06 December 2021 Weekly Analysis
GCMAsia Weekly Report: December 6 – 10
Market Review (Forex): November 29 – December 04
US Dollar
The dollar index which traded against a basket of six major currency pairs was traded flat over the backdrop of mixed economic data from United States last week. Nonetheless, the overall momentum for the US Dollar remained bullish amid market participants speculated the Federal Reserve would implement contractionary monetary policy and increase interest rate in order to combat high inflation risk in short-term basis. The Dollar Index was closing its price on last Friday session at the price of 96.15.
On the monetary policy front, the US Dollar received bullish momentum following the Federal Reserve unleashed their hawkish tone. Earlier, US Federal Reserve Chair Jerome Powell claimed on Tuesday that the Monetary Policy Committee (MPC) will start to discuss whether to diminish their bond purchases a few months earlier than had been anticipated, citing that a strong economy, stalled workforce growth as well as high inflation pressure would be expected to last until mid-2022.The Federal funds rate futures, which track short-term interest rate expectations, was priced in a 74% chance of a 25-basis point increase in the benchmark overnight interest rate by May 2022. Nonetheless, the gains experienced by the US Dollar was limited amid uncertainty of the Covid-19 variant. The rising numbers of the Omicron Covid-19 variant could be prompting the government to re-implement the highly stringent nationwide lockdown, which raising the concerns over the supply and demand mismatches due to labor shortage while increasing the stagflation risk in future. In respect of crucial economic data, U.S. Unemployment Rate notched down significantly from the previous reading of 4.6% to 4.2%, better than the market forecast at 4.5%. Though, U.S. Nonfarm Payrolls came in at 210K, worse than the market forecast at 550K, according to Bureau of Labor Statistics.
The overall economic prospect for the United States as for now remained vague amid uncertainty with regards of Omicron variant as well as mixed economic data, thus investors would continue to scrutinize the latest updates of further data to gauge the likelihood movement for the US Dollar.
USD/JPY
The pair of USD/JPY received bearish momentum on last week while ending last Friday session at the price of 112.95. The overall bearish momentum for the pair of USD/JPY last week was mainly due to the appreciation of Japanese Yen. The safe-haven Japanese Yen surged over the backdrop of rising fears about the spread of the Omicron variant of Covid-19, which has resulted in renewed restrictions in parts of the world. According to Reuters, The World Health Organization (WHO) designated Omicron as a “variant of concern” on 26th November due to the number of mutations that can affect how it spreads and its health effects.
EUR/USD
The pair of EUR/USD slumped throughout the week while ending last week session at the price of 1.1290. The overall momentum for the Euro remained bearish amid market participants speculated the European Central Bank would continue to implement its aggressive expansionary monetary policy to sustain the economic growth. According to Bloomberg, the European Central Bank President Christine Lagarde claimed that the current spike inflation is only transitory while unlikely to last in long-time basis, while vowing to continue aiding the Europe economy as the fallout from the pandemic lingers.
GBP/USD
The pair of GBP/USD slumped last week while closing its market price at 1.3235. Pound Sterling received bearish momentum over the backdrop of the string of bearish economic data. According to Markit Economics, U.K. Composite Purchasing Managers’ Index (PMI) and U.K. Services Purchasing Managers Index (PMI) came in at 57.6 and 58.5, missing the market forecast at 57.7 and 58.6 respectively. As both economic data fared worse than expectation, which dialing down the market optimism toward the economic progression.
Market Review (Commodities): November 29 – December 04
GOLD
Gold price have slumped last week with the price of $1784.50 per troy ounce amid the hawkish expectation from Fed in future continue to diminish the appeal for the safe-haven gold. The overall momentum for the gold remained bearish as market participants predicted that the Federal Reserve might start to increase interest rate next year in order to maintain its stable inflation rate in future. Such contractionary monetary policy would reduce the money circulation in the global financial market, which diminishing the inflation risk in future while dragging down the appeal for the safe-haven gold. Nonetheless, the overall statement from the Federal Reserve as for now remained vague, hence investors would continue to scrutinize the latest updates with regards of latest economic data as well as future monetary policy decision to receive further trading signal.
CrudeOIL
The price of crude oil slumped significantly last week while closing last Friday session with the price of $67.65. The oil market edged lower amid rising numbers of Covid-19 Omicron variant around the world had continue to spur negative prospect for this black-commodity. Besides, the crude oil price extends its losses amid bearish inventory data last week. According to Energy Information Administration (EIA), U.S. Crude Oil Inventories came in at -0.910M, missing the market forecast at -1.237M.
Weekly Outlook: December 6 – 10
For the week ahead, investors would continue to focus on crucial economic data such as the Initial Jobless Claims in order to determine further direction. Besides that, the ongoing situation with coronavirus will also be in the eyes of investors.
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: December 6 – 10
| Time | Market | Event | Actual | Forecast | Previous |
| Monday – 6th December 2021 | |||||
| 17:30 | GBP | Construction PMI (Nov) | – | 52.0 | 54.6 |
| Tuesday – 7th December 2021 | |||||
| 11:30 | AUD | RBA Interest Rate Decision (Dec) | – | 0.10% | 0.10% |
| 11:30 | AUD | RBA Rate Statement | – | – | – |
| 18:00 | EUR | German ZEW Economic Sentiment (Dec) | – | 25.3 | 31.7 |
| 23:00 | CAD | Ivey PMI (Nov) | – | – | 59.3 |
| Wednesday – 8th December 2021 | |||||
| 1:00 | USD | EIA Short-Term Energy Outlook | – | – | – |
| 7:50 | JPY | GDP (QoQ) (Q3) | – | -0.80% | -0.80% |
| 16:15 | EUR | ECB President Lagarde Speaks | – | – | – |
| 23:00 | USD | JOLTs Job Openings (Oct) | – | – | 10.438M |
| 23:00 | CAD | BOC Press Conference | – | – | – |
| 23:00 | CAD | BoC Interest Rate Decision | – | 0.25% | 0.25% |
| 23:30 | USD | Crude Oil Inventories | – | – | -0.910M |
| Thursday –9th December 2021 | |||||
| 21:30 | USD | Initial Jobless Claims | – | 228K | 222K |
| Friday – 10th December 2021 | |||||
| 15:00 | GBP | GDP (MoM) | – | – | 0.60% |
| 15:00 | GBP | Manufacturing Production (MoM) (Oct) | – | 0.10% | 0.10% |
| 17:05 | EUR | ECB President Lagarde Speaks | – | – | – |
| 21:30 | USD | Core CPI (MoM) (Nov) | – | 0.50% | 0.60% |