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Forex Forecast for 2021

2020 is now over (to the best as we all hope), and it is now time to review my 2020 Forex forecast and to offer my attempt of predicting the movement of currency pairs, gold, oil, and interest rates for 2021. The COVID-19 pandemic wreaked…

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2020 is now over (to the best as we all hope), and it is now time to review my 2020 Forex forecast and to offer my attempt of predicting the movement of currency pairs, gold, oil, and interest rates for 2021. The COVID-19 pandemic wreaked havoc not only to the world’s economies but also to lots of forecasts. So, the year 2020 was probably the worst one for my annual Forex forecasts. Below, you will find a recap of the last year’s predictions and my new forecast for each trading instrument.

EUR/USD

Although EUR/USD spent most of 2020 inside my forecast range (1.0800–1.1700), the currency pair far exceeded the upper range, rallying on all the last year’s stimulus announcements and getting lots of support from fundamental factors. I see no reason for the uptrend to stop in 2021, at least not so soon into 2021 as to make the currency pair end up lower than the top of my previous forecast’s range. Thus, my forecast for EUR/USD in 2021 is the range between 1.1700 and 1.2900.

EUR/USD - Forecast for 2021

USD/JPY

The major weakening of the US dollar in 2020 has seen the USD/JPY FX pair moving well below the lower border of my forecast range (107.00–112.00). Fueled by risk-aversion, the Japanese yen turned out to be one of the best hedges for the global recession in 2020. Similarly to EUR/USD, I see no reasons for the US strength to return in 2021, hence my forecast range is for the end of this year 95.00–107.00.

USD/JPY - Forecast for 2021

GBP/USD

My 2020 forecast for GBP/USD was a total disaster as the currency pair traded below the forecast range (1.4000–1.5500) for the entire year. The initial downtrend in the first quarter of 2020 and the deficiencies of the Brexit process weakened the British pound enough to keep it from reaching my forecast range. Nevertheless, I keep my forecast for 2021 unchanged from the last year’s range of 1.4000–1.5500.

GBP/USD - Forecast for 2021

AUD/USD

The forecast for 2020 (0.6500–0.7100) turn out to be too far away from the actual outcome for AUD/USD despite the fact that I expected monetary easing from the Reserve Bank of Australia and they delivered three rate cuts in 2020. Who knew that everyone else will also be adopting a super-accommodativemonetary policy? So, even though the Aussie traded for quite a long time inside (and below) my forecast range, it has ended the year well above that range. Although I believe that the US dollar will continue to weaken against its Australian counterpart in 2021, the Aussie’s performance may be not so stellar either, with negative interest rates still not completely off the table. That is why my forecast range for the end of 2021 is rather conservative — between 0.7200 and 0.8000.

AUD/USD - Forecast for 2021

USD/CAD

I expected a minor strengthening from USD/CAD in 2020, but instead it soared to multi-years highs in March only to fall straight through my forecast range (1.3000–1.3700) and to close 200 pips below its lower border. In theory, the loonie should benefit from the future US dollar weakness the same as the Australian dollar and other major currencies. However, the thing with the Canadian dollar vs. US dollar trading is that the two economies are very interconnected and the USD’s general weakness against other FX counterparts will likely diminish the CAD’s value too. In addition, the monetary authorities in Canada seem to be worried with the Canadian dollar’s appreciation against the US currency and are ready to provide even more easing (including future rate cuts) to undermine the CAD’s further strengthening. This makes me decide to leave the last year’s forecast unchanged for 2021 — 1.3000–1.3700.

USD/CAD - Forecast for 2021

USD/CHF

The greenback/Swissie pair had spent the first half of 2020 well within the boundaries of my forecast range for that year — 0.9400–1.0200. Then, things went south quickly, with the currency pair ending the year about 400 pips below the range as the demand for USD dwindled while the demand for the Swiss franc was strong during the pandemic crisis. Even though, the Swiss National Bank continues to call the Swiss franc “highly valued” in its monetary policy reports and continues currency interventions in order to cripple currency’s revaluation, there won’t be much that the SNB will be actually able to do in 2021 to prevent a further drop in USD/CHF. Hence, my forecast for 2021 is to anticipate a continued slide into the range of 0.8000–0.8800, where the closing price of the year should be in my opinion.

