8 March 2021 Weekly Analysis
GCMAsia Weekly Report: March 8 – 12
Market Review (Forex): March 1 – 5
US Dollar
The dollar index which traded against a basket of six major currency pairs managed to extend its rally throughout the entire last week, ending the trading session at 3 months high level amid significant surge in US treasury yield as well as the released of upbeat NFP data.
Earlier last week, dollar index received huge sell-off pressure after US House of Congress successfully passed the Covid-19 relief package which amounted to $1.9 trillion with narrow majority despite all the Republican opposed the plan. A positive progress in US stimulus plan urged the market participants to run away from dollar market as a pump of huge amount of dollar into the market would depreciate the value of the currency. However, a significant rise in the US 10 years treasury yield formed a strong support for dollar index as it implies a bet that global central bankers such as Federal Reserve will tighten their monetary policy earlier than expectation as global economy has been entered into a strong recovery stage, with the effort of ongoing vaccination program. In the data front, US NonFarm Payroll was reported at a reading of 379K, stronger than the economist forecast at 182K, indicating that the US labour market is undergoing strong recovery since the resurgence of virus two months ago.
As of now, market participants are waiting for more catalyst such as the progress of US stimulus plan to determine to further direction of dollar index, while keeping their eyes over the development of pandemic around the world.
USD/JPY
The pair of USD/JPY was traded higher throughout the week while closing at the price of 108.40. The main contribution of bullish momentum against this pair of currency was sourced from the effectiveness of the rollout of vaccination program. Recently, country such as US, UK and European Union are in the full force to launch massive vaccination program in order to combat the continuing spread of virus. The appeal of Japanese Yen as safe-haven asset dropped significantly following the global virus confirmed cases plunged.
EUR/USD
EUR/USD managed to extend its losses throughout last week while closing with the price of 1.1910. Last week, this currency pair experienced huge thrown-off pressure amid rising of US treasury yield, which brought up the value of dollar back to the recent high level. Last Friday, the US Treasury Yield even rose to the highest level in year 2021 at 1.62%, further exerting negative pressure on the currency pair value. As of now, investors will continue eyes on the progress of vaccination program in European Union in order to scrutinize the direction of this currency pair.
GBP/USD
The pair of GBP/USD have traded lower in overall while ending the market at the price of 1.3855. Earlier last week, pound sterling received bullish momentum as the UK lockdown measure was about to begin, urging the investors expect that the UK economy will start to pick up after an unprecedented recession in last year. However, the gain was limited as US treasury yield shoots above 1.60%, exerting strong bearish pressure on this currency pair. As of now, investors will continue eyeing on the road map of lockdown easing plan in order to gauge the direction of pound.
Market Review (Commodities): March 1 – 5
GOLD
Gold price was traded lower throughout the week while ending the week with a loss at the price of 1712.45 as market participants are expecting the $1.9 trillion stimulus plan is around the corner. The Senate on Saturday passed its version of the Democrats’ massive coronavirus relief package, after the House passed its package last week. However, it is noteworthy to mention that the lawmakers have made several changes throughout the legislation, the Democratic-led House now plans to vote on the Senate legislation Tuesday so that President Joe Biden can sign it into law as soon as possible. With the backdrop of positive progress in US stimulus plan legislation, the gold price extended its losses as investors are forecasting that the massive stimulus plan will able to support the nation’s economy from the fallout of pandemic before the previous package expired.
CrudeOIL
The price of crude oil managed to extend its gains while closing the market at a gain with the price of 66.10 amid unexpected oil cut decision in OPEC+ meeting and heightening of geopolitical tensions in Saudi Arabia.
At the earlier half of the week, the commodity has experience huge buying pressure as despite API data and EIA data showed a significant piled-up in the US crude oil stock level as investors were putting all their attention over the meeting of OPEC+. As a result, OPEC+ decided to maintain its cuts at least through April, against the market expectations. Besides, Saudi Arabia also said that it would extend its one million barrels per day voluntary production cut into April. Moreover, Yemen’s Houthi forces fired drones and missiles at the heart of Saudi Arabia’s oil industry on Sunday, affecting the Saudi Aramco facility at Ras Tanura vital to petroleum exports. The attack from Yemen’s Houthi put uncertainty over the future oil export from Saudi Arabia , boosting the oil price higher.
As of now, market participants are waiting for more catalyst to determine the direction of crude oil price such as further crude oil inventories data as well as the spread of virus.
Weekly Outlook: March 8 – 12
For the week ahead, investors would continue to focus on the development of new coronavirus as well as economic data to determine the currencies further direction.
As for oil traders, they will be also 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 8 – 12
| Time | Market | Event | Actual | Forecast | Previous |
| Monday – 8th March 2021 | |||||
| N/A | |||||
| Tuesday –9th March 2021 | |||||
| 07:50 | JPY | GDP (QoQ) (Q4) | – | 3.0% | 3.0% |
| 20:00 | USD | EIA Short-Term Energy Outlook | – | – | – |
| Wednesday –10th March 2021 | |||||
| 21:30 | USD | Core CPI (MoM) (Feb) | – | 0.2% | 0.1% |
| 23:00 | CAD | BoC Interest Rate Decision | – | 0.25% | 0.25% |
| 23:30 | USD | Crude Oil Inventories | – | – | 21.563M |
| Thursday –11th March 2021 | |||||
| 20:45 | EUR | ECB Interest Rate Decision (Mar) | – | 0.00% | 0.00% |
| 21:30 | USD | Initial Jobless Claims | – | 725K | 745K |
| 21:30 | EUR | ECB Press Conference | – | – | – |
| 23:00 | USD | JOLTs Job Openings (Jan) | – | 6.500M | 6.646M |
| Friday –12th March 2021 | |||||
| 15:00 | GBP | GDP (QoQ) | – | – | 1.0% |
| 15:00 | GBP | Manufacturing Production (MoM) (Jan) | – | -0.7% | 0.3% |
| 21:30 | USD | PPI (MoM) (Feb) | – | 0.4% | 1.3% |
| 21:30 | CAD | Employment Change (Feb) | – | 52.5K | -212.8K |