19 March 2018 Weekly Analysis
GCMAsia Weekly Report: March 19 – 23
Market Review (Forex): March 12 – 16
Greenback tacks on to its gains last Friday as investors heeds upon optimistic economic data and easing political turmoil in Washington. The dollar index rose 0.05% while closing the week at 90.19 against a basket of six major currencies. In the economic front, although building permits and housing starts shows significant decline with 1.298 million and 1.236 million respectively, investors sentiment was refreshed following a better-than-expected data with regards to employment and future economic outlook.
Based on a survey done by the US Bureau of Labor Statistics, JOLTs Job Openings shows a significant improvement with 6.312 million jobs available versus economist forecast of only 5.890 million jobs. Likewise, Michigan Consumer Sentiment portrays an improvement in consumers prospect towards the economy with 102.0 versus 99.3 seen. A higher consumer sentiment may reflect more willingness in spending and may contribute to higher retail sales while propping up regional inflationary pressure.
In the political front, President Donald Trump and his chief of staff John Kelly has allegedly reached a “truce” following talks held on Thursday. Prior to this, CBS News reported that Kelly has suggested to leave the White House due to conflict of interest with the President. Such news has eased investors’ concern over yet another political turmoil in the Trump administration following Rex Tillerson termination last week.
Building Permits
—– Forecast
Building permits for the month of February came in with lesser-than-expected reading of 1.298 million.
Housing Starts
—– Forecast
Housing starts misses economist expectation with only 1.236 million.
JOLTs Job Openings
—– Forecast
Job openings were higher than expected with 6.312 million jobs offered.
Michigan Consumer Sentiment
—– Forecast
Consumer sentiment improved for the month of March from 99.7 to 102.0.
USD/JPY
Pair of USD/JPY depreciates by 0.31% to 106.01 during late Friday trading.
EUR/USD
Euro extended losses by 0.12% to $1.2290 after ECB President Mario Draghi delivered a rather dovish speech on Wednesday.
GBP/USD
GBP/USD rose 0.04% while ended the week around $1.3942.
Market Review (Commodities): March 12 – 16
GOLD
Gold price extended its losses last Friday as political turmoil in Washington eases while investors ponder upon a higher chance for an interest rate hike by the Federal Reserve as soon as next week. Price of the precious metal tumbled down 0.18% while last quoted at $1,313.86 a troy ounce.
Gold prices set for a fourth consecutive weekly loss as investors wary of buying the dips in the precious metal ahead of US Federal Reserve’s two-day meeting which will start on 20th March next week. According to the Fed Rate Monitor Tool, traders are currently pricing in with a 93% chance for a 25-basis points rate hike to a range of 1.50%-1.75% on 21st March.
While many believes that the Fed’s rate hike has been priced in, the central bank’s rate hike projection for the year or to be known as dot-plot may be shifted upwards next week – pointing towards a faster pace of rate hikes. Such bullish moves may send further upside on the greenback while pushing the precious metal further down.
Crude Oil
Crude oil price settled higher last Friday while recording a second consecutive weekly gain as investors turn their attention towards growing global crude demand which may help to outweigh pressure from strong US production. Price of the black commodity skyrocketed 1.73% or $1.06 to $62.26 during late Friday trading.
In a monthly reported released by the International Energy Agency (IEA), the agency has revised its global demand growth outlook for year 2018 by 100,000 barrels per day to 1.5 million barrels per day; significantly bullish when compared to prior. The agency also noted that changes in the trade policy may have a negative impact on oil production which may slowdown the ongoing US production which has attain 10.4 million barrels per day.
However, overall upside on the commodity remains limited after Organization of the Petroleum Exporting Countries (OPEC) released a rather bearish forecast of non-OPEC supply. In their report, OPEC postulate that supplies from non-OPEC members could increase to around 1.6 million barrels per day for 2018, significantly higher as compared to previous reading of 1.4 million barrels per day. Otherwise, OPEC reiterated that its effort to cut supply will be continued in order to help rebalanced the global oil prices.
Weekly Outlook: March 19 – 23
For the week ahead, investors will be paying their attention to US Federal Reserve’s two-day meeting which may revise their dot-plot projection for the year. Such revision may catalyze higher volatility in the market specifically US dollar and safe-haven gold.
