16 April 2018 Weekly Analysis
GCMAsia Weekly Report: April 16 – 20
Market Review (Forex): April 9 – 13
US dollar recovered slightly during late Friday trading on last week although gains remained capped due to bearish economic data and jittery trade relationship between the United States and China. The dollar index notched up 0.02% while ended the week at 89.77.
In the economic front, US Labor Department’s latest Job Openings and Labor Turnover Survey (JOLTs) shows that job openings for the month of February fell to 6.05 million, missing economist expectation of 6.11 million. In addition, the University of Michigan reported that consumer sentiment fell to a three-month low of 97.8 versus 100.6, indicating a scaled back optimism among consumers towards future economic outlook of the country.
In the global setting, the White House was reported to ramp up trade pressure upon China after threatening to block Chinese technology investment in the United States. In addition to that, the administration will also release details as early as next week on the list of Chinese products which will be subjected to a tariff of 25% worth at least $100 billion. Such escalation could eventually lead to trade war which brings no benefits to either side while suppressing global economic growth and trade patterns.
However, the currency received some minor support from the downside over the backdrop of optimistic signal as portrayed by the FOMC meeting minutes for the month of March. According to several officials, they believed that the US economy will continue to firm up in the coming months and that inflation will rise towards their targeted reading of 2% soon. Otherwise, they reiterated to follow through their plans to have three rate hikes in the year of 2018.
JOLTS Job Openings
—– Forecast
US job openings came in at only 6.05 million for the month of February.
US Consumer Sentiment
—– Forecast
US Consumer Confidence came in lower at only 97.8 versus 101.4 for the month of April.
USD/JPY
Pair of USD/JPY rose 0.09% and last quoted around 107.41.
EUR/USD
EUR/USD recovered slightly by 0.02% to $1.2330. The single common currency remained under pressure following the release of European Central Bank’s meeting minutes last Thursday which shows that policymakers are concerned over the risk of full-blown trade war between the US and China and potentially harmful impact of a stronger Euro.
GBP/USD
Pound sterling extended its gains by 0.08% to $1.4239 against the US dollar.
Market Review (Commodities): April 9 – 13
GOLD
Safe-haven commodity – gold received tremendous demand during late Friday trading as underlying geopolitical tension and US-China trade wars continues to spur higher risk aversion among investors. Price of the yellow metal rose $10.37 or 0.78% while ended the week at $1,345.46 a troy ounce.
Earlier, White House has announced their plans to ramp up trade pressure upon China that could escalate current trade tension while brewing for an imminent trade war. In addition, safe-haven continued to rise after Russia accused the United Kingdom of staging the reported chemical attack in Syria.
Crude Oil
Crude oil price settled higher during last Friday due to ongoing geopolitical tension in the Middle East while global inventories which shows significant decline has offset fears over rising US oil output. Price of the black commodity tacks up 0.28% while closing the weekly trade at $67.31 per barrel.
According to the monthly report released by International Energy Agency (IEA), data showed that the glut in oil supplies has mostly diminished, shrunken by nine-tenth since the beginning of 2017 due to continuous supply cuts and rising demand. The oil cut pact, initiated by members and non-members of OPEC is expected to end later this year but there is growing speculation that it might be extended into next year. OPEC will be meeting in June to decide their next course of action.
Likewise, crude oil price was further supported by geopolitical tension between United States and Syria earlier this week after US President Donald Trump threatens to launch a missile attack to retaliate suspected chemical weapons used upon civilians by rebel groups. An attack on Syria may disrupt their oil production that could help to ease some pressure on global supply glut.
Weekly Outlook: April 16 – 20
For the week ahead, investors will place their attention upon several major economic data such as CPI and jobs market report that will be released by the United Kingdom and EU. Likewise, US report on retail sales will also be in focus as investors gauge overall consumer spending which could help to propel regional inflationary pressure.
