2 April 2018 Weekly Analysis
GCMAsia Weekly Report: April 2 – 6
Market Review (Forex): March 26 – 30
US dollar ended lower against other major currencies last Thursday as looming trade wars continue to haunt investors to bet against the currency. The dollar index recorded a loss of 0.20% while ended the week at 89.97. Ongoing questions over global trade protectionism following US President Donald Trump’s enactment of high tariff rate upon Chinese imports has shrouded the outlook for future US economy.
Earlier last week, the US dollar regained some upside momentum following the release of better-than-expected economic data from the region. In the GDP front, latest revision for last year’s fourth quarter came in at 2.9%, significantly better than economist forecast of only 2.7%. The optimistic reading was largely contributed by a higher real consumer spending in the last quarter with an increase of 4.0% versus 3.8% seen.
Similarly, the Fed preferred inflation measure – PCE Price Index shows similar notion after yearly comparison came in within economist expectation of 1.6% for the month of March. The data has further reinforced Fed’s outlook that future inflationary pressure Is expected to trickle towards the 2% target in the mid-term.
However, further gains on the dollar remains limited as investors gear up for the Good Easter and Eastern Europe holiday which sees a much lower trading volume than normal days. Likewise, the ongoing trade war uncertainty as catalyzed by Trump’s administration has placed a cap on the current upside as well.
US GDP Growth Rate
—– Forecast
US GDP growth came in higher than expected with 2.9% versus 2.7% seen.
US Real Consumer Spending
US Real Consumer Spending attains higher reading, with 4.0% versus economist forecast of only 3.8%.
US Core PCE Price Index (YoY)
Fed preferred PCE Price Index grew within expectation with 1.6% for the month of March.
USD/JPY
Pair of USD/JPY slipped 0.15% to 106.28 albeit recording weekly gains of up to 1.36%.
EUR/USD
Euro extended gains by 0.16% against the greenback while ending the week at $1.2319.
GBP/USD
Pound sterling remained unchanged against the US dollar, last quoted around $1.4017.
Market Review (Commodities): March 26 – 30
GOLD
Gold price ticked higher on last Thursday as trading was closed on Friday for Good Friday holiday. Price of the precious metal settled up 0.03% to $1,325.00 while recording a cumulative weekly loss of 1.73%. Earlier last week, the precious metal rallied to its highest level in five weeks on Wednesday before turning sharply as safe-haven demand diminished over subsiding geopolitical risk in Korean Peninsula. Gold price was hit by bearish pressure after US dollar extended its recovery from prior low due to better-than-expected regional economic data. Precious metal such as gold which is denominated in the US currency will become less affordable for holders of other currency when the dollar rises.
Crude Oil
Crude oil price tacks on to its gains on Thursday as investors cheered over data which showed the first fall in US oil rigs over the last three weeks. Oil prices ended higher on Thursday after rising up 56 cents or 0.90% and closing the week earlier due to Good Friday holiday at $64.94 a barrel. However, the oil price benchmark was down 1.4% for the week but recording a gain of up to 5.3% for the month and roughly 7.5% for the first quarter.
Overall bullish sentiment in the market was invigorated after US oilfield service provider Baker Hughes reported that the number of oil drilling rigs was down by 6 to a total of 798 last week. The report has help to firm up the support of crude prices amid positive report on Wednesday which suggest that OPEC and Russia are gearing up towards a long-term pact to keep oil price stable.
Prior, the effort done by members of OPEC and non-OPEC were dampened following rising output from non-participating mainly the United States. Regional domestic oil production rose to an all-time high of 10.43 million barrels per day last week, replacing Saudi Arabia as the second major oil producer globally.
Weekly Outlook: April 2 – 6
For the week ahead, investors will be pondering towards Friday’s US jobs report for indication on the future direction of monetary policy after Federal Reserve hiked interest rates for the first time this year while reiterating to have three rate hikes this year. Otherwise, inflation data from the Eurozone will also be in focus as a pickup would catalyze higher expectation towards the European Central Bank to taper its stimulus later this year.
