22 April 2019 Weekly Analysis
GCMAsia Weekly Report: April 22 – 26
Market Review (Forex): April 15 – 19
US Dollar
Dollar index skyrocketed against a basket of six major currency pairs through the entire week while ended last Thursday at 97.05 as risk appetite has heightened following upbeat data and positive development of trade talk between two largest economy countries, China and US.
In the earlier last week, the greenback extended its gains to a higher level following upbeat U.S. NY Empire State Manufacturing Index data been announced which supported the buying momentum of Dollar. According to Federal Reserve Bank of New York, the data came in at 10.10, exceeding the expectation of economic analyst of 6.70. Such upbeat data was indicating that the US business sectors are improving instead of worsening, while consolidated the market participant positive views on US economic growth outlook. On the other hand, appeal of US Dollar heightened further following progress in trade talk with China where both countries are in the step of scheduling more face-to-face talks in the hope that trade deal can be reached as soon as beginning of May. Moreover, bullish momentum continued to ‘lead’ dollar index to the end of last week amid optimistic economy growth outlook shown supported by upbeat data, including Core Retails Sales, Initial Jobless Claims and Retail Sales data. All of these data indicating that the economy outlook is remain resilient, hence Federal Reserve possibly shift their dovish stance back to hawkish in the coming Fed meeting.
In conclusion, Dollar index has changed its short-term trend from bearish back to bullish while market participants are waiting for upcoming economic data to have further confirmation on the next step of Federal Reserve in their monetary policy. More positive data be announced in this week would increase the possibility of shifting cash rate remain ‘neutral’ stance to a rate hike.
USD/JPY
USD/JPY was remained consolidate while ended slightly higher at 111.90 last Friday. Earlier last week, Japanese Yen was pressured by strong bearish momentum arising from US and Eurozone upbeat data. Thus, upbeat data has boosted up the risk appetite of market participants and urged them to shift their portfolio from safe haven asset to riskier asset such as Euro and US Dollar. However, the pair managed to recover part of its losses before the market closed on last Friday as bullish momentum had been triggered by the positive Core CPI data which came in at a rate of 0.8%, beating the economist expectation of 0.7%.
EUR/USD
Euro extend its gains throughout the week while closing last week trading session with the price of 1.1245. In the earlier of last week, Euro received bullish pressure following by positive ZEW Economic Sentiment data. Both Eurozone and German ZEW Economic Sentiment came in at 4.5 and 3.1 respectively, beating the expectation of economy analyst of 1.2 and 0.8. Upbeat data triggered bullish momentum and urged investors to increase their portfolio holding tilt to larger percentage of Euro currency. However, Euro has failed to hold it gains and experienced huge sell off following weaker than expected reading data that were announced last Thursday. A day that full of negative data has stunned the investor sentiment toward euro market while reaffirming ECB dovish stance.
GBP/USD
Pound Sterling tumbled against the dollar while ending last Friday trading session at the price of 1.2985. Through the entire week, the pair of GBP/USD was pressured by large volume of sell off from the market participants as most of the data on last week showed that UK economy growth is slowing down, bear continued to dominate the GBP market until the end of the week. According to the Office for National Statistics, data such as UK Claimant Count Change, CPI and PPI indicating that the inflationary pressure on economic is deteriorating. Hence, shininess of Pound Sterling toward market participants has shied away as appropriate of inflationary pressure is required for a country economy to remain resilient.
Market Review (Commodities): April 15 – 19
GOLD
Gold price was traded lower throughout last week while closing last Thursday’s market at $1275.25 a troy ounce. The safe-haven metal extended its losses in the earlier of the week as it pressured by upbeat data from US and EU. Besides, appeal of gold faded away after Venezuela announced to sell off large number of gold amounted to $400 Million amid crude oil sanctions from US. The idea of selling such a huge amount of gold was to enable Venezuela to sustain over the economic blockade. However, commodities market were closed down on last Friday due to Good Friday holiday. As of now, overall outlook for gold remains cloudy as recent progress on trade talk between China and US made riskier asset more appealing in the FX market.
Crude Oil
Crude oil price further its upward momentum for the fifth consecutive week while closing last week market higher at $63.97 per barrel amid ongoing production cut and US sanctions against Venezuela and Iran. In the earlier of last week, crude oil price was initially pressed down by the market following Russia and OPEC showed their reluctance to further cut the oil production after June as they wanted to fight for US market share as much as possible although there is a risk on crude oil price may fall all the way to $40 per barrel. However, US Baker Hughes, EIA and API inventories data managed to form a strong floor to support the crude oil price from falling below $63.00 per barrel as all of the data showed that the crude oil inventories level has declined sharply. The data of EIA and API showed a reading of -1.396 Million and -3.096 Million while Baker Hughes data came in at 825, indicating a huge decrease in crude oil inventories and slowing down in oil drilling activity on last week.
In conclusion, crude oil production cut from OPEC and US sanctions against Iran and Venezuela as well as recent political tension arising from Libya continues to provide support for oil prices despite Russia and OPEC may stop the plan of oil production cut beyond June. As of now, market participants continue to pay their attention on upcoming data to further gauge the direction of crude oil price.
Weekly Outlook: April 22 – 26
For the week ahead, investor’s will shift their attention towards Brexit progress and this week crucial data such as New Home Sales and GDP data to further gauge the market’s movement.
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: April 22 – 26
| Monday, April 22 |
Data USD – Manufacturing PMI (Apr) USD – Existing Home Sales (Mar)
Events N/A
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| Tuesday, April 23 |
Data CAD – Wholesale Sales (MoM) (Feb) USD – Services PMI (Apr) USD – New Home Sales (Mar)
Events N/A
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| Wednesday, April 24 |
Data CrudeOIL – API Weekly Crude Oil Stock AUD – CPI (QoQ) (Q1) EUR – German Ifo Business Climate Index GBP – CBI Industrial Trends Orders (Apr) CAD – BoC Interest Rate Decision
Events CAD – BoC Monetary Policy Report
|
| Thursday, April 25 |
Data USD – Core Durable Goods Orders (MoM) (Mar) USD – Initial Jobless Claims
Events JPY – BoJ Monetary Policy Statement JPY – BoJ Outlook Report (YoY)
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Friday, April 26
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Data NZD – Trade Balance (MoM) (Mar) JPY – Tokyo Core CPI (YoY) (Apr) JPY – Retail Sales (YoY) (Mar) AUD – PPI (QoQ) (Q1)
Events N/A |