USD/CHF - Forecast for 2021

NZD/USD

The dynamics of NZD/USD trading in 2020 was much similar to that of AUD/USD, with the sharp initial drop and a subsequent super-rally, which exceeded the upper border of my forecast range (0.5800–0.6400) by hundreds of pips. And similarly to AUD/USD, my forecast for 2021 will be a bit more conservative than with some other currency pairs because New Zealand still has some room for interest rate cutting, which might get employed this year. My forecast for the year’s end is rather wide at 0.6600–0.7600, but it leaves enough room for a potential appreciation of the NZD/USD rate.

NZD/USD - Forecast for 2021

Gold

I had expected to see a moderated decline of gold price in 2020 (down to the 1,250–1,400 range), but instead saw it soar first to the levels above 2,000 and then retrace somewhat but still ending the year 30% higher than the upper border of my yearly forecast. This year, I continue to bet on gold’s correction and I forecast it to end 2021 between 1,500 and 1,800. My main reason is gold’s lack of attractiveness due to the inflation remaining subdued despite all the stimulus measures by global central banks and governments. Simply put, investors will choose to hold some yielding assets during the coronavirus crisis recovery this year rather than to hedge against the elusive inflation.

Gold - Forecast for 2021

Oil

Oil (WTI) ended trading in 2020 super close to my forecast range (49.00–62.00). Unfortunately, after spending two days inside that range just two weeks ago, it declined somewhat and ended the year outside of my forecast range. 2021 will see a recovery of demand for oil as the pandemic will be largely overcome with mass vaccination. This will push the price up to the range between 50.00 and 65.00 by the year’s end.

Oil - Forecast for 2021

Interest rates

My 2020 forecast pointed at the 1.50%-1.75% range for the federal funds rates. Had the coronacrisis not hit us, it would probably be an accurate prediction. However the Federal Reserve cut the rates relentlessly in 2020, down to 0.00%-0.25%. For 2021, I expect that the Fed won’t have any reasons to lift the rates, keeping them at the current range of 0.00%-0.25%.

The eurozone’s main interest rate had already been at 0% before the coronacrisis, so the European Central Bank didn’t even have a chance to mess up with my no-change forecast for 2020. There are really no signs right now that the ECB plans changing the rate anytime soon.

As always, there was no challenge in guessing what the Bank of Japan will do with its interest rate (hint: it did nothing!). As with the ECB, I forecast that BoJ will keep its rate unchanged at -0.10%.

I expected the Bank of England to cut rates once in 2020 (to 0.50%), but it cut them twice (to 0.10%). The combination of Brexit woes and the coronacrisis consequences will make the BoE cut the rates further to 0% this year.

The Reserve Bank of Australia cut its interest rate three times in 2020 (to 0.10%) whereas my forecast was for only one cut (to 0.50%). Considering the market expectations, the RBA will likely cut its rate to 0% in 2021.

My 2020 forecast had been for the Bank of Canada to reduce the interest rate once (to 1.50%), which was a major underestimation of the extent they would ease the monetary policy — which was three cuts to 0.25%. My forecast for 2021 is for the BoC to cut the interest rate down to 0%.

Another easy hit was with the Swiss National Bank as it has been keeping the rate unchanged at -0.75% for quite some time now and I expect it to continue keeping it at that level in 2021.

Surprisingly, my forecast for New Zealand’s rates wasn’t that far from the reality — I said it will drop from 1.00% to 0.50%; instead, it was cut to 0.25%. I expect the Reserve Bank of New Zealand to cut the interest rate even further in 2021 — down to 0%.

If you want to share your own Forex or interest rate forecast for 2021, you can do so using the commentary form below.

Posted on Forex blog.

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Analyst reviews Apple stock price target amid challenges

Here’s what could happen to Apple shares next.

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They said it was bound to happen.

It was Jan. 11, 2024 when software giant Microsoft  (MSFT)  briefly passed Apple  (AAPL)  as the most valuable company in the world.

Microsoft's stock closed 0.5% higher, giving it a market valuation of $2.859 trillion. 

It rose as much as 2% during the session and the company was briefly worth $2.903 trillion. Apple closed 0.3% lower, giving the company a market capitalization of $2.886 trillion. 

