4 November 2019 Weekly Analysis
GCMAsia Weekly Report: November 4 – 8
Market Review (Forex): October 28 – November 1
US Dollar
The dollar index which is measured against a basket of six major currency pairs have fell last week while closing last Friday market at the price of 96.90. Overall bearish momentum was largely due to bleak data performance in the U.S and recent rate cut by the Federal Reserve.
According to Conference Board, U.S Conference Board (CB) Consumer Confidence fell below the forecast of 128.0, came in at 125.9 prior to 126.3 for last month. In fact, Federal Reserves expanded its monetary policy last Wednesday, cutting their interest rate from 2.00% to 1.75%, spurring a huge sell-off for the greenback on last Thursday. In addition, ISM manufacturing PMI came in at 48.3, weaker than economist forecast for a reading of 48.9, has further signaled an economic slowdown in the US region. At this time, investors predicted that the Fed may cut its interest rates further due to bearish economic data, despite hawkish statement from Fed Chairman Jerome Powell during the press conference. However, U.S GDP and Pending Home sales were both fared better than expected. In addition, U.S. Nonfarm payrolls came in at 128k for the month of October, better than economist forecast of 89k. These positive data has limited its prior losses. Meanwhile, investors will continue to focus on upcoming data to gauge further movement of the index.
With regards to trade war, trade tensions continues to escalate after Chinese officials casted doubts about reaching a comprehensive long-term trade deal with the U.S. even as the two sides get close to signing a “phase one” agreement. However, President Donald Trump later claimed that a new location for trade deal will be announced soon after meeting in Chile cancel amid to protection, diminishing the trade tensions. As such, market participants remain fixated upon ongoing headlines of trade war as both countries only reached a partial truce and not resolved completely.
USD/JPY
USD/JPY was traded lower last week while ending last Friday session at the price of 108.21. The pair received further selloff following bearish economic data from the United States. Likewise, ongoing uncertainty which surrounds the current trade negotiation in between US and China has spurred higher demand for the safe-haven currency.
EUR/USD
Pair of EUR/USD rose last week while closing last Friday’s trading session with the price of 1.1160. Euro received higher demand mostly due to the weakness in rival currencies, especially U.S dollar. In addition, data released on Thursday have shown that current economic growth in euro zone remains stable for the third quarter, beating market expectations for further slowdown. In addition, the fear of no-deal Brexit has faded after European policymakers agreed on a third Brexit extension until 31st January 2020. However, the Germany Unemployment change came in at 6k, higher than the market forecast of 2k, which has provided some limitation for the pair to extend its gains.
GBP/USD
Pair of GBP/USD was traded lower while ending the market at the price of 1.2935. Last week, Pound Sterling received some sell-off pressure after the European policymakers agreed on a Brexit extension until 31st January 2020. Such sentiment has triggered Boris Johnson to launch a general election with a proposed date of 12th December. In fact, Pound Sterling slumped further following the 12th December the general election was approved by UK parliament, which tend to increase the geopolitics risk in the UK.
Market Review (Commodities): October 28 – November 1
GOLD
Gold price remains traded within a tight range last week while ending the market at around $1510.21 a troy ounce. The safe-haven metals have experienced a significant sell-off following positive employment and GDP data from U.S region. In fact, trade optimism between US and China which increased the risk appetite and drove higher demand in equity markets lead to further selloff on gold futures. However, gold price rebounded from its lower level after the Institute for Supply Management (ISM) said the manufacturing sector contracted for the third consecutive month in October. Furthermore, the commodity received further bullish support amid weaker greenback after Fed Reserve cut its interest rate by 25 basis points.
Crude Oil
Oil prices remained in a tight range last week while closing last Friday session at the price of 56.14. In the earlier of last week, crude oil prices slump following the crude oil data was released. According to Energy Information Administration, U.S. Crude OIL inventories came in at 5.702M, higher than the economist forecast and 0.494M.
However, crude oil prices rose on Friday amid possible resolution of trade war in between US and China sooner than later. According to Reuters, U.S. Trade Representative Robert Lighthizer and Treasury Secretary Steven Mnuchin made progress on a variety of issues during a telephone call on Friday with China’s Vice Premier Liu He with regards to interim trade agreement, USTR said in a statement on Friday.
Weekly Outlook: November 4 – 8
For the week ahead, investors will continue to keep a close on upcoming data such as Bank of England interest rate decision that will be released this week to attain more market signals. Besides that, investors will also continue to focus on the ongoing development of Brexit and trade war news.
As for oil traders, they will be eyeing on US inventories level reported by API and EIA as well as developments in the Middle East to gauge the strength of crude demand for world’s largest oil consumer.
Highlighted economy data and events for the week: November 4 – 8
| Monday, November 4 |
Data AUD – Retail Sales (MoM) (Sep) EUR – German Manufacturing PMI (Oct) GBP – Construction PMI (Oct)
Events N/A
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| Tuesday, November 5 |
Data AUD – RBA Interest Rate Decision (Nov) GBP – Composite PMI (Oct) GBP – Services PMI (Oct) USD – ISM Non-Manufacturing PMI (Oct) USD – JOLTs Job Openings (Sep)
Events AUD – RBA Rate Statement
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| Wednesday, November 6 |
Data CrudeOIL – API Crude Oil Inventories NZD – Employment Change (QoQ) (Q3) CAD – Ivey PMI (Oct) CrudeOIL – Crude Oil Inventories
Events GBP – Autumn Budget
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Thursday, November 7 |
Data GBP – BoE Interest Rate Decision (Nov) USD – Initial Jobless Claim
Events GBP – BoE Inflation Report GBP – BoE MPC Meeting Minutes GBP – BoE Gov Carney Speaks
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Friday, November 8
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Data CAD – Employment Change (Oct) USD – Michigan Consumer Sentiment (Nov)
CrudeOIL – U.S. Baker Hughes Oil Rig Count
Events N/A
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