07 October 2019 Weekly Analysis
GCMAsia Weekly Report: October 7 – October 11
Market Review (Forex): September 30 – October 4
US Dollar
Greenback was traded lower throughout the entire last week while closing the market on last Friday at 98.55 amid mixed economic data been announced from the US region.
Earlier last week, dollar index received huge sell off pressure from the market participants following the release of downbeat ISM Manufacturing PMI for the month of September. The data came in at historical low of 47.8 since year 1982, lower than economist forecast of 50.4, sparked the fear of investors over economic recessions. Besides, the other economic data such as ISM Non-Manufacturing PMI and Nonfarm Payrolls (NFP) also recorded a lower reading as compare to the economist forecast. All the downbeat data indicated that the US manufacturing sector has weaken, which seemingly affected by the trade war between US and other country, and pushed the dollar downward significantly. However, unexpected fall in US unemployment rate limited the bearish momentum of greenback and dragged up the appeal of this currency toward the market participants. US unemployment rate for the month of September fall to 3.5%, a 50 year-low may acted as strong evidence for Federal Reserve to cease the plan of further rate cut and adopt less accommodative monetary policy.
In term of diplomacy, United States and China have scheduled a trade representative level of trade talk on 11 to 12 October 2019 in the hope of reaching trade deal as escalation of trade war had affected both countries economy growth negatively. Besides, US also announced to impose 10% of tariff on EU imported goods which including Airbus’s aeroplane, whisky, wine and cheese as a retaliation action toward EU subsidizing local airline. It has further diminished the appeal of greenback as market worries over EU may retaliate back US. As of now, investors will continue scrutinize on further development of trade talk between US and other countries and more economic data in order to gauge the direction of dollar index.
USD/JPY
The pair of USD/JPY slumped throughout last week while closing last Friday’s market around 106.90. Earlier last week, Japenese Yen received strong bullish momentum following optimistic data been announced in Japan region. According to Bank of Japan, Japan Tankan Large Manufacturers Index came in at 5, higher than economist forecast of 2 while showing Japan manufacturing sector has strengthen. Moreover, poor economic data in US region exerted even more bearish momentum toward the pair of USD/JPY and touched one month low level on last Friday.
EUR/USD
EUR/USD managed to rebound from its lowest level while closing its Friday market at 1.0980 despite euro remain pressured by Brexit dispute and US new tariff imposition on EU goods. Later last week, WTO approved the Trump administration to impose tariff on $7.5 billion in European goods as US claimed EU illegally subsidies it local aircraft marker (Airbus). The duties would take effect on 18th October which including goods such as aircraft, cheese and whisky from several countries in European Union. The news of a widening trade conflict exerted little pressure on the pair of EUR/USD as weakening dollar supported the single currency from falling further.
GBP/USD
GBPUSD remain traded in a tight right while closing last Friday session with the closing price of 1.2332. In overall, pound sterling continues to struggle as recent remarks from U.K Prime Minister Boris Johnson have strengthen further the expectation of a hard Brexit. According to latest development, Prime Minister Boris Johnson have warned EU that he would not delay any further the deadline of Brexit which is October 31st, despite British MP’s have passed a law last month that requires him to seek for another delay. As the risk of no-deal British continue to heighten, the potential upside for the pound sterling are limited while market remain cautious and continue to focus on Brexit developments for further signals.
Market Review (Commodities): September 30 – October 4
GOLD
Gold price was also traded in a tight range while ending last week session at the price of $1507.99 a troy ounce as market. The safe-haven metal manage to hold its ground as investors continue to shift their portfolio into safe-haven markets due to increasing uncertainty ahead of U.S-China trade talk and Brexit fears. Despite that, market are currently struggling for a direction as recent mixed have stirred the sentiment. Investors will continue to provide their attention towards for any upcoming data that could help determine further sentiment for the safe-haven commodity.
CrudeOIL
Oil price was traded in a tight range while closing last week market session with $52.96 per barrel. The oil price remain pressured following recovering production level and weakening demand pegging any hopes for a rebound.
According to the latest report, Saudi Arabia’s largest oil producer, Saudi Aramco has fully restored the damaged production from the Abqaiq and Khurais facilities within a few weeks which is an impressive feat given in such a short term. However, the news also increase expectation of oversupply as production have returned to record level, causing investors to remain concern about its supply level.
On the other hand, dismal manufacturing data from U.S and China last week have heightened further the concern of a global economic slowdown and a potential risk of recession. Forecast for oil demand have been downgrade for several times and IEA’s executive director Fatih Birol have recently stated that week there could be another downward revision for the week which may exert further pressure for the commodity. Still, market continue to focus on global growth and upcoming data to gauge further economic health which will affect the market.
Weekly Outlook: October 7 – 11
For the week ahead, investors will pay attention upon key event such as Fed Chair Powell Speaks as well as FOMC Meeting Minutes to further gauge the market.
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: October 7 – 11
| Monday, October 7 |
Data N/A
Events N/A
|
| Tuesday, October 8 |
Data USD – Core PPI (MoM)(Sep) USD – PPI (MoM)(Sep)
Events USD – Fed Chair Powell Speaks
|
| Wednesday, October 9 |
Data CrudeOIL – API Weekly Crude Oil Stock USD – JOLTs Job Openings (Aug) CrudeOIL – EIA Crude Oil Inventories
Events USD – Fed Chair Powell Speaks
|
| Thursday, October 10 |
Data GBP – GDP(MoM) GBP – Manufacturing Production (MoM)(Aug) USD – Core CPI (MoM)(Sep) USD – Initial Jobless Claims
Events USD – FOMC Meeting Minutes CrudeOIL – OPEC Monthly Report
|
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Friday, October 11
|
Data CAD – Unemployment Change (Sep) USD – Michigan Consumer Sentiment (Oct) CrudeOIL – U.S. Baker Hughes Oil Rig Count
Events CrudeOIL – OPEC Meeting
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