03 June 2019 Weekly Analysis
GCMAsia Weekly Report: June 3 – 7
Market Review (Forex): May 27 – 31
US Dollar
Greenback managed to make a strong rebound after hitting a low level of 97.35 following mixed data that has been announced throughout last week. The dollar index closed its market on last Friday at 97.62. Earlier last week, Dollar received strong bullish momentum after the CB Consumer Confidence came in at optimistic reading of 134.1, beating the economist forecast of 130.1. The upbeat data has slightly lightened the market sentiment toward Fed may decrease interest rate in the future.
However, dollar index faces major sell-off after US President Donald Trump said that US is not ready to reach a deal with China while there is a possibility to increase the tariff upon China goods from 25% to 35%. Escalation of trade tension between two world’s largest economy continues to haunt the global economic outlook and eventually causing the investor to react by shifting their portfolio from riskier asset to safe haven asset. Besides, the appeal of Greenback deteriorated after US treasury yield curve shows sign of inversion, representing that US economy is turning into recession stage.
Last Friday, Donald Trump tweeted a post and mentioned that on 10th June onward, US will impose 5% tariff on all imported goods from Mexico and even will raise to 25% until illegal immigrants issue come to an end. Besides, shininess of dollar index exacerbated before market closed on last Friday amid Michigan Consumer showed a reading of lower than economist expectation, 93.5 compared to 95.2. As of now, market will continue to eye on global trade war and economic data to further gauge the direction of US dollar.
USD/JPY
The pair of USD/JPY has capped its gains throughout last week while closing the market on last Friday at 108.30. The appeal for Japanese yen rose significantly as trade war tension between two largest economy countries and global economic slowdown continue to deteriorate the market sentiment toward the riskier asset. Besides, uncertainty in Brexit issue and upbeat data from Japan such as industrial production further boosted the appearance of Japanese yen and reached six months lowest level.
EUR/USD
Euro extended its losses on last Friday while closing last week’s market around 1.1165 against the US dollar. Market sentiment towards the euro remains bearish amid downbeat data indicating that EU economy slowdown is being worsening the demand of Euro. According to Destatis, Germany Retails Sales and Unemployment change was came in at -2.0% and 60k respectively while the forecast of economist were 0.4% and -8k. Besides, Germany CPI index data which missed the expectation of economist at 0.2% compare to 0.3% has increased the probability that European Central Bank may even further decrease it official cash rates to negative rates.
GBP/USD
Pair of GBP/USD extended its bearish momentum while closing last week’s market at around 1.2630. Market participants extended their selloff upon sterling as Brexit issue uncertainty continues to haunt the appealing of Pound. After Theresa May announced that she will be stepping down on 7th June, market participants are now eye on UK leadership contest and anticipating a new leader by the end of July. Besides, Ex Brexit secretary Dominic Raab who is also one of the leadership contest candidate recently said that he has a good Brexit plan and will not ask for an extension beyond October. Hence, Sterling managed to recover part of its loss at the end of last week.
Market Review (Commodities): May 27 – 31
GOLD
Gold price surged sharply throughout entire last week while closing its trading at around $1,305.25 a troy ounce. The yellow metal received huge demand as trade tensions between US and other countries such as China and Mexico. Besides, tumble in Brexit issue and worsening of European Union economy condition continues to boost up the appealing of safe haven asset such as gold and Japanese yen.
Crude Oil
Crude oil price tumbled to its lowest level in six months while closing the market on last Friday at $53.30 per barrel. Earlier last week, oil price managed to recover part of its losses amid escalation tensions between US and Iran following an announcement regarding Washington is planning to deploy more troops to the Middle East. The tension in between both countries heightened the prospect of supply disruptions in Iran as a war may lead to closure of oil rig.
However, crude oil futures received huge bearish reversal momentum as on-going trade war in between US and China may lead to a decline on oil demand in the future. Besides, downbeat crude oil inventories data also triggered strong bearish momentum on black commodity market. Last week, EIA data showed a very slight decline in US oil inventories as compared to economist expectation.
US crude oil inventories showed stockpile fell nearly 300k barrel, missing the analyst forecast of 900k. Besides, U.S. Baker Hughes Oil Rig Count data also showed that the number of oil rig in US has been increased to 800 from 797, indicating higher oil drilling activity in US as well. As of now, investor are eyes on OPEC meeting and crude oil inventories data to further gauge the direction of crude oil in short term.
Weekly Outlook: June 3 – 7
For the week ahead, investors will keep an eye on trade war progression in between US and China in order to gain further market signals. Likewise, other important economic data such as RBA interest rate decision and NFP will also determine the direction of the currencies.
As for oil traders, they will be eyeing on US inventories level reported by API and EIA to gauge the strength of crude demand for world’s largest oil consumer.
Highlighted economy data and events for the week: June 3 – 7
| Monday, June 3 |
Data EUR – German Manufacturing PMI (May) GBP – Manufacturing PMI (May) USD – ISM Manufacturing PMI (May)
Events N/A
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| Tuesday, June 4 |
Data AUD – Retail Sales (MoM) (Apr) AUD – RBA Interest Rate Decision (Jun)
Events AUD – RBA Rate Statement USD – Fed Chair Powell Speaks
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| Wednesday, June 5 |
Data CrudeOIL – API Weekly Crude Oil Stock AUD – GDP (QoQ) (Q1) EUR – Services PMI (May) GBP – Services PMI (May) USD – ADP Nonfarm Employment Change (May) USD -Services PMI (May)
Events N/A
|
| Thursday, June 6 |
Data AUD – Trade Balance (Apr) EUR – German Factory Orders (MoM) (Apr) EUR – GDP (QoQ) (Q1) EUR – Deposit Facility Rate EUR – ECB Marginal Lending Facility EUR – ECB Interest Rate Decision (Jun)
Events GBP – BoE Gov Carney Speaks EUR – ECB Press Conference
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Friday, June 7
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Data EUR – German Industrial Production (MoM) (Apr) USD – Average Hourly Earnings (MoM) (May) USD – Nonfarm Payrolls (May)
Events N/A
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