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: April 2 – 6
| Monday, April 2 |
Data JPY – Tankan Large Manufacturers Index (Q1) JPY – Tankan Large Non-Manufacturers Index (Q1) CNY – Caixin Manufacturing PMI (Mar) USD – Manufacturing PMI (Mar) USD – ISM Manufacturing PMI (Mar) USD – ISM Manufacturing Employment (Mar)
Events N/A
|
| Tuesday, April 3 |
Data AUD – RBA Interest Rate Decision (Apr) EUR – German Retail Sales (MoM) (Feb) EUR – German Manufacturing PMI (Mar) EUR – Manufacturing PMI (Mar) GBP – Manufacturing PMI (Mar)
Events USD – FOMC Member Kashkari Speaks AUD – RBA Rate Statement
|
| Wednesday, April 4 |
Data CrudeOIL – API Weekly Crude Oil Stock AUD – Retail Sales (MoM) (Feb) CNY – Caixin Services PMI (Mar) GBP – Construction PMI (Mar) EUR – CPI (YoY) (Mar) EUR – Unemployment Rate (Feb) USD – ADP Nonfarm Employment Change (Mar) USD – Services PMI (Mar) USD – ISM Non-Manufacturing Employment (Mar) USD – ISM Non-Manufacturing PMI (Mar) CrudeOIL – Crude Oil Inventories CrudeOIL – Gasoline Inventories
Events USD – FOMC Member Brainard Speaks USD – FOMC Member Bullard Speaks USD – FOMC Member Mester Speaks
|
| Thursday, April 5 |
Data AUD – Trade Balance (Feb) CHF – CPI (MoM) (Mar) EUR – German Services PMI (Mar) EUR – Markit Composite PMI (Mar) EUR – Services PMI (Mar) GBP – Services PMI (Mar) EUR – Retail Sales (MoM) (Feb) USD – Initial Jobless Claims USD – Trade Balance (Feb) CAD – Trade Balance (Feb)
Events N/A
|
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Friday, April 5
|
Data JPY – Household Spending (YoY) (Feb) EUR – German Industrial Production (MoM) (Feb) USD – Average Hourly Earnings (MoM) (Mar) USD – Nonfarm Payrolls (Mar) USD – Unemployment Rate (Mar) CAD – Employment Change (Mar) CAD – Unemployment Rate (Mar) CAD – Ivey PMI (Mar) CrudeOIL – US Baker Hughes Oil Rig Count
Events USD – FOMC Member Bostic Speaks GBP – BoE Gov Carney Speaks USD – Fed Chair Powell Speaks
|
Technical Weekly Outlook: April 2 – 6
Dollar Index
DOLLAR_INDX, Daily: Dollar index was traded lower following prior retracement from the 60-MA (green), near the key resistance of 90.00. Overall major trend which still skew towards bearish suggests the index to extend its losses after successfully closing below the 20-MA line (red).
Resistance level: 90.00, 90.60
Support level: 89.40, 88.40
GBPUSD
GBPUSD, Daily: GBPUSD was traded higher after regaining some support from the 20-MA line (red). Stochastic Oscillator which has illustrate an imminent rebound signal from the oversold region suggests the pair to be traded higher in short-term in the event of a bullish rebound from the 20-MA line (red).
Resistance level: 1.4210, 1.4390
Support level: 1.3970, 1.3800
USDJPY
USDJPY, Daily: USDJPY remains traded within a descending channel following prior retracement from the top level. MACD histogram which illustrate diminished upward momentum may suggest the pair to extend its losses in short-term after breaking the support level at 105.95.
Resistance level: 108.40, 109.70
Support level: 105.95, 105.45
EURUSD
EURUSD, Daily: EURUSD remains traded within the range of 1.2270 and 1.2500 following prior retracement from the top level. Stochastic Oscillator which illustrate the imminent formation of rebound signal from the oversold region may suggests the pair to extend its gains after closing above the 20-MA line (red).
Resistance level: 1.2400, 1.2500
Support level: 1.2270, 1.2170
GOLD
GOLD_, Daily: Gold price remains traded within a sideways channel following prior retracement from the top level. MACD histogram which illustrate diminishing upward momentum may suggest the commodity price to extend its losses in short-term, towards the target of support level at 1312.00.
Resistance level: 1340.00, 1353.70
Support level: 1312.00, 1295.00
Crude Oil
CrudeOIL, Daily: Crude oil price was traded higher following prior rebound from the support level at 63.75. Both MA lines which has formed a golden cross signal may suggest the commodity price to extend further up and retest near the strong resistance level of 66.65.
Resistance level: 66.65, 69.10
Support level: 63.75, 60.80