13 May 2019 Weekly Analysis
GCMAsia Weekly Report: May 13 – May 17
Market Review (Forex): May 6 – 10
US Dollar
US dollar extended its losses throughout last week while closing Friday’s market at 97.06 against a basket of six major currencies. Sentiment towards the greenback turned sour following continuous release of bearish economic data from the region. Earlier last week, latest report shows that the Initial Jobless Claims increased to 228K, missing economist expectation for a depreciation to 215K. Likewise, Produce Price Index (PPI) for the month of April missed economist expectation with only 2.2%, slightly lower than forecast of 2.3%. Overall, a depreciation in producer price may reflect towards a slower price growth that may be reflected upon consumer final prices.
On Friday, US dollar broke below its triangle formation following the release of consumer inflation data for the region. According to reports, Core Consumer Price Index (CPI) came in at only 0.1%, missing economist forecast of 0.2%. A softer than expected data came well in line with Federal Reserve projection whereby onset inflation may hover at or slightly below their targeted range, signaling a possible slowdown in consumer spending. If the downtrend in inflation continues to persist, this may spark higher chances for an interest rate cut from the Fed by year end. Thus, investors will continue to monitor future economic releases from the region particularly employment and inflation data to gain more market signals.
USD/JPY
Japanese yen gained substantially throughout last week following rising trade tensions between United States and China. Pair of USD/JPY closed last week’s market at around 109.94. Safe-haven Yen received higher bid in the market after US went ahead to impose additional tariffs upon $200 billion China imports although trade negotiations were ongoing. The action sparked China to retaliates similar action against US imports although further details were not being released as of writing.
EUR/USD
Euro extended its gains during last week following a shift in sentiment towards the single common currency. Pair of EUR/USD closed last week’s market near 1.1233. The single common currency received invigorated bullish sentiment following the release of bullish data from Germany. According to the latest report, German’s trade balance expands further into the surplus territory with 20.0 billion for the month of March, confounding market’s forecast for a decrease to 18.2 billion. However, its gains remain limited as prior economic data such as inflation shows diminishing momentum, well in line with European Central Bank’s forecast for a slower economic growth ahead.
GBP/USD
Pound sterling were subjected within a tight range as market participants awaits further development with regards to Brexit. Pair of GBP/USD closed last week’s market at around 1.3001. Prior, UK Prime Minister Theresa May and its Conservative Party participated in a private negotiation with the Labor Party leader Jeremy Corbyn in order to resolve their differences which may pave way for a smooth Brexit transition. However, recent report shows that May has yet to make any significant breakthrough while her party stresses May to drop the negotiation and to gain more confidence within the Parliament instead. As such, future parliamentary meetings in the UK will be the limelight to determine pound sterling’s near-term trend direction.
Market Review (Commodities): May 6 – 10
GOLD
Gold price extended its gains further last Friday following weaker US dollar and higher risk aversion in the market. Price of the yellow metal was closed at $1,285.57 during late Friday trading. Demand for safe-haven assets appreciates throughout last week following higher risk aversion in the market against rising trade tension between US and China. However, any substantial gains on the commodity remains limited while traders continue to monitor the possibility for a rate cut from Federal Reserve by waiting for more economic releases from the US.
Crude Oil
Crude oil price was traded in a tight range last week while closing its market at $61.70 per barrel. Oil futures remained under pressure as trade conflict between two of the world’s largest economies escalate on last Friday. In general, trade war between US and China may jeopardize global economic growth and in return, a downfall in crude demand. As global supply remains at a high point while market demand diminishes, this will lead to a slump in oil prices for mid to long-term. H
However, losses on the commodity were limited as recent US sanction against Iran came into effect last week. US enacts additional sanction against the oil producing country by aiming to reduce its oil exports to 0 due to a fallout from the prior nuclear deal. Likewise, recent report from Baker Hughes shows that the number of active oil rig in the region has depreciate by 2 to 805 which may help to reduce US oil output for the time being.
Weekly Outlook: May 13 – 17
For the week ahead, investors will keep an eye on trade war negotiations in between US and China in order to receive further signal with regards to US dollar’s near-term direction. Likewise, traders would also scrutinize on major data that will be released by US, UK, EU and Canada.
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: May 13 – 17
| Monday, May 13 |
Data N/A
Events N/A
|
| Tuesday, May 14 |
Data EUR – German CPI (MoM) (Apr) GBP – Average Earnings Index +Bonus (Mar) GBP – Claimant Count Change (Apr) EUR – German ZEW Economic Sentiment (May) EUR – Industrial Production (MoM) (Mar)
Events CrudeOIL – OPEC Monthly Report
|
| Wednesday, May 15 |
Data CrudeOIL – API Weekly Crude Oil Stock CNY – Industrial Production (YoY) (Apr) EUR – German GDP (QoQ) (Q1) EUR – GDP (QoQ) (Q1) USD – Core Retail Sales (MoM) (Apr) USD – Retail Sales (MoM) (Apr) CAD – Core CPI (MoM) (Apr) USD – Industrial Production (YoY) USD – Business Inventories (MoM) (Mar)
Events CrudeOIL – IEA Monthly Report
|
| Thursday, May 16 |
Data AUD – Employment Change (Apr) USD – Building Permits (Apr) USD – Initial Jobless Claims USD – Philadelphia Fed Manufacturing Index (May)
Events CAD – BoC Gov Poloz Speaks
|
|
Friday, May 17
|
Data EUR – CPI (YoY) (Apr) USD – Michigan Consumer Sentiment (May)
Events N/A
|