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 19 – 23
| Monday, March 19 |
Data JPY – Trade Balance (Feb) EUR- Trade Balance (Jan)
Events USD – FOMC Member Bostic Speaks
|
| Tuesday, March 20 |
Data AUD – House Price Index (QoQ) (Q4) EUR – German PPI (MoM) (Feb) GBP – CPI (YoY) (Feb) EUR – German ZEW Economic Sentiment (Mar) EUR – ZEW Economic Sentiment CAD – Wholesale Sales (MoM) (Jan)
Events AUD – RBA Meeting Minutes
|
| Wednesday, March 21 |
Data CrudeOIL – API Weekly Crude Oil Stock GBP – Average Earnings Index +Bonus (Jan) GBP – Claimant Count Change (Feb) GBP – Unemployment Rate (Jan) GBP – CBI Industrial Trends Orders (Mar) USD – Existing Home Sales (Feb) CrudeOIL – Crude Oil Inventories CrudeOIL – Gasoline Inventories
Events N/A
|
| Thursday, March 22 |
Data USD – Fed Interest Rate Decision NZD – RBNZ Interest Rate Decision AUD – Employment Change (Feb) AUD – Participation Rate (Feb) AUD – Unemployment Rate (Feb) EUR – German Manufacturing PMI (Mar) EUR – German Ifo Business Climate Index (Mar) GBP – Retail Sales (MoM) (Feb) GBP – BoE Interest Rate Decision (Mar) USD – Initial Jobless Claims USD – Manufacturing PMI (Mar) USD – Services PMI (Mar)
Events USD – FOMC Economic Projection USD – FOMC Statement USD – FOMC Press Conference NZD – RBNZ Rate Statement EUR – ECB Economic Bulletin GBP – MPC Asset Purchase Facility Vote
|
|
Friday, March 23
|
Data JPY – National Core CPI (YoY) (Feb) USD – Core Durable Goods Orders (MoM) (Feb) CAD – Core CPI (MoM) (Feb) CAD – Core Retail Sales (MoM) (Jan) USD – New Home Sales (Feb) CrudeOIL – US Baker Hughes Oil Rig Count
Events USD – FOMC Member Bostic Speaks USD – FOMC Member Kashkari Speaks
|
Technical Weekly Outlook: March 19 – 23
Dollar Index
DOLLAR_INDX, Daily: Dollar index was traded higher following prior rebound from the support level near 89.40. Such price action suggests further bullish bias while the index is required to close above the resistance near 90.00 in order to further extend its bullish approach.
Resistance level: 90.00, 90.95
Support level: 89.40, 88.40
GBPUSD
GBPUSD, Daily: GBPUSD was traded higher following prior breakout from the top level of descending triangle. However, MACD histogram which illustrate diminishing upward momentum may suggests the pair to be traded lower in short-term as technical correction after closing below the 60-MA line (green).
Resistance level: 1.3970, 1.4210
Support level: 1.3800, 1.3600
USDJPY
USDJPY, Daily: USDJPY was traded higher following prior rebound near the strong support level at 105.95. MACD histogram which shows some pickup in upward momentum may suggests the pair to extend its gains in short-term after successfully closing above the 20-MA line (red).
Resistance level: 108.40, 109.70
Support level: 105.95, 105.45
EURUSD
EURUSD, Daily: EURUSD remains traded within a descending channel following prior retracement from the upper level. MACD histogram which illustrate the formation of downward signal and momentum may suggest the pair to advance further down after successfully breaking the strong support level at 1.2270.
Resistance level: 1.2400, 1.2500
Support level: 1.2270, 1.2170
GOLD
GOLD_, Daily: Gold price remains traded within a descending triangle while currently testing at the strong support level of 1312.00. MACD histogram which illustrate the formation of death cross signal suggests further bearish bias. However, a close below the strong support at 1312.00 is required to attain further verification.
Resistance level: 1340.00, 1353.70
Support level: 1312.00, 1295.00
Crude Oil
CrudeOIL, Daily: Crude oil price remains traded within a narrowing triangle while currently testing at the top level. A break above may suggest a change in trend direction to extend its upside bias thereafter. Otherwise, a retrace will suggests the commodity price to be remained under pressure and subject to the narrowing triangle formation.
Resistance level: 63.75, 66.65
Support level: 60.80, 59.00