begin to price in the USD after the federal fund rate hikes in 2022. All three have the potential to be very bullish especially if treasury yields continue to increase and omicron fears push through into 2022.

To read our other top picks, check out our market analysis tab on the A1 website here.

Let's look at the news event's we've got lining up this week...

(AUD) RBA Rate Statement

The Reserve Bank of Australia is widely expected to keep interest rates on hold at 0.10% once again. Although there have been some notable improvements in the Australian economy's performance, policymakers are likely concerned about the Omicron variant that might prompt another downturn in growth. In their previous rate statement, the RBA has already hinted that their first rate hike most likely won't happen until 2024 due to weak price pressures and other uncertainties.

(CAD) BOC Rate Statement

The Bank of Canada is likely to keep rates on hold once again at 0.25%. The latest employment data has been stronger than expected in the past month, which might be enough for the BoC to shift to a slightly more optimistic stance. However, policymakers are also likely concerned about crude oil price swings and how the Omicron variant might affect growth and trade.

(USD) CPI

The Consumer Price Index (CPI) report measures the change in the average price basket of goods and services by consumers, which can be anything from food, transportation and medical care. Changes in the CPI are used to assess price changes associated with living in the country. It is one of the most used statistics to identify periods of inflation or deflation.

The USD is releasing its monthly inflation figures this week, and we're expected to see slightly slower price pressures as headline CPI is likely to dip from 0.9% to 0.7% while the core figure is probably going to fall from 0.6% to 0.5%. Weaker than expected results could undermine policy tightening expectations, especially with the Omicron variant forcing policymakers to wait and see before making any big decisions.

Hey everyone! Welcome to this week's forex forecast for the week ending December 10th, 2021. I'm TraderBart with A1 Trading, and this week I'll be looking at USDCAD, EURAUD, GBPJPY & XAUUSD.

USD/CAD

Price is now consolidating at the resistance of the previous ascending triangle pattern at 1.283. Over the next week, lookout for a potential break of this level, this opens up price to levels such as 1.293 and 1.31. If price fails to break this level, it's likely it will continue acting as resistance and instead, we could see a bearish run back down towards 1.258.

EUR/AUD

Price is now just below a short-term key horizontal level 1.618 following the break of the ascending triangle and horizontal level 1.59. Over the next week, look out for a potential break above 1.618 which suggests a bullish run to follow, opening price up to 1.635 and potentially new higher highs.

GBP/JPY

Looking at G/J in the long-run, price is definitely failing to make a new trend and break yearly highs at around 156.0-158.0. Price is currently making its fourth recent touch of 149.0 and over the next couple of weeks, a break below this level suggests potential long-term bearishness towards 129.0. If price reverses and instead stays above, it's also potential we could still see new highs being made. This is a long-term view so would need to look over the chart for months.

XAU/USD

Gold is continuing to stay above the long-term level 1765 and no major moves were made over the past week. Price did reject 1800 which suggests we could be seeing potential bearish moves coming up. A break below 1765 opens up price to levels such as 1725 and 1675. If price continues to stay above 1765 over the next week, it's likely we could be seeing price coming up to retest previous levels such as 1800 and 1835.

Let's look at the news event's we've got lining up this week...

(USD) FOMC Member Speeches

Many Fed policymakers are scheduled to give testimonies throughout the week to hint at any possible upcoming monetary policy changes which could move the USD around. The Fed Chair Powell is set to speak in webinars in front of the Senate Banking Committee and the House Financial Services Committee. Other important members to look out for is Fed's Williams, Bowman and Clarida.

(CAD) GDP

A Gross Domestic Product (GDP) report is a measure of the size and health of a country's economy over a period of time. The figure sums up the country's performance in terms of trade, consumer activity, government spending and investment during a particular period.

Analysts are expecting to see no change in growth following last months 0.4% expansion. Weaker job growth and rising price levels likely kept consumer spending in check, even as businesses slowly resume normal operations.

(AUD) GDP

Australia is scheduled to print its Q3 GDP report midweek and analysts are expecting to see a softer pace of growth compared to the earlier 0.7% expansion. Australia did go into lockdown amongst its major cities in the past quarter, likely limiting business and consumer activity once again. A weaker than expected reading will likely mean more downside for the AUD while a stronger reading could encourage tightening expectations and boost the currency.

OPEC-JMMC Meeting

Every month, the Organisation of Petroleum Exporting Countries (OPEC) and the Joint Ministerial Monitoring Committee (JMMC) have a meeting to discuss the outlook of Oil and its performance. OPEC aims to control the price of oil by adjusting supply volumes. If its members want to increase the price of oil, they can revise their production quotas downwards to limit supply.

The cartel is under pressure to increase its production targets, given how major economies like the US and China are taking it upon themselves to release crude oil reserves into the global market. The OPEC is worried that this might spur a global glut, so they may refrain from boosting supply for now. However, since they did miss their output goal earlier, this could mean they may be inclined to make up for it.

(USD) NFP

The Non-Farm Payroll (NFP) or also known as Non-Farm Employment Change data, released by the Bureau of Labor Statistics, is a key economic indicator for the US economy which represents the number of jobs added to US citizens, excluding farm, government, private household and non-profit organisation employees.

NFP data always causes a commotion in FX as it is an important indicator for the Federal Reserve Bank. When unemployment is high, policymakers tend to have an expansionary (stimulatory, with low-interest rates) monetary policy with the goal to increase economic output and increase employment.

Following October's report of an increase of 531k, analysts are expecting to see another similar November report with an increase of 528k jobs. This is expected to bring the unemployment rate down from 4.6% to 4.5%.

