2 December 2019 Weekly Analysis
GCMAsia Weekly Report: December 2 – 7
Market Review (Forex): November 25 – 29
US Dollar
Greenback was sold off during late American trading hours after notching up to one-week high last Friday. The dollar index closed last week’s market at around 98.12 against six major currencies. US dollar remains traded within a tight range for the majority of last week as US market remained closed for two days due to Thanksgiving Holidays.
Due to the lack of major economic releases from the United States, investors shifted their focus towards further developments in US-China trade talks as well as fundamental developments from other major economic powers. In terms of global trade, US and China was reportedly engaging actively in order to resolve differences in between both countries. Last week, China announced that they will step up the punishment for intellectual property infringement, one of the main concerns that was being brought up by the United States.
However, rising political risks in between US and China has jeopardized optimistic market view towards the possible achievement of phase one trade term in the near future. Last week, US President Donald Trump has signed the Hong Kong Human Rights and Democracy Act into a law, which would allow the US government to impose sanction against officials that are responsible for human rights abuses in Hong Kong. The act would also require the US Department of State and other agencies to conduct an annual review to determine whether there are changes in Hong Kong political status.
The signatory sparked strong criticism from Beijing, which then vows to take retaliatory action against Washington. Such warning has sparked concerns whereby both countries may succumb into more trade issues while dragging the achievement of phase one trade deal even further into the future. For the time being, investors will continue to monitor further developments with regards to trade war in order to gauge market sentiment.
USD/JPY
Pair of USD/JPY extended its gains while closing last week’s market at 109.44. Market’s appeal for Japanese Yen continues to falter following rising calls for a trade deal in between US and China to be achieved. However, gains on the pair of USD/JPY remains limited after recent signatory of Hong Kong Human Rights and Democracy Act sparked strong criticism from China which may jeopardize the achievement of phase one trade deal in between both countries.
EUR/USD
Pair of EUR/USD managed to rebound from its prior low levels while closing last weeks’ trading at 1.1018. Euro benefited from the rebound after recent economic data from Germany and EU portrays a slight recovery in terms of economic momentum. For the month of November, German Unemployment Change came in at -16,000 individuals, better than economist forecast of a rise of up to 5,000 individuals. Similarly, EU zone CPI for the month of November rose to 1.0%, slightly higher than forecast of 0.9%. However, overall gains on the pair of EUR/USD remains limited as EU zone’s economic condition remains weak when compared to the United States.
GBP/USD
Pair of GBP/USD was opened lower earlier this morning at around 1.2907. Last week, the pair remains traded within a tight range as market participants waits for the arrival of general election on 12th December 2019. However, pound sterling received tremendous selloff pressure this morning after a recent poll from BMG Research shows diminishing support for Conservative Party which now stands at only 39%. Diminishing support for Conservatives sparks higher possibility for a hung parliament to occur which may jeopardize their plan to facilitate Brexit smoothly after winning the general election.
Market Review (Commodities): November 25 – 29
GOLD
Gold price was traded higher last Friday while closing the market at $1,463.70 a troy ounce. Overall, gold price remains traded within a tight range as market participants continues to ponder upon issues in the market such as US-China trade war and Brexit. Prices of the commodity rose last Friday after Beijing commented that they would retaliate against Washington for signing a law which support Hong Kong protestors. The warning has sparked concerns that phase one trade deal may take a longer time to achieve while both countries indifference are yet to be resolved.
Crude Oil
Crude oil price plunged more than 4% last Friday while closing the market at $55.36 per barrel. Oil price received tremendous selloff pressure after Saudi Arabia’s Energy Minister Prince Abdulaziz bin Salman commented that they will not increase their supply cut capacity in order to offset other countries which are not complying with the production cut agreement.
His signal sparks higher pessimism in the market as Saudi Arabia has been restricting their supply more than its agreed levels previously in order to offset low compliance rate from other countries. As such, market participants will now place their focus upon OPEC’s meeting which is bound to be held in Vienna on 5th December for more market signals.
Weekly Outlook: December 2 – 7
For the week ahead, investors will place their attention upon major economic data from US, UK and Canada in order to gauge the movement and trend direction of respective currencies. Likewise, highlight of the week will be placed upon US coveted release of Nonfarm Payrolls report this coming Friday.
As for oil traders, they will be eyeing on US inventories level reported by API and EIA as well as developments with regards to OPEC in order to gauge the trend direction of crude oil in the near term.
Highlighted economy data and events for the week: November 2 – 7.
| Time | Market | Events | Actual | Forecast | Previous |
| Monday – 2 December 2019 | |||||
| 16:55 | EUR | German Manufacturing PMI (Nov) | – | 43.8 | 43.8 |
| 17:30 | GBP | Manufacturing PMI (Nov) | – | 48.3 | 48.3 |
| 22:00 | EUR | ECB President Lagarde Speaks | – | – | – |
| 23:00 | USD | ISM Manufacturing PMI (Nov) | – | 49.2 | 48.3 |
| Tuesday – 3 December 2019 | |||||
| 11:30 | AUD | RBA Interest Rate Decision (Dec) | – | 0.75% | 0.75% |
| 12:30 | AUD | RBA Rate Statement | – | – | – |
| 17:30 | GBP | Construction PMI (Nov) | – | 44.5 | 44.2 |
| Tentative | GBP | BoE MPC Treasury Committee Hearings | – | – | – |
| Wednesday – 4 December 2019 | |||||
| 08:30 | AUD | GDP (QoQ) (Q3) | – | 0.5% | 0.5% |
| 17:30 | GBP | Composite PMI (Nov) | – | 48.5 | 48.5 |
| 17:30 | GBP | Services PMI (Nov) | – | 48.6 | 48.6 |
| 21:15 | USD | ADP Nonfarm Employment Change (Nov) | – | 140K | 125K |
| 23:00 | USD | ISM Non-Manufacturing PMI (Nov) | – | 54.5 | 54.7 |
| 23:00 | CAD | BoC Interest Rate Decision | – | 1.75% | 1.75% |
| 23:30 | CrudeOIL | Crude Oil Inventories | – | – | 1.572M |
| Thursday – 5 December 2019 | |||||
| 08:30 | AUD | Retail Sales (MoM) (Oct) | – | 0.3% | 0.2% |
| 21:30 | USD | Initial Jobless Claims | – | 215K | 213K |
| 23:00 | CAD | Ivey PMI (Nov) | – | 53.8 | 48.2 |
| Friday– 6 December 2019 | |||||
| 21:30 | USD | Average Hourly Earnings (MoM) (Nov) | – | 0.3% | 0.2% |
| 21:30 | USD | Nonfarm Payrolls (Nov) | – | 180K | 128K |
| 21:30 | USD | Unemployment Rate (Nov) | – | 3.6% | 3.6% |
| 21:30 | CAD | Employment Change (Nov) | – | 10.0K | -1.8K |
| 23:00 | USD | Michigan Consumer Sentiment (Dec) | – | 97.0 | 96.8 |
| Saturday – 7 December 2019 | |||||
| 02:00 | CrudeOIL | U.S. Baker Hughes Oil Rig Count | – | – | 668 |