19 August 2019 Weekly Analysis
GCMAsia Weekly Report: August 19 – 23
Market Review (Forex): August 12 – 16
US Dollar
Dollar index was dominant last week while closing last Friday market session at 98.00 as mostly positive economic data help the dollar to regain market confidence.
Last week, dollar index was overall supported by uplifting economic data where recent inflation data came in better-than-expected despite increasing tension in between U.S and China that would jeopardize global economy. Both Core CPI and Retail Sales data have surpassed market expectations with the reading of 0.3% and 0.7% against the forecasted reading of 0.2% and 0.3% respectively. The upbeat report portrays that U.S economy remains stable while lifting market sentiment after being pummeled by trade war tensions and global recession risk.
Despite that, investors remain anxious as signs of upcoming recession continue to appreciate. U.S treasury yield curve inverted, alarming investors with possibility for a recession in the world´s largest economy. At the same time, consumer’s confidence also depreciated with its prior high level, with the index plummeting to 92.1, its lowest reading since January 2016. Investors are now looking for fresh insights from Federal Reserve on how it may respond to growing concerns of recession.
USD/JPY
Japanese Yen slipped against the greenback last week while closing last week session at the price of 106.34. Safe-haven demand continues to diminished as market have slowly pricing in global economic risk such as US-China trade war and political unrest in Hong Kong. At the same time, positive update from U.S consumer inflation and spending numbers also provides more reason for traders to shift their investments back to greenback at the moment.
EUR/USD
EUR/USD have extended its losses throughout last week following higher expectation for more rate cuts from European Central Bank (ECB). Euro continues to slip after Governing Council member Olli Rehn suggested on Thursday that the central bank could restart its quantitative easing program and was open to extending it into equity purchases. Besides that, economic docket from Eurozone last week also adding further pressure for the fall. Market participants will now keep an eye upon upcoming economic releases and reports from ECB in order to gain further insights on market direction.
GBP/USD
Pound sterling regained its footing last week while closing last week’s session at 1.2144. Sterling received higher demand following upbeat economic data which has eased concerns over hard-Brexit possibility in the United Kingdom. According to recent reports, UK Claimant Count Change came in at 28.0K, slightly better than forecasted reading of 32.0K. Likewise, Average Earnings Index + Bonus remains stable at 3.7%. For the time being, traders will continue to monitor upcoming economic releases from the UK as well as latest developments with regards to Brexit to attain more market signals.
Market Review (Commodities): August 12 – 16
GOLD
Gold price remains resilient albeit pared some of its gains last week while closing at $1,513.31 a troy ounce. The safe-haven asset slipped after US dollar rebounds from its lower level due to diminishing risk aversion sentiment among investors. However, losses on the commodity remains limited after US President Donald Trump criticized Federal Reserve as well as renewed fears of a prolonged trade war in between US and China.
Crude Oil
Crude oil price was traded flat throughout last week while closing the market at around $54.87 per barrel. Sentiment upon the commodity remains mixed due to oil demand concerns as well as uncertainty in global economic growth.
Last week, tensions in the Middle East continue to rises after Yemen’s Houthi group launched a drone attack on an oilfield eastern of Saudi Arabia. The attach disrupted the production of crude oil in the area which spark higher buyback in the commodity. However, its gains were temporary as global economic recession risk and its impact upon future demand continues to rise. In a monthly report, Organization of the Petroleum Exporting Countries (OPEC) cut its forecast for global oil demand growth in 2019 by 40,000 barrels per day (bpd) to 1.10 million bpd, indicating a slight surplus ahead in the year 2020. Likewise, recent report from US Baker Hughes shows that energy firm have increased the number of oil rigs last week, rising to 770 at the time of writing.
Weekly Outlook: August 19 – 23
For the week ahead, investors will pay attention upon Federal Reserve whereby Fed Chairman Jerome Powell is expected to deliver a closely watched speech this Friday. Besides that, market will also keep a close eye on economic data that will be released this week to attain more market signals.
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: August 19 – 23
| Monday, August 19 |
Data EUR – CPI (YoY) (Jul)
Events N/A
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| Tuesday, August 20 |
Data GBP – CBI Industrial Trends Orders (Aug)
Events AUD – RBA Meeting Minutes
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| Wednesday, August 21 |
Data CAD – Core CPI (MoM) (Jul) USD – Existing Home Sales (Jul) CrudeOIL – Crude Oil Inventories
Events N/A
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Thursday, August 22 |
Data USD – FOMC Meeting Minutes EUR – German Manufacturing PMI (Aug) EUR – Manufacturing PMI (Aug) USD – Initial Jobless Claims
Events EUR – ECB Publishes Account of Monetary Policy Meeting
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Friday, August 23
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Data NZD – Retail Sales (QoQ) (Q2) JPY – National Core CPI (YoY) (Jul) CAD – Core Retail Sales (MoM) (Jun)
Events USD – Jackson Hole Symposium USD – Fed Chair Powell Speaks
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