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21 October 2019                    Weekly Analysis

GCMAsia Weekly Report: October 21 – October 25

Market Review (Forex): October 14 – 18

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 97.00 amid bleak data performance in the U.S. and rising trade war risks.

Last Thursday, China is still struggling whether to increase the purchases the amount about $40 billion to $50 billion U.S. agricultural products. In fact, China also emphasized on Thursday that the U.S. must remove all the tariffs in order for two countries to reach a final agreement on trade, according to Ministry of Commerce spokes Gao Feng.

In addition, the index received further pressure after the bleak data in U.S was released last week. According to Census Bureau, U.S Core retail fell below the forecast of 0.3, came in at -0.3 prior to 0.2. In fact, Philadelphia Fed Manufacturing Index (Oct) came in at 5.6, weaker than economist forecast for a reading of 8.0. These bleak data would increase the intention for the Fed to implement easing monetary policy in order to boost back the economy performance, spurring the sell-off in US dollar. However, U.S. Building Permits and Initial Jobless Claims were both fared better than expected which limits the its losses.

Likewise, market remain fixated upon 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.

 

USD/JPY

USD/JPY extend its losses last week while ending last Friday session at the price of 108.47. Following the uncertainty in global market such as U.S trade war, Brexit issues and Middle East tensions, the safe-haven currency have received significant demand from the market as investors risk appetite have been lowered, therefore shifting their assets into safe-haven markets.

 

EUR/USD

The pair of EUR/USD have rose last week while closing last Friday trading session with the price of 1.1155. The euro have gained its strength mostly due to the weakness in rival currencies, especially U.S dollar. Besides that, according to Eurostat, the Eurozone Industrial Production for the month of September notched up from -0.4% to 0.4%, exceeding the economic forecast, sparkling the demand on EUR/USD. In addition, EUR/USD receive further bullish support after EU leaders approve a revised version of Brexit deal. However, according to latest news, UK parliament has rejected the soft-Brexit agreement, spurring the uncertainties in UK policy and limit its gained. In addition, EUR/USD came under pressure as the German ZEW Economic Sentiment and Europe CPI data which released last week was both came in below the economist forecast. Meanwhile, investors would continue to scrutinize the latest Brexit news and future data to gauge the movement of the pair.

 

GBP/USD

The exchange rate for GBP/USD skyrocketed to an intraday high last week while ending the market at the price of 1.2906. Last week, pound sterling received huge buyback after the EU dan UK reached an agreement on last Friday, causing the risk of non-deal Brexit in UK to decrease significantly. However, on last Saturday, the soft-Brexit agreement which prepared by Boris Johnson was failed to convince lawmakers during their Parliament meeting. Under separate legislation passed last month, Johnson is now compelled to ask the EU for a Brexit delay until the end of January 2020. Such negative sentiment has further increased the tension of the geopolitics risk in UK, limited the gain on Pound Sterling. Yet, Leader of the House of Commons Jacob Rees-Mogg said the government planned to put Johnson’s Brexit deal to a debate and vote on Monday. Still, market would continue to eye for further discussion and developments upon the Brexit latest updates.

Market Review (Commodities): October 14 – 18

GOLD

Gold price was traded within a tight range week while ending the market at around $1490.05 a troy ounce. The safe-haven metal has experienced a significant sell-off after positive Brexit news was announced on last Tuesday, following higher risk appetite which drives higher demand in the equity markets while pressuring gold price to move lower. However, gold price was able to limit it losses amid rising tension between U.S and China after the latter requested to hold more negotiation before signing the first phase of trade agreement. In addition, risk appetite diminished after the UK parliament reject Boris Johnson’s Brexit deal on last Saturday, which stoked a shift in sentiment toward safe-haven assets. In fact, gold price received a bullish support amid to weaker dollar index after bleak data in U.S was released last week.

 

Crude Oil

Oil prices have regained its strength last week and rose while closing last Friday session at the price of 53.72. Last week, crude oil price managed to hold onto its gains as renewed geopolitical tensions in the Middle East. According to recent reports, hostility continues in between Syria and Turkey on Friday in defiance of a supposed five-day ceasefire negotiated between the US and Turkey amid allegations of war crimes. Likewise, oil price is expected to climb amid to the escalation of tension in the Middle East could lead to a further decrease in output. However, crude oil price limited its gained after the crude oil data was released last week. Crude Oil API notched up from 4.100M to 10.500M while Crude Oil Inventories came in at 9.281M, exceeding the economist forecast for a reading of 2.927M.

 

Weekly Outlook: October 21 – 26

For the week ahead, investors will continue to keep a close on upcoming data such as ECB interest Rate Decision 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 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: October 21 – 26

Monday, October 21  

Data

German PPI (MoM) (Sep)

 

Events

N/A

 

Tuesday, October 22  

Data

CAD – Core retail Sales (MoM) (Aug)

USD – Existing Home Sales (Sep)

 

Events

N/A

 

Wednesday, October 23  

Data

CrudeOIL – API Weekly Crude Oil Stock

CrudeOIL – Crude Oil Inventories

 

Events

N/A

 

 

 

Thursday, October 24

 

Data

EUR – German Manufacturing PMI (Oct)

EUR – Deposit Facility Rate (OCT)

EUR – ECB Marginal Lending Facility

EUR – ECB interest Rate Decisions

USD – Core Durable Goods Orders (MoM) (Sep)

USD – New Home Sales (Sep)

 

Events

EUR – ECB Monetary Policy Statement

EUR – ECB Press Conference

 

 

Friday, October 25

 

 

Data

EUR – German Ifo Business Climate Index (Oct)

CrudeOIL – US Baker Hughes Oil Rig Count

 

Events

N/A