14 October 2019 Weekly Analysis
GCMAsia Weekly Report: October 14 – October 18
Market Review (Forex): October 7 – 11
US Dollar
The U.S dollar which is against a basket of six major currency pairs have fell last week while closing last Friday market at the price of 97.99 as U.S and China reached a deal.
Last week, U.S President Donald Trump have reached a partial trade deal with the U.S which he stated it is “tremendous” or “tremendously” positive. China will purchase $40 billion to $50 billion more in agricultural products for over two years and promised to protect intellectual property and also welcome more foreign services in order to avoid tariff hike from 25% to 30% on Chinese imports worth $250 billion this week as planned.
Despite that, the positive development unable to boost the outlook for recent global trade and growth as it doesn’t reduce the expectation of rate cut on Oct 30. Based on data wise, U.S consumer price index have shown weaker growth on its numbers, which the official figures came it at just 0.1% compared to market expectation of 0.2% which further increase the possibility of rate cut. The possibility of rate cut have reach to a level of 67.3%, according to Fed Rate Monitor Tool.
Likewise, market remain concentrate on the ongoing headlines of trade war as both countries only reached a partial truce and not resolved completely. Besides that, investors will continue to focus on upcoming data to gauge further expectation of rate cut before the end of month and also sentiment.
USD/JPY
USD/JPY extend its gains last week while ending last Friday session at the price of 108.43. Following the positive development in trade talk between U.S and China, the safe-haven yen have received significant pressure from the market as investors risk appetite have been tuned on, therefore shifting their assets into riskier markets.
EUR/USD
The pair of EUR/USD have rose last week while closing last Friday trading session with the price of 1.1034. The euro have gained its strength mostly on its weakness in rival currencies, especially the U.S dollar. Besides that, the pair also gained support from fresh speculation of ECB may be hesitant to avoid taking a more dovish stance on Eurozone monetary policy due to split views among its officials.
GBP/USD
The exchange rate for GBP/USD have skyrocketed to an intraday high last week while ending the market at the price of 1.2647. Last week, the pound sterling have received huge demand after U.K Prime Minster Boris Johnson have stated that “There is a way forward” for Brexit. According to recent developments, EU negotiator Michael Barnier has accepted that the EU cannot erect a custom border as a solution to the backstop agreement. Johnson also reply that “there is work to be done”, hinting positive vibes. Still, market continue to eye for further discussion and developments while the Brexit deadline is approaching.
Market Review (Commodities): October 7 – 11
GOLD
Gold price suffered huge losses last week while ending the market at around $1488.57 a troy ounce. The safe-haven metal have experience a significant sell-off last week following upbeat risk appetite was driving the equity markets higher and pressuring gold lower. One of the biggest market movers on Friday was the optimism portrayed by U.S. President Trump ahead of his meeting with Chinese Vice Premier Liu He at the White House on Friday afternoon. Trump tweeted: “Good things are happening at China Trade Talk Meeting. Warmer feelings than in recent past, more like the Old Days. I will be meeting with the Vice Premier today. All would like to see something significant happen!” The tweet which since boosted the risk appetite of market and shifting their portfolio to riskier markets.
Crude Oil
Oil prices have regain its strength last week and rose while closing last Friday session at the price of 54.86. Last week, oil price managed to hold onto its gains as renewed geopolitical tensions in the Middle East coupled with positive developments from U.S and China boosted the market sentiment.
According to recent reports, an Iranian tanker have been attacked off Saudi Arabia’s coast in the Red Sea on Friday. The attack once again ratcheting up the tension between Iran and Saudi Arabia despite recently both countries have reached a partial cease-fire agreement. Investigations are under way to determine if the tanker was hit by missiles, which could potential nulled the agreement between Tehran and Riyadh if confirmed.
Likewise, oil price is expected to continue its climb as the escalation of tension in the Middle East could lead to a further decrease in output. Besides that, the “phase one “trade deal reached by U.S and China help boosted the appeal for the commodity.
Weekly Outlook: October 14 – 18
For the week ahead, investors will continue to keep a close on upcoming data such as Retail Sales that will be released this week to attain more market signals. Besides that, investors will also continue to focus on the ongoing development of trade talk between U.S and China.
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: October 14 – 18
| Monday, October 14 |
Data CNY – Trade Balance (USD) (Sep)
Events N/A
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| Tuesday, October 15 |
Data GBP – Average Earnings Index +Bonus (Aug) GBP – Claimant Count Change (Sep) EUR – German ZEW Economic Sentiment (Oct)
Events AUD – RBA Meeting Minutes
|
| Wednesday, October 16 |
Data NZD – CPI (QoQ) (Q3) GBP – CPI (YoY) (Sep) EUR – CPI (YoY) (Sep) USD – Core Retail Sales (MoM) (Sep) CAD – Core CPI (MoM) (Sep) CrudeOIL – Crude Oil Inventories
Events N/A
|
|
Thursday, October 17 |
Data AUD – Employment Change (Sep) GBP – Retail Sales (MoM) (Sep) USD – Building Permits (Sep) USD – Philadelphia Fed Manufacturing Index (Oct)
Events N/A
|
|
Friday, October 18
|
Data CNY – GDP (YoY) (Q3) CNY – Industrial Production (YoY) (Sep)
Events N/A
|
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