17 June 2019 Weekly Analysis
GCMAsia Weekly Report: June 17 – 21
Market Review (Forex): June 10 – June 14
US Dollar
Dollar index extended gains against its basket of six major pairs last week, achieving the highest since June 3 while closing Friday’s market session at the price of 97.48. The greenback was supported by market expectations of dovish stance from global central banks which have boosted the sentiment of the dollar.
Last week, dollar have soars to its highest level in almost two weeks following a positive retail sales data for the month of May. According to the U.S Census Bureau, retail sales in the U.S exclude automobiles have improved to 0.5%, higher than market forecast with the reading of 0.3%. The data have eased investors’ fear of economic slowdown in the U.S. Additionally, with the ongoing trade tensions between countries, U.S economy is also expected by the investors to be in a better position when compared to other countries.
In conclusion, the dollar was widely demanded by market as investors are starting to doubt whether the expectations of interest rate cut from the Federal Reserve is inconceivable based on the recent data release. As this week Fed will announced its policy decision, traders will focus their full attention on the latest rate announcement as worries over economic fall-out from U.S China trade war could prompt Fed to consider for a rate cut later this year.
USD/JPY
USD/JPY slowly recovered from its lows while closing the market higher on last Friday trading session at the price of 108.55. As the greenback have regain its confidence following prior positive developments and economic data in the U.S, investors’ risk appetite have been turned on and starting to sell off safe haven assets to adding their bids on the riskier assets.
EUR/USD
The pair of EUR/USD extended its losses throughout the week while hitting this year’s low, closing last week market at the price of 1.1210. Euro has been largely sold off by investors due to stronger dollar and also various disappointing data such as Italian industrial sales and CPI. The nation is currently pressured by Rome’s budgetary ambitions which it have proposed for a parallel currency. Investors feared that the proposal could lead to excessive deficit procedure that could tear the Eurozone apart, therefore sending more negativity towards the market sentiment as bearish sellers continue to sell-off the currency.
GBP/USD
GBP/USD have tumbled to two-weeks low while closing last week market session at the price of 1.2587. The pound sterling have extend its decline for the third consecutive session last week as investors remain worried over no-deal Brexit, especially after the result of first ballot for Tory leadership contest showed that the leading candidate Boris Johnson received an stunning 114 votes. Boris Johnson was known as a hardline Brexiteer and with the latest result, the expectation of a no-deal Brexit have increased At the same time, the pair was further pressured by its strong counterpart which is the dollar boosted by its data.
Market Review (Commodities): June 10 – 14
GOLD
Gold price have pared its gains on last week while closing the market with the price at $1341.32 a troy ounce. The safe haven gold have started to shift its momentum after economic data on Friday gave an encouraging data on the economy which dampening hopes for a looser monetary policy from the Federal Reserve. As gold have benefited from recent global uncertainty risk, the data have failed to boost further the asset and hampered the risk-off appeal of the dollar-denominated metal to investors.
Crude Oil
The price of crude oil have been traded within a range throughout the week while ending the market lower with the price of $52.43 per barrel despite tensions in the Iranian coast. Recently, crude oil price have received shockwave from the attacks on two oil tankers in the Gulf of Oman last week raised concerns about potential supply disruptions, but the gains were limited by increasing crude supplies and ongoing U.S China trade tensions. Inventories have surprisingly increased by 4.850M which is higher than previous reading of 3.545M. Besides that, the International Energy Agency cut its 2019 demand growth forecast Friday to 1.2 million barrels per day, noting that “the main focus is on oil demand as economic sentiment weakens”, and adding that a “worsening trade outlook” was a common theme around the regions it covered in its monthly outlook report.
In conclusion, investors skeptical on the outlook of the black commodity while remain focus on further developments and inventories level to determine future direction for the oil.
Weekly Outlook: June 17 – 21
For the week ahead, investors will keep an eye on the Federal Reserve’s policy meeting which will be the center of attention in the market. Besides that, other important economic data such as Existing Home Sales and Manufacturing Index 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 17 – 22
| Monday, June 17 |
Data USD – NY Empire State Manufacturing Index (Jun)
Events N/A
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| Tuesday, June 18 |
Data AUD – RBA Meeting Minutes EUR – German ZEW Economic Sentiment (Jun) EUR – EUR CPI (YoY)(May) USD – Building Permits (May)
Events EUR – ECB President Draghi Speaks GBP – BoE Gov Carney Speaks
|
| Wednesday, June 19 |
Data GBP – CPI (YoY) (May) CAD – Core CPI (MoM) (May)
CrudeOIL – Crude Oil Inventories
Events EUR – ECB President Draghi Speaks
|
| Thursday, June 20 |
Data USD – Fed Interest Rate Decision NZD – GDP (QoQ) (Q1) JPY – BoJ Interest Rate Decision GBP – Retail Sales (MoM) (May) GBP – BoE Interest Rate Decision (Jun) USD – Philadelphia Fed Manufacturing Index (Jun)
Events JPY – BoJ Monetary Policy Statement JPY – BoJ Press Conference GBP – BoE MPC Meeting Minutes
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Friday, June 21
|
Data EUR – German Manufacturing PMI (Jun) CAD – Core Retail Sales (MoM) (Apr) USD – Existing Home Sales (May)
Events N/A |