A stronger than expected report will boost the USD currency however, a weaker than expected result could slash hopes of a Fed interest rate hike sometime in the middle of 2022. Leading indicators like the ADP Non-Farm Employment Change and the ISM Manufacturing PMI will likely also bring in extra volatility.

Let's look at the news event's we've got lining up this week...

(AUD) Monetary Policy Meeting Minutes

During the previous rate decision, the RBA kept their interest rates on hold as expected. However, the RBA has removed its yield curve control target on the April 2024 government bond since it is "losing credibility". The transcript during this event should provide more insight on when policymakers think their first tightening move may happen.

(USD) Retail Sales

The USD Retail Sales Report is set for Tuesday which shows the total value of sales at a retail level. Consumer spending accounts for a majority of economic activity, and therefore when citizens spend, it is a sign that people have jobs, people are making money, and people are able to spend money for whatever it is they want.

A pickup in consumer spending is eyed for October, with the headline figure expected to rise from 0.7% to 1.2% and the core reading to also pick up from 0.8% to 1.0%. These increases were likely caused by the rebound in auto sales, on top of the improvement in the labour market situation.

(GBP) CPI

The Consumer Price Index (CPI) report measures the change in the average price basket of goods and services by consumers, which can be anything from food, transportation and medical care. Changes in the CPI are used to assess price changes associated with living in the country. It is one of the most used statistics to identify periods of inflation or deflation.

Another surge in UK inflation is eyed, with the headline figure expected to climb from 3.1% to 3.8%. This may be enough to spark BoE rate hike bets once again, as stagflation remains a persistent threat to the UK economy.

(CAD) CPI

The BoC is also releasing its inflation figures this week as well as related indicators of price pressures. The headline CPI report doesn't currently have a forecast, but later in the week keep an eye on this event. Stronger than expected results could fuel monetary policy tightening expectations from the BoC.

10/29/2021

CADCHF fell around 1.80% from the recent highs this week and has finally landed on what could be a promising trade setup. Switzerland's KOF economic barometer beat expectations while Canada's GDP missed by 0.3%.

Our outlook

We are still seeing an improvement in Canada's economy from August even though GDP missed while Switzerland continues to struggle with their national currency and stagflation. An important thing to look out for is the risk-on and off sentiment that could help determine whether CAD or CHF would be bullish. CAD may be starting to look weaker in the short term, however, there is still potential for the pair on the long side.

Trade Setups

CADCHF

Price looks like it is trying to reject the lows in the .73600s and bounce from this support zone. However, if price fails to do so, the 50 and 200 DMA on the 1D chart could prove to be promising support for this pair. There is also a rising trend line on this timeframe that could serve as additional support if price struggles at this support level.

Let's look at the news event's we've got lining up this week...

(AUD) CPI

The quarterly AUD Consumer Price Index (CPI) report is releasing on Wednesday, which measures the change in the average price basket of goods and services by consumers, which can be anything from food, transportation and medical care. Changes in the CPI are used to assess price changes associated with living in the country. It is one of the most used statistics to identify periods of inflation or deflation.

Analysts expect a pickup in the headline figure by another 0.8% and a 0.5% gain in the trimmed mean CPI for Q3. Better than expected results could spur further gains for the Australian currency, given how the economy is recovering after the pandemic lockdowns, this could also push the RBA into action, potentially considering hiking interest rates to keep price pressures in check.

(CAD) Rate Statement

No changes to the 0.25% interest rate are eyes, but the BoC might have some adjustments to asset purchases. Employment and inflation figures have surpassed expectations in the past couple of months, so the BoC could stay on track towards ending their easing program by the end of the year, meaning a reduction from C$2B to C$1B in weekly asset purchases.

(EUR) Monetary Policy Statement

No changes to interest rates or bond purchases are expected from the ECB, and policymakers might slice hopes of an interest rate hike for next year since stagflation remains a strong threat in the region. Nonetheless, the energy crunch and supply chain issues are also weighing on growth prospects.

(CAD) GDP

A Gross Domestic Product (GDP) report is a measure of the size and health of a country's economy over a period of time. The figure sums up the country's performance in terms of trade, consumer activity, government spending and investment during a particular period.

Analysts are expecting to see a slower 2.6% expansion following an impressive 6.7% growth figure previously. Weaker job growth and rising price levels likely kept consumer spending in check, even as businesses slowly resume normal operations. The Atlanta Fed GDP model is pointing to a meager 0.5% growth figure, so a downside surprise could be likely.

(USD) PCE Price Index

The Core Personal Consumption Expenditures (PCE) Price Index is releasing on Friday and it reflects changes in the prices of goods and services purchased by consumers in the US. Slightly slower price pressures are eyed since the reading could dip from 0.3% to 0.2% in September. This is the Fed's preferred measure of inflation, and hence should be a very big deal!

10/21/2021

UC has been stuck in a downtrend for over a month now as the loonie continues to gain more demand over the USD. Good economic numbers on both sides is making it difficult for USD to prevail over CAD although Canada's economy is benefitting from the high demand in oil prices in which the USD is not.

Our outlook

The downtrend looks too strong for a turnaround in momentum, but that is not to say that we might still see a bounce on a significant level of support that the pair is currently on. Looking at technicals, the pair has potential although inflationary fears still runs through the US economy. So, short term, I think the pair has potential to move to the upside, but it will be difficult for the pair to further this momentum with the current situation in the US.

Trade Setups

USDCAD

UC touching support around 1.23000 with the latest candle rejecting the lows with a long wick on the downside. If price can bounce from here, it may test resistance around 1.24200 which is now a strong level after the support zone was broken some days ago. A potential double bottom on this chart would be bullish, however, a break under this support could mean a move to 1.22486.

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