29 March 2021 Weekly Analysis
GCMAsia Weekly Report: March 29 – April 2
Market Review (Forex): March 22 – 26
US Dollar
The dollar index which traded against a basket of six major currency pairs have soared during last week while ending the market with the price of 92.66. As U.S economic outlook continue to brighten with vaccine progress, investors continue to rush into the greenback.
On data front, GDP came in higher than expected for the fourth quarter with the reading of 4.3% against 4.1%. U.S jobless claims also benefited the greenback as it fell to a one-year low last week at 684K against 730K. Despite with some weaker data such as Home Sales and Core Durable Goods Order, it has muted reaction towards the dollar as market remains optimistic on U.S economic outlook.
On top of that, strong vaccine progress in U.S coupled with comments from U.S President Joe Biden to double its vaccination numbers also provide support for the greenback. Last week, U.S President Joe Biden pledge to double its vaccination plan after reached his previous goal of 100 million. As of Saturday, about a third of the adult population which is roughly 91 million U.S citizens have received at least one shot of COVID-19 vaccination.
With the backdrop of ongoing U.S stimulus package, strong vaccine development and improving outlook, U.S economy recovery is expected to speed up further while market continue to monitor COVID-19 conditions and further economic data to gauge near-term sentiment.
USD/JPY
The pair of USD/JPY have surged throughout last week while ending the market at the price of 109.65. On data front, Japan’s Manufacturing PMI rise from 51.4 to 52.0 while Service PMI increased from 46.3 to 46.5. Tokyo Core CPI also improved -0.1% against -0.2% expectation. Despite that, the stats had muted impact on the Japanese Yen. In fact, the Japanese Yen experience significant selling pressure mostly due to rising greenback strength supported by positive outlook, thus reducing the appeal for the Yen.
EUR/USD
EUR/USD have plunged last week and ending the week with a loss at the price of 1.1793. On data front, German Manufacturing PMI jumped to 66.6, higher than market expectation of 60.8. Besides that, German IFO Business Climate Index also rose 96.6 against market expectation of 93.2. While most of its key stats were impressive, ongoing vaccine issue, third wave COVID-19 and reintroduction of lockdown continue to weigh heavily on the pair and completely offset the positive stats. The ECB’s Economic Bulletin also talked of possible risks to the recovery last week.
GBP/USD
The pair of GBP/USD have ended last week market with a loss, but still manage to recover some of its ground before ending at the price of 1.3789. On the first half of the week, the overall bearish momentum was mainly due to rising strength in U.S dollar. However, the pair recover some of its losses after tension between EU and UK ease as both decided to work together for a deal that benefited both countries after EU previously decided to restrict vaccine export to UK. At the same time, U.K vaccination and lockdown easing also provide some support for the pound sterling.
Market Review (Commodities): March 22 – 26
GOLD
Gold price was traded steady in overall while ending last week market at the price of $1732.20. Despite with the appreciation of U.S dollar, the yellow metal remains resilient and stable as investors digest different conflicting theme such as vaccination progress and new COVID-19 cases in Euro region. Following the lack of clear direction, market continue to focus on potential catalyst such as COVID-19 development or any geopolitical news to gauge the likelihood movement for the commodity.
CrudeOIL
The price of crude oil has experienced a huge volatility but still ending last week with a slight loss at the price of $60.71 per barrel. Following a mixed bag of catalyst, investors are having a hard time to determine the direction for the black commodity. Last week, a giant container ship named “Evergreen” have stuck in Suez Canal, one of the busiest shipping lanes in the world and caused millions of gallons in oil trade halted. While the blockage is expected to affect crude supply, which would help buoyed the commodity price, rising concerns of third wave coronavirus and lockdowns also weigh heavily on the black commodity. Countries in Europe are renewing restrictions to curb COVID-19 cases, which will reduce demand from the region. Germany, the largest European economy, saw its biggest increase in coronavirus cases since January. On top of that, the third largest oil consumer country in the world, India also witness new coronavirus infections hitting their highest level in five months. The volatility is expected to extend while market continue to monitor COVID-19 situation as well as the Suez Canal to gauge sentiment.
Weekly Outlook: March 29 – April 2
For the week ahead, investors would continue to focus on the developments on U.S stimulus, coronavirus situation as well as economic data such ADP Nonfarm Employment and Nonfarm Payrolls to determine 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. Besides that, they will also continue to monitor the situation in Suez Canal.
Highlighted economy data and events for the week: March 29 – April 2
| Time | Market | Event | Actual | Forecast | Previous |
| Monday – 29 March 2021 | |||||
| N/A | |||||
| Tuesday – 30 March 2021 | |||||
| 22:00 | USD | CB Consumer Confidence (Mar) | – | 97.0 | 91.3 |
| Wednesday – 1 April 2021 | |||||
| 09:00 | CNY | Manufacturing PMI (Mar) | – | 51.0 | 50.6 |
| 14:00 | GBP | GDP (QoQ) (Q4) | – | 1.0% | 1.0% |
| 15:55 | EUR | German Unemployment Change (Mar) | – | -5K | 9K |
| 17:00 | EUR | CPI (YoY) (Mar) | – | 1.3% | 0.9% |
| 20:15 | USD | ADP Nonfarm Employment Change (Mar) | – | 525K | 117K |
| 20:30 | CAD | GDP (MoM) (Jan) | – | 0.5% | 0.1% |
| 22:00 | USD | Pending Home Sales (MoM) (Feb) | – | -2.6% | -2.8% |
| 22:30 | USD | Crude Oil Inventories | – | -0.272M | 1.912M |
| Thursday – 2 April 2021 | |||||
| 07:50 | JPY | Tankan Large Manufacturers Index (Q1) | – | -15 | -10 |
| 07:50 | JPY | Tankan Large Non-Manufacturers Index (Q1) | – | -5 | -5 |
| 08:30 | AUD | Retail Sales (MoM) (Feb) | – | -1.1% | 0.5% |
| 09:45 | CNY | Caixin Manufacturing PMI (Mar) | – | 51.0 | 50.9 |
| 15:55 | EUR | German Manufacturing PMI (Mar) | – | 66.6 | 66.6 |
| 16:30 | GBP | Manufacturing PMI (Mar) | – | 57.9 | 57.9 |
| 20:30 | USD | Initial Jobless Claims | – | 680K | 684K |
| 22:00 | USD | ISM Manufacturing PMI (Mar) | – | 61.3 | 60.8 |
| Friday – 3 April 2021 | |||||
| 20:30 | USD | Nonfarm Payrolls (Mar) | – | 182K | 379K |
| 20:30 | USD | Unemployment Rate (Mar) | – | – | 6.2% |