10 June 2019 Weekly Analysis
GCMAsia Weekly Report: June 10 – 14
Market Review (Forex): June 3 – June 7
US Dollar
Dollar index extended its losses throughout last week, plunging below its 97.00 level and hitting 8-weeks low while closing Friday’s market at 96.47. Greenback was pressured by a set of disappointing data last week, with a slump in their jobs and wages data as well as dovish statement from Fed.
Earlier last week, dollar received bearish momentum following the release of ISM Manufacturing PMI which slump to 52.1, missing its forecasted value of 53.0. Furthermore, Fed Chairmen Jerome Powell stated that possibility for rate cut by this year was higher due to unexpected trade war escalation, heightening fears among investors as they sell dollar. Besides that, dollar was further pressured by poor ADP Nonfarm Employment Change with a reading of 27K compared to 180K. However, the loss was limited by upbeat ISM Non-manufacturing PMI when the data came in at 56.9, exceeding economists’ expectation of 55.5.
Last Friday, dollar faced large sell-off after Nonfarm Payroll data plunged to 75K from 224K, missing its forecasted value of 185K, indicating a poorer labor market although US Unemployment Rate remained stable at 3.6%. Dollar’s sentiment was worsened by lower Average Hourly Earnings which came in at 3.1%, 0.1% less than its forecasted value, signaling a lower wage growth in the US which may affect spending activities in the long run. For the time being, investors will focus on future trade talks developments especially during the G20 summit in Japan as well as future data to further gauge the dollar’s movement.
USD/JPY
The pair of USD/JPY was traded in a sideway channel while closing the market lower on last Friday at 108.20. Sentiment towards the safe-haven Yen was mixed last week following uncertainties in global trade war as well as investors heightened risk appetite amid weaker dollar. The pair was largely sold during the end of the week after release of weak US data.
EUR/USD
Pair of EUR/USD surged throughout last week while hitting its 11-weeks high and closing last Friday’s market around 1.1330. The euro was largely bought last week following weaker dollar as well as shocking statement from European Central Bank (ECB). Earlier last week, downbeat data from the US caused investors to flee into preferable euro market as manufacturing and services data from the eurozone showed signs of recovery. Further supporting the euro was ECB President Mario Draghi comments which stated that the bank will delay its interest rate hike till the middle of year 2020, eliminating previous fears of a rate cut due to the economy slowdown in the eurozone. Investors digested the statement as positive sentiment while they bought the euro.
GBP/USD
Pair of GBP/USD was traded higher throughout last week while closing the market at around 1.2730. Demand for the pair remained limited despite a major fall in dollar, mostly due to a set of downbeat data from the UK. Last week, the region released its Manufacturing and Construction PMI where both missing its expectation with the reading of 50.5 vs 50.6 and 48.6 vs 50.5 respectively. Although their services PMI was higher than expected at 51.0 compared to 50.6, investors remained skeptical towards the pound as Brexit uncertainties and political tension regarding the election of a new Prime Minister continues to haunt the pound market.
Market Review (Commodities): June 3 – 7
GOLD
Gold price have extended its gain on last week while closing the market with the price of $1340.33 a troy ounce, following the ongoing dollar weakness. The dollar had been facing a major sell-off throughout the week caused by disappointing employment data and wage data. As recent economic outlook with the weak data adding more bets on possibility of Federal Reserve to cut its interest rate and tensions between U.S and China have not made any positive progress, market investors continue to bid heavily on the safe-haven commodity for risk aversion.
Crude Oil
The price of crude oil had rebound as positive developments and news have regain market confidence in the commodity and closing last week trading price at $54.01 per barrel. According to recent reports, Saudi Energy Minister Khalid al-Falih said on Friday that OPEC and Russia are close to agree on extending the supply cut throughout the rest of the year. Besides that, reports from Baker Hughes also suggested the U.S oil inventories are starting to dwindle with the oil rig reduced to 789 from previous 800. At the same time, crude oil price further boosted by positive news on Mexico where the largest buyer of U.S energy have reached a trade deal with U.S which have averse the tariff threat, thus further providing positive sentiment on the black commodity.
Weekly Outlook: June 10 – 14
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 US PPI and Core CPI 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 10 – 14
| Monday, June 10 |
Data GBP – GDP (MoM) GBP – Manufacturing Production (MoM) (Apr) GBP – Monthly GDP 3M/3M Change (MoM) USD – JOLTs Job Openings (Apr)
Events N/A
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| Tuesday, June 11 |
Data GBP – Average Earnings Index +Bonus (Apr) GBP – Claimant Count Change (May) GBP – Unemployment Rate (Apr) USD – PPI (MoM) (May)
Events N/A
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| Wednesday, June 12 |
Data CrudeOIL – API Weekly Crude Oil Stock CNY – CPI (MoM) (May) CrudeOIL – Crude Oil Inventories
Events EUR – ECB President Draghi Speaks
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| Thursday, June 13 |
Data AUD – Employment Change (May) CHF – SNB Interest Rate Decision EUR – German CPI (MoM) (May) USD – Initial Jobless Claims CHF – SNB Monetary Policy Assessment CHF – SNB Press Conference CrudeOIL – OPEC Monthly Report
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Friday, June 14
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Data CNY – Industrial Production (YoY) (May) JPY – Industrial Production (MoM) (Apr) USD – Core Retail Sales (MoM) (May) USD – Michigan Consumer Sentiment (Jun)
Events CrudeOIL – IEA Monthly Report
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