26 August 2019 Weekly Analysis
GCMAsia Weekly Report: August 26 – 30
Market Review (Forex): August 19 – 23
US Dollar
Dollar index loss its ground last week while closing last Friday market session at 97.50 amid escalation of trade dispute between US and China.
Earlier last week, dollar index was traded flatten before plummeting to a one week low following heightened trade tensions between US and China. Dollar index was hovering around 98.00 amid upbeat data and optimistic statement from Fed member acting as a support for dollar. According to National Association of Realtors, US Existing Home Sales data came in at 5.42M, slightly stronger than the market analyst expectation of 5.39M while indicating the housing sector is still stable. Besides, greenback had also received another wave of bullish momentum after Fed Member Harker commented that US economy remains resilient and no further rate cut is needed.
Despite that, investors are still remain cautious toward the direction of FX market as recent inverted yield curve signaled that economy recession may just around the corner. Moreover, dollar index experienced huge sell of momentum by the market participants following retaliatory moves taken by two largest economy bodies, US and China. Later last week, China announced to impose 10% of tariff on US imported goods which including soybeans, lobsters, peanut butters and so on, starting on 1 September and 15 December. Other than that, Beijing also announced to impose another round of tariff which up to 25% on US autos and 5% on Auto parts. These retaliatory move from China caused Donald Trump to retaliate against China as he announced that $250 billion of goods from China which taxed at 25% will now be taxed at 30% and the remaining $300 billion of goods will be raised to 15% from previously 10%. Escalation of trade tensions exerted huge bearish momentum in dollar index whereas scented the safe haven asset at this moment.
USD/JPY
The pair of USD/JPY fell sharply last week while closing last week session at the price of 105.40. Safe-haven demand continues to increase as trade dispute between US and China become worst. Tariff imposed by US and China not only will dragged down their economy development, but also exacerbated the global recession risks. Besides, progress in trade talk between US and Japan also boosted up the demand of Japanese yen while expecting a bilateral trade deal can be made in September.
EUR/USD
EUR/USD have extended its gains throughout last week amid positive economic data been released from local region. Early last week, Germany PPI and Manufacturing PMI came in at a reading of 0.1% and 43.6 respectively, beating the economist forecast of 0.0% and 43.0. However, Euro unable to extend its gains further as its market sentiment still remain dovish amid European Central Bank (ECB) is still remain open to further ease their monetary policy by reducing the interest rate and more quantitative can be expected in the future. 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 1.2290. Sterling received higher demand following optimistic news on Brexit progress where German Chancellor Angela Merkel commented that Irish backstop issue may be resolved in near term. Angela Markel revealed that Irish backstop solution can be found before the deadline of 31th October. 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 19 – 23
GOLD
Gold price remains scented toward market participants while closing the market at around $1528.35 a troy ounce as market risk avoidance has been boosted up following trade war deepen. Last Friday, gold price experienced huge buy in momentum as tariff imposition between US and China has dragged up the market concern over global recession risk as Trump and Xi Jin-ping are pushing the global economy into downturn.
Crude Oil
Crude oil price was traded lower throughout last week while closing the market at around $53.85 per barrel amid mixed crude oil inventory data and escalation of trade tensions.
Early last week, sentiment upon this commodity has been dragged up as crude oil inventory data from Energy Information Administration (EIA) showed a sharp drop in crude oil pile at -2.7M, higher than economist forecast of -1.889M. However, positive data did not managed to push up this black commodity price further higher as oil market hit badly by the trade war escalation prior to the close on Friday. Black commodity plunged significantly on Friday after China unveiled new tariffs on $75 billion worth of American goods, while reignited the market concern about global economic slowdown. Market reacted to this new tariff by selling off their holdings on crude oil as slowdown in global economic will eventually lowered down the demand upon this commodity. As of now, market will continue to eye on crude oil inventory data and the progress of trade war between US and China in order to gauge the direction of crude oil.
Weekly Outlook: August 26 – 30
For the week ahead, investors will pay attention upon economic data such as GDP and Core PCE Price Index 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 26 – 30
| Monday, August 26 |
Data EUR – German Ifo Business Climate Index (Aug) USD – Core Durable Goods Orders (MoM) (Jul)
Events N/A
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| Tuesday, August 27 |
Data EUR – German GDP (QoQ) (Q2) USD – CB Consumer Confidence (Aug)
Events N/A
|
| Wednesday, August 28 |
Data CrudeOIL – API Weekly Crude Oil Stock CrudeOIL – Crude Oil Inventories
Events N/A
|
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Thursday, August 29 |
Data EUR – German Unemployment Change (Aug) EUR – German CPI (MoM) (Aug) USD – GDP (QoQ) (Q2) USD – Pending Home Sales (MoM) (Jul)
Events N/A
|
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Friday, August 30
|
Data EUR – CPI (YoY) (Aug) EUR – Unemployment Rate (Jul) USD – Core PCE Price Index (MoM) (Jul) CrudeOIL – U.S. Baker Hughes Oil Rig Count
Events N/A
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