18 November 2019 Weekly Analysis
GCMAsia Weekly Report: November 18 – 22
Market Review (Forex): November 11 – 15
US Dollar
The dollar index which is measured against a basket of six major currency pairs plunged last week while closing last Friday market at the price of 97.80. Greenback received a significant selloff against its rivals on last week mostly due to escalation in trade tension and a string of bleak U.S. economic data.
According to U.S Bureau of Labor Statistics, U.S. Core Consume Price Index (CPI) for last month came in at 2.3%, worse than economist forecast at 2.4%. In addition, according to Federal Reserve, U.S Industrial Production for last month notched down to -0.8%, worse than the economist forecast of -0.4%. In fact, US initial jobless claims and Core retail sales were both fared worse than expectation, spurring a further selloff for the US dollar. However, U.S Producer Price Index (PPI) and US retail sales for last month both came in better than economist forecast, limited the losses experienced by the Dollar Index.
With regards to trade war, Greenback received a huge bearish momentum amid lack of progress for trade deal over the week have left a scant hope upon the resolution of trade war. Trade tension escalated following China and the United Stated were both struggling to reach a “phase one” deal, reported by Financial Times. In fact, US-China trade negotiations have “hit a snag” over farm purchase, with Beijing not wanting a deal that looks one-sided in favor of the United States, reported by Reuters. Such negative sentiment came after U.S President Donald Trump warned that he would raise tariffs “substantially” on Chinese goods if the trade deal between both countries were unachievable, which further magnifying uncertainties and spurring a selloff for the dollar index. However, U.S. Commerce Secretary Wilbur Ross said on last Friday that the progress was being made on the trade agreement’s detail, which lifted up the positive sentiment toward the trade deal and limited the further losses experienced by the Dollar index. As such, market participants remain fixated upon ongoing headlines of trade war as both countries only reached a partial truce and not resolved completely
USD/JPY
Pair of USD/JPY was traded lower last week while ending last Friday session at the price of 108.75. Likewise, trade pessimism between US and China has reduced the risk appetite, which insinuating the demand for safe-haven assets such as Japanese Yen. However, Japanese Yen received a huge bearish momentum following the bleak data was released. According to Cabinet Office, Japan Gross Domestic Product (GDP) for last month came in at 0.1%, worse than the economist forecast at 0.2%, which limited the gains experienced by the Japanese Yen.
EUR/USD
Pair of EUR/USD surged last week while closing last Friday’s trading session with the price of 1.1050. Euro received some bullish momentum following positive economic data from the Europe region was released. According to ZEW Financial Market Survey, Germany ZEW Economic sentiment notched up to -2.1, better than the economist forecast at -13.2. In addition, Germany Gross Domestic Product (GDP) for last month came in at 1.0%, exceed the market expectation at 0.9%, which further sparkled the higher demand for the Euro.
GBP/USD
Pair of GBP/USD was traded higher while ending the market at the price of 1.2902. Pound Sterling received bullish support was mostly due to positive prospect for the soft-Brexit, despite poor UK data. According to Reuters, Pound Sterling surged following the Brexit Party said that they will not contest previously Conservative held seats in the UK’s election. Such positive sentiment had increased the probability for the Britain’s Conservative Party to win the election in 12th December 2019, and further enhanced the positive expectation for the Brexit outlook and sparkled the demand for Pound Sterling. However, the pair received some selloff pressure following the bleak data from the UK region was released. U.K Consumer Price Index (CPI) came in at 1.5%, worse than the economist forecast of 1.6%. In addition, U.K Gross Domestic Product and U.K Manufacturing Production for last month were both fared worse than the expectation, limited the gains experienced by the Pound Sterling.
Market Review (Commodities): November 11 – 15
GOLD
Gold price surged last week while ending the market at around $1467.60 a troy ounce. The safe-haven metals have experienced a significant buy-back amid to bleak data from the US region and negative prospect for the trade deal. Poor data in the US region has provided some downward pressure on the greenback, which sparkled the demand for the safe-haven asset such as gold. On the other hand, ongoing uncertainties which surrounds the current trade negotiation had reduced the risk appetite and drove higher demand for the safe-haven asset such as gold. However, trade tensions faded following the positive statement provided by the U.S Commerce Secretary Wilbur Ross on last Friday. According to Financial Times, U.S Commerce Secretary Wilbur Ross claimed that some progress with regards of the trade deal had been achieved. Such positive sentiment had boosted the hopes upon the resolution of trade war, which limited the gains experienced by the safe-haven asset.
Crude Oil
Oil prices was traded within a tight range last week while closing last Friday session at the price of $57.86. In the earlier of last week, crude oil prices slumped following the crude oil data was released. According to Energy Information Administration, U.S. Crude OIL inventories came in at 2.219M, exceeding the economist forecast at 1.649M.
However, according to the news on last Friday, crude oil prices rebounded from its low level following the Saudi Aramco, one of the largest oil company in Dubai decided to run its IPO to the world. According to CNN news, Saudi Arabia believed that the Saudi Aramco company could be the most profitable company in the world, which would worth between $1.6 trillion and $1.7 trillion, making it also by far the most valuable company ahead of Apple. Indeed, Crown Prince Mohammed bin Salman reiterated that the purpose of IPO is to diversify the risk and reduce the uncertainties for the oil industry in future, which would be spurring the crude oil price to increase.
Weekly Outlook: November 18 – 22
For the week ahead, investors will continue to keep a close on upcoming data such as German GDP and US Existing Home 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 Brexit and trade war news.
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: November 18 – 22
| Monday, November 18 |
Data N/A
Events N/A
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| Tuesday, November 19 |
Data USD – Building Permits (Oct)
Events AUD – RBA Meeting Minutes
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| Wednesday, November 20 |
Data CAD – Core CPI (MoM) (Oct) CrudeOIL – Crude Oil inventories
Events N/A |
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Thursday, November 21 |
Data USD – Philadelphia Fed Manufacturing Index (Nov) USD – Existing Home Sales (Oct)
Events USD – FOMC Meeting Minutes GBP – BoE MPC Treasury Committee Hearings EUR – ECB Publishes Account of Monetary Policy Meeting CAD – BoC Gov Poloz Speaks
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Friday, November 22
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Data EUR – German GDP (QoQ) (Q) EUR – German Manufacturing PMI (Nov) GBP – Manufacturing PMI GBP – Services PMI CAD – Core Retail Sales (MoM (Sep) CrudeOIL – U.S. Baker Hughes Oil Rig Count
Events EUR – ECB President Lagarde Speaks
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