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 16 – 20
| Monday, April 16 |
Data CHF – PPI (MoM) (Mar) USD – Core Retail Sales (MoM) (Mar) USD – Retail Sales (MoM) (Mar) USD – NY Empire State Manufacturing Index (Apr) USD – Business Inventories (MoM) (Feb)
Events N/A
|
| Tuesday, April 17 |
Data CNY – GDP (YoY) (Q1) CNY – Industrial Production (YoY) (Mar) JPY – Industrial Production (MoM) (Feb) GBP – Average Earnings Index +Bonus (Feb) GBP – Claimant Count Change (Mar) GBP – Employment Change 3M/3M (MoM) GBP – Unemployment Rate (Feb) EUR – German ZEW Economic Sentiment (Apr) USD – Building Permits (Mar) USD – Housing Starts (Mar) CAD – Manufacturing Sales (MoM) (Feb) USD – Industrial Production (MoM) (Mar)
Events USD – FOMC Member Bostic Speaks AUD – RBA Meeting Minutes USD – FOMC Member Williams Speaks USD – FOMC Member Quarles Speaks
|
| Wednesday, April 18 |
Data CrudeOIL – API Weekly Crude Oil Stock JPY – Trade Balance (Mar) GBP – CPI (YoY) (Mar) EUR – CPI (YoY) (Mar) CAD – BoC Interest Rate Decision CrudeOIL – Crude Oil Inventories CrudeOIL – Gasoline Inventories
Events CAD – BoC Rate Statement CAD – BoC Monetary Policy Report
|
| Thursday, April 19 |
Data NZD – CPI (QoQ) (Q1) AUD – Employment Change (Mar) AUD – Unemployment Rate (Mar) GBP – Retail Sales (MoM) (Mar) USD – Initial Jobless Claims USD – Philadelphia Fed Manufacturing Index (Apr) USD – Philly Fed Employment (Apr) CAD – ADP Nonfarm Employment Change
Events USD – FOMC Member Dudley Speaks USD – FOMC Member Quarles Speaks
|
|
Friday, April 20
|
Data JPY – Tertiary Industry Activity Index (MoM) EUR – German PPI (MoM) (Mar) CAD – Core CPI (MoM) (Mar) CAD – Core Retail Sales (MoM) (Feb) CrudeOIL – US Baker Hughes Oil Rig Count
Events USD – FOMC Member Mester Speaks
|
Technical Weekly Outlook: April 16 – 20
Dollar Index
DOLLAR_INDX, Daily: Dollar index remains traded within a sideways channel following prior retracement from the strong resistance near 90.00. Both MA line which began to broaden downwards suggests the index to extend its losses in short-term following a successful closure below the support level at 89.40.
Resistance level: 90.00, 90.65
Support level: 89.40, 88.40
GBPUSD
GBPUSD, Daily: GBPUSD was traded higher following prior rebound while currently testing at the strong resistance level at 1.4240. MACD histogram which illustrate diminishing upward signal may suggests the pair to be traded lower in short-term as technical correction. Otherwise, a successful break above could indicate further bullish bias.
Resistance level: 1.4240, 1.4430
Support level: 1.4000, 1.3800
USDJPY
USDJPY, Daily: USDJPY extended gains following prior closure above the 60-MA line (green). Both MA line and MACD histogram which illustrate bullish signal suggests the pair to extend its gains, towards the direction of resistance level near 108.40.
Resistance level: 108.40, 109.70
Support level: 105.95, 105.45
EURUSD
EURUSD, Daily: EURUSD remained under pressure following prior retrace from the mid-level of sideways channel. Stochastic Oscillator which illustrate retracement signal from the overbought region suggests the pair to extend its losses in the event of a closure below the 20-MA line (red).
Resistance level: 1.2340, 1.2500
Support level: 1.2200, 1.2000
GOLD
GOLD_, Daily: Gold price remains traded within a sideways channel while recently rebounded from the 20-MA line (red). Such price action suggests short-term bullish bias for the commodity price to extend its gains, towards the direction of resistance level at 1353.70. However, long-term trend direction could only be determined after a successful breakout from either side of the channel.
Resistance level: 1353.70, 1366.00
Support level: 1340.00, 1325.00
Crude Oil
CrudeOIL, Daily: Crude oil price remains traded within an ascending wedge while recently retraced from the top level. Diminishing upward momentum from MACD histogram may suggests the commodity price to be traded lower in short-term following a closure below the support level at 66.30.
Resistance level: 69.10, 71.50
Support level: 66.30, 63.75