1 March 2021 Weekly Analysis
GCMAsia Weekly Report: March 1 – 5
Market Review (Forex): February 22 – 26
US Dollar
The dollar index which traded against a basket of six major currency pairs surged over the backdrop of upbeat economic data from the United States region, which dialed up the market optimism toward the economic progression in the United States. Besides, the US Dollar extend its gains amid the recent gains in long-term Treasury yields and an improved U.S. Covid-19 response had spurred further positive prospect for the US Dollar. Dollar Index was closing its price on last Friday session at the price of 90.90.
Last week, the U.S. treasury yields rose to the highest level since February 2020, as investors start to factor in the full economic impact of aggressive stimulus plan totaling as much as $1.9 trillion. Such big fluctuation in US bond market would indicate that investors seem to be betting on a stronger economic recovery and high inflation rate in future while speculating that the Federal Reserve would have a less accommodative monetary easing program during the long-term. Higher bond yielding would attract capital inflow into United States, which spurring significant bullish momentum on the US Dollar. On the economic data front, most of the crucial economic data from the US region were fared much better than economist expectation. According to Census Bureau, the U.S. New Home Sales notched up significantly from the preliminary reading of 885K to 923K, better than the market forecast at 855K. Similarly, the U.S. Core Durable Goods Orders and U.S. Initial Jobless Claims came in at 1.4% and 838K, which fared better than market expectation at 0.7% and 838K respectively. According to Reuters, economists are expecting the U.S. economy to have created 165,000 new jobs in February. Such better-than-expected economic data had spurred positive prospect upon the economic momentum in the United States, which increasing market demand on the US Dollar.
Nonetheless, as for now investors would continue to scrutinize the latest coronavirus vaccine development and the latest US economic data in order to gauge the likelihood movement for the US Dollar.
USD/JPY
The pair of USD/JPY received bullish momentum on last week while ending last Friday session at the price of 106.40. The overall bullish momentum for the pair was mainly due to the appreciation of the US Dollar. Besides, the positive development with regards of the Covid-19 cases had also spurred risk-on sentiment in the FX market, which diminishing market demand on the safe-haven asset such as Japanese Yen. “For the third week in a row, the number of new cases of COVID-19 reported globally fell significantly last week,” WHO Director General Tedros Adhanom Ghebreyesus said at a press conference.
EUR/USD
The pair of EUR/USD slumped throughout the week while ending last week session at the price of 1.2075. The overall bearish momentum for the pair of EUR/USD was mainly due to appreciation of the US Dollar. Nonetheless, due to the lack of crucial economic data from the European region within a short-term period, investors would continue to wait for more catalyst before entering the market for Euro.
GBP/USD
The pair of GBP/USD was edged lower on last week while closing its market price at 1.3920. The overall bearish momentum for the pair of GBP/USD was mainly due to the appreciation of the US Dollar. Though, the losses experienced by the GBP/USD was limited over the backdrop of the positive economic data and also lower Covid-19 infection rate in the UK region had insinuated some market demand on the Pound Sterling. According to Office for National Statistics, the U.K. Average Earning Index + Bonus and U.K. Claimant Count Change came in at 4.7% and -20.0K, which both fared better than market expectation at 4.1% and 35.0K respectively.
Market Review (Commodities): February 22 – 26
GOLD
Gold price slumped tremendously throughout last week with the price of $1726.95 troy ouns amid the falling cases of the global Covid-19 infections had spurred risk-on sentiment in the FX market, which prompting investors shift their portfolio from the safe-haven commodity such as gold toward other riskier asset. A significant fall in global Covid-19 cases has bolstered hopes that countries will be able to combat the pandemic despite concern over the emergence of new variant. According to latest data, the global infections rates have dropped precipitously since the start of 2021, from more than 5 million cases a week to 2.5m in mid-February. Experts claimed that the vaccinations program have played crucial role in the falling number of cases in the US and UK region. Besides, the safe-haven commodity received further bearish momentum as the rising US Treasury yields had prompted investors to shift their portfolio from gold into US Treasury bond, which spurring further bearish momentum on the gold.
CrudeOIL
The price of crude oil surged throughout the week while closing last Friday session with the price of $61.20 per barrel amid the positive Covid-19 vaccine development had spurred market optimism toward the crude oil demand in future. Nonetheless, the gains experienced by the crude oil was limited over the backdrop of downbeat inventory data from EIA last week. According to Energy Information Administration (EIA), the U.S Crude Oil inventories had increased significantly from the preliminary reading of -7.258M to 1.285M, much higher than the market forecast at -5.190M. Nonetheless, investors would continue to scrutinize the latest updates with regards of the OPEC+ Producers’ meeting on Thursday in order to receive further trading signal.
Weekly Outlook: March 1 – 5
For the week ahead, investors would continue to focus on crucial economic data such as Nonfarm Payroll from the US region and Covid-19 development in order to determine further direction.
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: March 1 – 5
| Time | Market | Event | Actual | Forecast | Previous |
| Monday – 1st March 2021 | |||||
| 16:55 | EUR | German Manufacturing PMI (Feb) | – | 51.5 | 51.5 |
| 17:30 | GBP | Manufacturing PMI (Feb) | – | 54.9 | 54.9 |
| 23:00 | USD | ISM Manufacturing PMI (Feb) | – | 58.8 | 58.7 |
| Tuesday – 2nd March 2021 | |||||
| 11:30 | AUD | RBA Interest Rate Decision (Mar) | – | 0.10% | 0.10% |
| 11:30 | AUD | RBA Rate Statement | – | – | – |
| 16:55 | EUR | German Unemployment Change (Feb) | – | -15K | -41K |
| 18:00 | EUR | CPI (YoY) (Feb) | – | 1.0% | 0.9% |
| 21:30 | CAD | GDP (MoM) (Dec) | – | 0.3% | 0.7% |
| Wednesday – 3rd March 2021 | |||||
| 08:30 | AUD | GDP (QoQ) (Q4) | – | 2.5% | 3.3% |
| 17:30 | GBP | Services PMI (Feb) | – | 49.7 | 49.7 |
| 21:15 | USD | ADP Nonfarm Employment Change (Feb) | – | 168K | 174K |
| 23:00 | USD | ISM Non-Manufacturing PMI (Feb) | – | 58.7 | 58.7 |
| 23:30 | USD | Crude Oil Inventories | – | -5.190M | 1.285M |
| Thursday – 4th March 2021 | |||||
| 04:15 | NZD | RBNZ Gov Orr Speaks | – | – | – |
| 08:30 | AUD | Retail Sales (MoM) (Jan) | – | 0.6% | 0.6% |
| 17:30 | GBP | Construction PMI (Feb) | – | 51.5 | 49.2 |
| 21:30 | USD | Initial Jobless Claims | – | 775K | 730K |
| Friday – 5th March 2021 | |||||
| 21:30 | USD | Nonfarm Payrolls (Feb) | – | 165K | 49K |
| 21:30 | USD | Unemployment Rate (Feb) | – | 6.3% | 6.3% |
| 23:00 | CAD | Ivey PMI (Feb) | – | – | 48.4 |