"It was inevitable that Microsoft would overtake Apple since Microsoft is growing faster and has more to benefit from the generative AI revolution," D.A. Davidson analyst Gil Luria said at the time, according to Reuters.

The two tech titans have jostled for top spot over the years and Microsoft was ahead at last check, with a market cap of $3.085 trillion, compared with Apple's value of $2.684 trillion.

Analysts noted that Apple had been dealing with weakening demand, including for the iPhone, the company’s main source of revenue. 

Demand in China, a major market, has slumped as the country's economy makes a slow recovery from the pandemic and competition from Huawei.

Sales in China of Apple's iPhone fell by 24% in the first six weeks of 2024 compared with a year earlier, according to research firm Counterpoint, as the company contended with stiff competition from a resurgent Huawei "while getting squeezed in the middle on aggressive pricing from the likes of OPPO, vivo and Xiaomi," said senior Analyst Mengmeng Zhang.

“Although the iPhone 15 is a great device, it has no significant upgrades from the previous version, so consumers feel fine holding on to the older-generation iPhones for now," he said.

A man scrolling through Netflix on an Apple iPad Pro. Photo by Phil Barker/Future Publishing via Getty Images.

Future Publishing/Getty Images

Big plans for China

Counterpoint said that the first six weeks of 2023 saw abnormally high numbers with significant unit sales being deferred from December 2022 due to production issues.

Apple is planning to open its eighth store in Shanghai – and its 47th across China – on March 21.

Related: Tech News Now: OpenAI says Musk contract 'never existed', Xiaomi's EV, and more

The company also plans to expand its research centre in Shanghai to support all of its product lines and open a new lab in southern tech hub Shenzhen later this year, according to the South China Morning Post.

Meanwhile, over in Europe, Apple announced changes to comply with the European Union's Digital Markets Act (DMA), which went into effect last week, Reuters reported on March 12.

Beginning this spring, software developers operating in Europe will be able to distribute apps to EU customers directly from their own websites instead of through the App Store.

"To reflect the DMA’s changes, users in the EU can install apps from alternative app marketplaces in iOS 17.4 and later," Apple said on its website, referring to the software platform that runs iPhones and iPads. 

"Users will be able to download an alternative marketplace app from the marketplace developer’s website," the company said.

Apple has also said it will appeal a $2 billion EU antitrust fine for thwarting competition from Spotify  (SPOT)  and other music streaming rivals via restrictions on the App Store.

The company's shares have suffered amid all this upheaval, but some analysts still see good things in Apple's future.

Bank of America Securities confirmed its positive stance on Apple, maintaining a buy rating with a steady price target of $225, according to Investing.com

The firm's analysis highlighted Apple's pricing strategy evolution since the introduction of the first iPhone in 2007, with initial prices set at $499 for the 4GB model and $599 for the 8GB model.

BofA said that Apple has consistently launched new iPhone models, including the Pro/Pro Max versions, to target the premium market. 

Analyst says Apple selloff 'overdone'

Concurrently, prices for previous models are typically reduced by about $100 with each new release. 

This strategy, coupled with installment plans from Apple and carriers, has contributed to the iPhone's installed base reaching a record 1.2 billion in 2023, the firm said.

More Tech Stocks:

Apple has effectively shifted its sales mix toward higher-value units despite experiencing slower unit sales, BofA said.

This trend is expected to persist and could help mitigate potential unit sales weaknesses, particularly in China. 

BofA also noted Apple's dominance in the high-end market, maintaining a market share of over 90% in the $1,000 and above price band for the past three years.

The firm also cited the anticipation of a multi-year iPhone cycle propelled by next-generation AI technology, robust services growth, and the potential for margin expansion.

On Monday, Evercore ISI analysts said they believed that the sell-off in the iPhone maker’s shares may be “overdone.”

The firm said that investors' growing preference for AI-focused stocks like Nvidia  (NVDA)  has led to a reallocation of funds away from Apple. 

In addition, Evercore said concerns over weakening demand in China, where Apple may be losing market share in the smartphone segment, have affected investor sentiment.

And then ongoing regulatory issues continue to have an impact on investor confidence in the world's second-biggest company.

