20 May 2019 Weekly Analysis
GCMAsia Weekly Report: May 20 – 24
Market Review (Forex): May 13 – 17
US Dollar
Greenback extended its bullish trend despite mixed signals that trickles out from the US market. As of last Friday, the dollar index rose 0.25% and closed last week’s market at 97.80. Earlier last week, although US Core Retail Sales came in lower than expected with only 0.1% versus forecast of 0.7% for the month of April, the bearish data failed to cap the gains upon greenback.
Investors places higher demand for the greenback as US economy remains resilient when compared to other nations such as UK and EU. Likewise, ongoing risks within the subsequent market such as Brexit, EU-Parliament election and trade war has led to an increase appeal of the US dollar as an alternative safe-haven asset.
Last Thursday, the greenback extended its gains further following a trio of bullish data from the region. Three data namely Building Permits, Initial Jobless Claims and Philadelphia Fed Manufacturing Index has confounded economist forecast with bullish readings. These data have dialed down market concerns over possible economic recession in the US while the market awaits further data from the region.
USD/JPY
Pair of USD/JPY rebounds from its prior low levels while closing last Friday’s market near 110.06. The appeal for Japanese yen has diminished as market participants shifted their focus towards the US market which has better economic performance and current standpoint when compared to other nations. Likewise, calls for further easing from the Bank of Japan has also capped bullish bets towards the Japanese yen as they project slower economic and inflationary growth ahead.
EUR/USD
Euro extended its losses on last Friday while closing last week’s market around 1.1158 against the US dollar. Market sentiment towards the euro remains bearish as European Central Bank continues to adopt dovish stance with regards to policy outlook for the time being. With the introduction of TLTRO-III in the next coming months, market participants will scrutinize whether its introduction will push back possible monetary policy for the eurozone until next year in order to further support EU-zone fragile economy.
GBP/USD
Pair of GBP/USD extended its bearish momentum while closing last week’s market at around 1.2713. Market participants extended their selloff upon sterling as they doubt over UK PM Theresa May Brexit plan which may hit another failure in the fourth parliamentary voting. Likewise, with the absence of successful cross-party talks and early signal that the Brexit plan is the same as before, it will be a tough road ahead for the pound sterling as the proposal will go through the parliament during the week starting from June 3rd.
Market Review (Commodities): May 13 – 17
GOLD
Gold price dipped sharply on last Friday while closing its trading at around $1,277.29 a troy ounce. The yellow metal received fresh selloff as US dollar extended its gains over the backdrop of bullish data from the region. Although gold is still remained supported due to rising US-China trade war, the appeal of the commodity continues to diminish as market participants prefer yielding and “stable” economic condition currency such as the greenback.
Crude Oil
Crude oil price was traded lower last Friday following a shift in market attention towards the ongoing US-China trade war. Price of the black commodity slumped slightly before closing last week’s market at around $62.71 per barrel. Earlier last week, oil price rebounds from its prior low levels after Iran was officially barred from selling its crude oil to other countries under a total sanction from the United States. Likewise, oil price gains further bullish traction after Saudi Arabia accuses Iran for attacking its major oil hubs through its Houthi rebel allies. The tension in between both countries and closure in multiple hubs has raise speculations over possible slowdown in oil production and supply.
However, crude oil futures received some bearish reversal as market participants shifted their focus back to the US and China trade war. In a tit-for-tat situation in between both countries, such condition may brew higher recessive risks among two of the world largest economy. A downfall in economic progression may lead to dominos effect and affect other countries which relies on exports towards China and US. As such, a recession that may occur in the future will dial down the prospect for higher crude demand and thus reducing oil futures appeal for the time being.
Weekly Outlook: May 20 – 24
For the week ahead, investors will keep an eye on trade war progression in between US and China in order to gain further market signals. Likewise, FOMC Meeting Minutes from the US will also be scrutinized in order to gauge Fed official’s monetary policy stance.
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 20 – 24
| Monday, May 20 |
Data EUR – German PPI (MoM) (Apr)
Events N/A
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| Tuesday, May 21 |
Data GBP – CBI Industrial Trends Orders USD – Existing Home Sales (MoM) (Apr)
Events USD – Fed Chair Powell Speaks AUD – RBA Meeting Minutes GBP – BoE Gov Carney Speaks GBP – Inflation Report Hearings
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| Wednesday, May 22 |
Data CrudeOIL – API Weekly Crude Oil Stock GBP – CPI (YoY) (Apr) CAD – Core Retail Sales (MoM) (Mar)
Events EUR – ECB President Draghi Speaks
|
| Thursday, May 23 |
Data EUR – german gdp (QoQ)(Q1) EUR – German Manufacturing PMI (May) EUR – German Ifo Business Climate Index USD – Initial Jobless Claims USD – New Home Sales (Apr)
Events USD – FOMC Meeting Minutes EUR – ECB Publishes Account of Monetary Policy Meeting
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Friday, May 24
|
Data GBP – Retail Sales (MoM) (Apr) USD – Core Durable Goods Orders (MoM) (Apr)
Events N/A
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