16 March 2020 Weekly Analysis
GCMAsia Weekly Report: March 16 – 20
Market Review (Forex): March 9 – 13
US Dollar
The dollar index which traded against a basket of six major currency pairs have regain its strength last week while ending last Friday session at the price of 98.46. Last week, Despite with the ongoing risk of the coronavirus, the greenback stand tall against its peers after data showed that the market confidence towards the economy remains strong and U.S Fed pledge to impose further economic stimulus to combat the impact of the coronavirus.
On last Friday, the data showed that the consumer’s confidence towards the U.S economy remain resilient as the reading came in at 95.9, surpassed market expectation of 95 according to University of Michigan. Besides that, U.S Fed have also stated that it will slashed its interest rates to zero and launches a new round of massive $700 billion quantitative easing program. Besides that, the Fed also slashed the rate of emergency lending at the discount window for banks by 125 bps to 0.25%, and lengthened the term of loans to 90 days. The aggressive move by the Fed have continue to support the buying momentum for the greenback.
As market continue to speculate the potential impact from the outbreak, investors will continue to focus on the ongoing development in coronavirus and upcoming economic data to attain further signal for the greenback.
USD/JPY
The pair of USD/JPY have soared last week while ending last Friday session with the price of 107.99. Due to rate cut and quantitative easing from global central banks and a combination of positive factors, the appeal of the Japanese Yen as the safe-haven currency have fell, causing investors to shift their portfolio from safe-haven markets to riskier markets such as the greenback.
EUR/USD
The pair of EUR/USD continue to struggle in overall last week while closing last week trading session at 1.1155. Following the strength of the greenback coupled with the worsening conditions in Italy, the demand for Euro have been pummeled and causing investors to forfeit the pair.
GBP/USD
GBP/USD continue to extend its downfall last week while ending the market session with the price of 1.2394. The pair remain on downside risk following policy statement from BoE and the immense strength of the greenback. Last week, BoE have released the minutes of its recent meeting and also decided that it will lower its interest rate by 50 basis point and also stated it could lower rates even more if needed. Sentiment remains dominated by the fear of the coronavirus, thus causing investors to react negatively towards the pound sterling.
Market Review (Commodities): March 9 – 13
GOLD
Gold price struggled and fell last week while ending the market at around $1529.35 a troy ounce. Due to the meltdown of global markets, investors are rushing to liquidate their assets into cash in order to cover their position margin. Fears of recession and the scheduled announcement of a national emergency for the United States by President Donald Trump to deal with coronavirus kept investors across markets wary on Friday. Therefore, the eagerness to turn anything worthy into cash made gold a main target for liquidation.
Crude Oil
Crude oil price remain pressured and continue to extend its downfall last week while ending its price at 30.10 following the tension between Saudi Arabia and Russia that have triggered an oil price war.
Last week, the commodity price was down more than 30% after Russia decided to forfeit a 3 year old pact by refusing to join Saudi Arabia’s proposed cut. Saudi Arabia slashed selling prices for its oil and later announced plans to massively increase oil output in response, thus further driving down the price of oil that was already plunging due to the disease outbreak and its toll on the global economy.
As the chance of oil demand rebound remain dim and the commodity are expected to extend its selling pressure and, investors will turn their attention towards ongoing development between Saudi Arabia and Russia as well as the condition of the coronavirus outbreak that could affect the demand for the commodity.
Weekly Outlook: March 16 – 20
For the week ahead, investors will continue to focus on upcoming data such as Core Retail Sales that will be released this week to attain more market signals. Besides that, investors will also continue to focus on the ongoing development of the coronavirus and the possibility and further measures from global central bank.
As for oil traders, they will be eyeing on US inventories level reported by API and EIA as well as developments between Russia and Saudi Arabia. Besides that, they will also monitor condition of coronavirus to gauge the strength of crude demand for world’s largest oil consumer.
Highlighted economy data and events for the week: March 16 – 20
| Monday, March 16 |
Data USD – Fed Interest Rate Decision CNY – Industrial Production (YoY) (Feb)
Events NZD – RBNZ Rate Statement USD – FOMC Statement USD – U.S. President Trump Speaks NZD – RBNZ Press Conference USD – FOMC Press Conference
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| Tuesday, March 17 |
Data GBP – Average Earnings Index +Bonus (Jan) GBP – Claimant Count Change (Feb) EUR – German ZEW Economic Sentiment (Mar) USD – Core Retail Sales (MoM) (Feb) USD – Retail Sales (MoM) (Feb) USD – JOLTs Job Openings (Jan)
Events AUD – RBA Meeting Minutes
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| Wednesday, March 18 |
Data EUR – CPI (YoY) (Feb) USD – Building Permits (Feb) CAD – Core CPI (MoM) (Feb) CrudeOIL – Crude Oil Inventories
Events N/A
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Thursday, March 19 |
Data NZD – GDP (QoQ) (Q4) AUD – Employment Change (Feb) CHF – SNB Interest Rate Decision USD – Philadelphia Fed Manufacturing Index (Mar)
Events CHF – SNB Monetary Policy Assessment
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Friday, March 20
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Data CNY – PBoC Loan Prime Rate CAD – Core Retail Sales (MoM) (Jan) USD – Existing Home Sales (Feb)
Events N/A
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