“We think the sell-off is rather overdone, while we suspect there is strong valuation support at current levels to down 10%, there are three distinct drivers that could unlock upside on the stock from here – a) Cap allocation, b) AI inferencing, and c) Risk-off/defensive shift," the firm said in a research note.

Related: Veteran fund manager picks favorite stocks for 2024

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Major typhoid fever surveillance study in sub-Saharan Africa indicates need for the introduction of typhoid conjugate vaccines in endemic countries

There is a high burden of typhoid fever in sub-Saharan African countries, according to a new study published today in The Lancet Global Health. This high…

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There is a high burden of typhoid fever in sub-Saharan African countries, according to a new study published today in The Lancet Global Health. This high burden combined with the threat of typhoid strains resistant to antibiotic treatment calls for stronger prevention strategies, including the use and implementation of typhoid conjugate vaccines (TCVs) in endemic settings along with improvements in access to safe water, sanitation, and hygiene.

Credit: IVI

There is a high burden of typhoid fever in sub-Saharan African countries, according to a new study published today in The Lancet Global Health. This high burden combined with the threat of typhoid strains resistant to antibiotic treatment calls for stronger prevention strategies, including the use and implementation of typhoid conjugate vaccines (TCVs) in endemic settings along with improvements in access to safe water, sanitation, and hygiene.

 

The findings from this 4-year study, the Severe Typhoid in Africa (SETA) program, offers new typhoid fever burden estimates from six countries: Burkina Faso, Democratic Republic of the Congo (DRC), Ethiopia, Ghana, Madagascar, and Nigeria, with four countries recording more than 100 cases for every 100,000 person-years of observation, which is considered a high burden. The highest incidence of typhoid was found in DRC with 315 cases per 100,000 people while children between 2-14 years of age were shown to be at highest risk across all 25 study sites.

 

There are an estimated 12.5 to 16.3 million cases of typhoid every year with 140,000 deaths. However, with generic symptoms such as fever, fatigue, and abdominal pain, and the need for blood culture sampling to make a definitive diagnosis, it is difficult for governments to capture the true burden of typhoid in their countries.

 

“Our goal through SETA was to address these gaps in typhoid disease burden data,” said lead author Dr. Florian Marks, Deputy Director General of the International Vaccine Institute (IVI). “Our estimates indicate that introduction of TCV in endemic settings would go to lengths in protecting communities, especially school-aged children, against this potentially deadly—but preventable—disease.”

 

In addition to disease incidence, this study also showed that the emergence of antimicrobial resistance (AMR) in Salmonella Typhi, the bacteria that causes typhoid fever, has led to more reliance beyond the traditional first line of antibiotic treatment. If left untreated, severe cases of the disease can lead to intestinal perforation and even death. This suggests that prevention through vaccination may play a critical role in not only protecting against typhoid fever but reducing the spread of drug-resistant strains of the bacteria.

 

There are two TCVs prequalified by the World Health Organization (WHO) and available through Gavi, the Vaccine Alliance. In February 2024, IVI and SK bioscience announced that a third TCV, SKYTyphoid™, also achieved WHO PQ, paving the way for public procurement and increasing the global supply.

 

Alongside the SETA disease burden study, IVI has been working with colleagues in three African countries to show the real-world impact of TCV vaccination. These studies include a cluster-randomized trial in Agogo, Ghana and two effectiveness studies following mass vaccination in Kisantu, DRC and Imerintsiatosika, Madagascar.

 

Dr. Birkneh Tilahun Tadesse, Associate Director General at IVI and Head of the Real-World Evidence Department, explains, “Through these vaccine effectiveness studies, we aim to show the full public health value of TCV in settings that are directly impacted by a high burden of typhoid fever.” He adds, “Our final objective of course is to eliminate typhoid or to at least reduce the burden to low incidence levels, and that’s what we are attempting in Fiji with an island-wide vaccination campaign.”

 

As more countries in typhoid endemic countries, namely in sub-Saharan Africa and South Asia, consider TCV in national immunization programs, these data will help inform evidence-based policy decisions around typhoid prevention and control.

 

###

 

About the International Vaccine Institute (IVI)
The International Vaccine Institute (IVI) is a non-profit international organization established in 1997 at the initiative of the United Nations Development Programme with a mission to discover, develop, and deliver safe, effective, and affordable vaccines for global health.

