25 November 2019 Weekly Analysis
GCMAsia Weekly Report: November 25 – 29
Market Review (Forex): November 18 – 22
US Dollar
The dollar index which is traded against a basket of six major currency pairs have soared last week while ending last Friday session with the price of 98.18. The greenback have receive a huge demand after comments from U.S. President Donald Trump on China increased hope that the two sides would sign a trade deal soon.
According to the recent reports from Fox News, U.S President Donald Trump have stated that a deal with China was “potentially very close” and also indicated that he might not sign a bill passed this week by Congress that supports Hong Kong in an attempt to appease Beijing. He mentions: “We have to stand with Hong Kong, but I’m also standing with President Xi Jinping, he’s a friend of mine. He’s an incredible guy, but we have to stand…I’d like to see them work it out.” The latest remarks have since increasing further appeal for the greenback, causing investors to flood into the dollar market.
Besides that, the positive sentiment also boosted further by its economic data. According to the Markit Economics, U.S. manufacturing output have shown an increase in its number where the Manufacturing PMI have improved to 52.2, higher than market estimate with the expectation of 51.5. At the same time, service activity also improved with the Service PMI reading came in at 51.6, stronger than economist expectation with the reading of 51.0. Both index were at its highest level since April.
Still, market remains fixated on trade deal as the uncertainty between two economic powerhouse U.S and China remain unresolved. Market will continue to focus on the ongoing development in trade talk to attain further signal for the greenback.
USD/JPY
The pair of USD/JPY remain steady last week while closing last week session at the price of 108.62. The appeal for Japanese Yen as a safe-haven market has fallen due to remarks from US President Donald Trump which hinted a “potentially very close” deal with the Beijing cause safe-haven assets such as the JPY to lose investor’s interest.
EUR/USD
EUR/USD have plummeted last week while closing last Friday’s trading session with the price of 1.1018. The Euro extend its selling pressure following the weakness in Eurozone economy and Brexit issue remained as a major influence to the market. In the euro area, the manufacturing sector is under pressure from weak global investment activity due to the trade war, Brexit and weak global growth. At the same time, the upbeat sentiment in the U.S also which increased further pressure for the Euro.
GBP/USD
GBP/USD have experience a pullback from its high and fell, closing last week market at the price of 1.2829. The pound sterling which traded against the greenback continue to remain in downside risk as the ongoing uncertainty in Brexit coupled with economic weakness have caused investors to sell-off. Despite recent optimism from polls over the Tory Party being on track to win a parliamentary majority in the upcoming general election on 12th December, investors remain vary that the risk of Labour Party could make advances over the coming weeks. Besides that, weak fundamentals from economic data also increase further concern as PMI Composite Index fell to 48.5, the worst print since just after the Brexit referendum in 2016.
Market Review (Commodities): November 18 – 22
GOLD
Gold price remain vulnerable and fell last week, ending the market at around $1461.92 a troy ounce. Following the positive remarks from U.S President Donald Trump on trade deal, the appeal of safe-haven gold have fell as the US dollar (USD) managed to lure risk-averse traders despite with the ongoing challenges to the US-China trade deal and doubts over the global economy. Elsewhere, Donald Trump also recently signed a bill to avoid another Government shutdown till December 20, which in turn helps the risk-tone.
Crude Oil
The price of crude oil have ended their two-day rally on Friday and fell, but still managed to finish the week higher while ending their price at 57.90 following the mixed substance of OPEC+ production cuts will remain ongoing until June and the ongoing challenge in U.S-Sino trade deal.
Last week, crude oil price continue to receive a significant demand after Reuters report that OPEC and Russia were likely to extend existing production cuts by another three months to mid-2020 when they meet over Dec. 5-6. President Russian President Vladimir Putin himself also provide confirmation to the speculation by stating that OPEC will have his country’s support. However, the positive sentiment has ended after China’s President Xi Jinping said that Beijing wanted a deal with the United States, but will fight back if necessary against Trump’s threat on Chinese imports to face more duties from Dec 15 if a phase one agreement isn’t achieved.
As traders continue to balance the market fundamentals, investors will turn their attention towards further planning from OPEC such as a stricter deal compliance on cuts from the likes of Iraq and Nigeria and also the IPO of Saudi Arabia’s biggest oil company Aramco.
Weekly Outlook: November 25 – 29
For the week ahead, investors will continue to focus on upcoming data such as U.S Core Durable Goods Orders and GDP that will be released this week to attain more market signals. Besides that, investors will also continue to focus on the ongoing development of fundamentals such as Brexit and trade deal.
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 25 – 29
| Monday, November 25 |
Data EUR – German IFO Business Climate
Events N/A
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| Tuesday, November 26 |
Data USD – CB Consumer Confidence (Nov) USD – New Home Sales (Oct)
Events N/A
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| Wednesday, November 27 |
Data USD – Core Durable Goods Orders (MoM) (Oct) USD – GDP (QoQ) (Q3) USD – Pending Home Sales (MoM) (Oct) CrudeOIL – Crude Oil Inventories
Events GBP – BoE MPC Treasury Committee Hearings
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Thursday, November 28 |
Data CHF – GDP (QoQ) (Q3)
Events N/A
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Friday, November 29
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Data EUR – German Unemployment Change (Nov) EUR – CPI (YoY) (Nov) CAD – GDP (MoM) (Sep)
Events N/A
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