29 April 2019 Weekly Analysis
GCMAsia Weekly Report: April 29 – May 3
Market Review (Forex): April 22 – 26
US Dollar
Dollar index extended its bullish momentum against a basket of six major currency pairs through the entire week while closing market last Friday at 97.75. The appeal of US dollar has heightened following upbeat data and positive development of trade talk between two largest economy countries, China and US.
Throughout the entire week, bullish momentum continues to dominate US dollar due to majority of the crucial data that been announced showed a positive and higher than expected reading results. Take some example, New Home Sales and Core Durable Goods Orders data have managed to drag up the shininess of US dollar during earlier of the week. Both data were came in at 692K and 0.4% respectively, beating the economist forecast of 647K and 0.2%. These upbeat data has successfully triggered a bulk of buying momentum in the US dollar market as data showed that US economy is still remain resilient. However, bullish trend of US dollar has diminished near the end of last week amid downbeat PCE prices data and ‘unrealistic’ increase in GDP data. In depth of this month GDP data, 3.2% of GDP data was mainly contributed by large amount of private investment, foreign direct investment and increase in net balance while an obvious of decrease in GDP consumption‘s component. In fact, dwindle in US resident consumption indicating the future inflation pace will slow down and eventually US economic might undergo contraction stage.
Besides, a recent report has showed that there is a progress in US and China trade talk where both party are now willing to make concessions in order to reach a deal. As of now, they are planning to have another face to face meeting on coming Thursday, in a hope that they are able to officially end the trade war at Japan G20 summit which will be held in June.
In conclusion, Dollar index has changed its short-term trend from bearish back to bullish while market participants are now waiting for upcoming economic data such as Fed interest rate decision and progress in Sino trade war as it will provide us some further confirmation on the direction of US dollar.
USD/JPY
USD/JPY was traded lower while its market last Friday at 111.55. In the earlier of last week, Japanese Yen was pressured by strong bearish momentum arising from US upbeat data. Positive data has dragged up the risk appetite of market participants and eventually urged them to move their portfolio investment from safe haven asset toward riskier asset. Fortunately, Japanese Yen managed to recover part of its losses following German Ifo Business Climate index data came in at a depress reading of 99.2 compared to economist forecast of 99.9. Besides, Japanese Yen edged up even higher despite Bank of Japan’s decision to maintain its interest rate at extremely low level until at least year 2020 while its key monetary stimulus settings will also left remained unchanged.
EUR/USD
Euro extend its losses throughout the week while closing last week trading session with the price of 1.1140. Last week, Euro received strong bearish pressure following by lower than expected reading of German Ifo Business Climate Index data. Such downbeat data from Germany signals that the Eurozone economy is still haunted by slowing down issues, and it has triggered bearish momentum in Euro market which urged the investors to decrease the portion of holding euro assets. Negative data from Germany has stunned the investor sentiment toward euro market while reaffirming ECB dovish stance. As of now, Investor are eye on the coming economic data in order to gauge the further direction of Euro currency.
GBP/USD
Pound Sterling tumbled against the dollar while ending last Friday trading session at the price of 1.2915. In the earlier of the week, the pair of GBP/USD was pressured by large volume of sell off from the market participants as most of the data from US showed that US economy has strengthen, urging the investor to throw off their Pound sterling and shift their portfolio to Dollar market. Besides, Pound has tumbled even further as Brexit deadlock continue to haunt the UK market following leader level of meeting between Conservative party and Labour party are stuck in impasses now. As of now, Investors are still remained their focus on the talk between Theresa May and the opposition Labour party on breaking the Brexit impasses this week.
Market Review (Commodities): April 22 – 26
GOLD
Gold price was traded higher throughout last week while closing last Friday market at $1285.75 a troy ounce. The safe-haven metal managed to rebound from bottom level in the earlier of the week as investors risk appetite has been declined due to Brexit deadlock and Eurozone economic downturn. However, this yellow commodities undergo bearish momentum pressure near the end of last week amid market sentiment are still remain negative due to recent huge sell off of $400Million worth of gold from Venezuela. As of now, Investor will focus on US data such as ADP Non-Farm Employment Change and NFP in order to gauge the direction of gold as this yellow metal is highly sensitive to US data.
Crude Oil
Crude oil price shifted into bearish momentum while closing last week market higher at $62.85 per barrel amid downbeat crude oil data and possibility that Russia and OPEC may stop its oil production cut plan in coming June. Throughout the entire week, crude oil price was still pressing down by the market as negative sentiment continue to haunt the oil 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. Moreover, EIA and API data on last week has also showed a huge build up in US crude oil inventories where both data were came in at 5.479M and 6.900M. Both data showed that the demand of crude oil has been declined sharply and eventually dragged down the investor confidence toward the crude oil. Other than that, US President Donald Trump has also accused OPEC that they should increase the oil production in order to remain the crude oil price in lower level as current oil price is too high for Donald Trump, causing the crude oil price tumbled further following such dovish note been given out by US President.
In conclusion, crude oil production cut from OPEC and US sanctions against Iran and Venezuela continues to provide support for oil prices to avoid it drop further. On the other hand, Russia and OPEC may stop the plan of oil production cut beyond June also created bearish momentum in crude oil market. 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 29 – May 3
For the week ahead, investor’s will shift their attention towards Brexit progress and this week crucial data such as ADP Nonfarm Payroll and NFP 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 29 – May 3
| Monday, April 29 |
Data USD – Core PCE Price Index (YoY) (Mar) USD – Core PCE Price Index (MoM) (Feb) USD – Core PCE Price Index (YoY) (Feb) USD – Core PCE Price Index (MoM) (Mar)
Events GBP – BoE Gov Carney Speaks
|
| Tuesday, April 30 |
Data CNY – Manufacturing PMI (Apr) CNY – Caixin Manufacturing PMI (Apr) EUR – German Unemployment Change (Apr) EUR – Unemployment Rate (Mar) USD – CB Consumer Confidence (Apr) USD –Pending Home Sales (MoM) (Mar)
Events CAD – BoC Gov Poloz Speaks
|
| Wednesday, May 1 |
Data CrudeOIL – API Weekly Crude Oil Stock NZD – Employment Change (QoQ) (Q1) GBP – Manufacturing PMI (Apr) USD – ADP Nonfarm Employment Change (Apr) USD – ISM Manufacturing PMI (Apr)
Events N/A
|
| Thursday, May 2 |
Data USD – Initial Jobless Claims
Events USD – FOMC Statement USD – FOMC Press Conference GBP -BoE Inflation Report GBP -BoE Gov Carney Speaks
|
|
Friday, May 3
|
Data GBP – Services PMI (Apr) EUR– CPI (YoY) (Apr)
Events N/A |