IVI’s current portfolio includes vaccines at all stages of pre-clinical and clinical development for infectious diseases that disproportionately affect low- and middle-income countries, such as cholera, typhoid, chikungunya, shigella, salmonella, schistosomiasis, hepatitis E, HPV, COVID-19, and more. IVI developed the world’s first low-cost oral cholera vaccine, pre-qualified by the World Health Organization (WHO) and developed a new-generation typhoid conjugate vaccine that is recently pre-qualified by WHO.

IVI is headquartered in Seoul, Republic of Korea with a Europe Regional Office in Sweden, a Country Office in Austria, and Collaborating Centers in Ghana, Ethiopia, and Madagascar. 39 countries and the WHO are members of IVI, and the governments of the Republic of Korea, Sweden, India, Finland, and Thailand provide state funding. For more information, please visit https://www.ivi.int.

 

CONTACT

Aerie Em, Global Communications & Advocacy Manager
+82 2 881 1386 | aerie.em@ivi.int


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US Spent More Than Double What It Collected In February, As 2024 Deficit Is Second Highest Ever… And Debt Explodes

US Spent More Than Double What It Collected In February, As 2024 Deficit Is Second Highest Ever… And Debt Explodes

Earlier today, CNBC’s…

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US Spent More Than Double What It Collected In February, As 2024 Deficit Is Second Highest Ever... And Debt Explodes

Earlier today, CNBC's Brian Sullivan took a horse dose of Red Pills when, about six months after our readers, he learned that the US is issuing $1 trillion in debt every 100 days, which prompted him to rage tweet, (or rageX, not sure what the proper term is here) the following:

We’ve added 60% to national debt since 2018. Germany - a country with major economic woes - added ‘just’ 32%.   

Maybe it will never matter.   Maybe MMT is real.   Maybe we just cancel or inflate it out. Maybe career real estate borrowers or career politicians aren’t the answer.

I have no idea.  Only time will tell.   But it’s going to be fascinating to watch it play out.

He is right: it will be fascinating, and the latest budget deficit data simply confirmed that the day of reckoning will come very soon, certainly sooner than the two years that One River's Eric Peters predicted this weekend for the coming "US debt sustainability crisis."

According to the US Treasury, in February, the US collected $271 billion in various tax receipts, and spent $567 billion, more than double what it collected.

The two charts below show the divergence in US tax receipts which have flatlined (on a trailing 6M basis) since the covid pandemic in 2020 (with occasional stimmy-driven surges)...

... and spending which is about 50% higher compared to where it was in 2020.

The end result is that in February, the budget deficit rose to $296.3 billion, up 12.9% from a year prior, and the second highest February deficit on record.

And the punchline: on a cumulative basis, the budget deficit in fiscal 2024 which began on October 1, 2023 is now $828 billion, the second largest cumulative deficit through February on record, surpassed only by the peak covid year of 2021.

But wait there's more: because in a world where the US is spending more than twice what it is collecting, the endgame is clear: debt collapse, and while it won't be tomorrow, or the week after, it is coming... and it's also why the US is now selling $1 trillion in debt every 100 days just to keep operating (and absorbing all those millions of illegal immigrants who will keep voting democrat to preserve the socialist system of the US, so beloved by the Soros clan).

And it gets even worse, because we are now in the ponzi finance stage of the Minsky cycle, with total interest on the debt annualizing well above $1 trillion, and rising every day

... having already surpassed total US defense spending and soon to surpass total health spending and, finally all social security spending, the largest spending category of all, which means that US debt will now rise exponentially higher until the inevitable moment when the US dollar loses its reserve status and it all comes crashing down.

We conclude with another observation by CNBC's Brian Sullivan, who quotes an email by a DC strategist...

.. which lays out the proposed Biden budget as follows:

The budget deficit will growth another $16 TRILLION over next 10 years. Thats *with* the proposed massive tax hikes.

Without them the deficit will grow $19 trillion.

That's why you will hear the "deficit is being reduced by $3 trillion" over the decade.

No family budget or business could exist with this kind of math.

Of course, in the long run, neither can the US... and since neither party will ever cut the spending which everyone by now is so addicted to, the best anyone can do is start planning for the endgame.

Tyler Durden Tue, 03/12/2024 - 18:40

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