03 December 2018 Weekly Analysis
GCMAsia Weekly Report: December 3 – 7
Market Review (Forex): November 26 – November 30
US Dollar
The US dollar was traded higher but remained pressured by negative economic data throughout last week while closing Friday’s trading session at 97.05. The dollar was further boosted on Friday on expectations that the trade war talk will end up with high tariffs.
Earlier last week, dollar extended its bullish momentum although US CB Consumer Confidence data at 135.7 missed economists’ expectations of 135.9. However, dollar started to depreciate later last week when both GDP and New Home Sales data also failed to meet their expectations. GDP came in at 3.5% compared to 3.6% while New Home Sales came in at 544K compared to 583K. Further worsening the sentiment was Thursday’s Pending Home Sales data at -2.6%, missing its expectations of 0.8% by a long shot. Dollar index successfully regained its gains on Friday ahead of Trump-Xi meeting where investors expect the talk to end up with US President Donald Trump increasing its tariffs on China’s goods.
Overall, the dollar remained its bullish momentum for the long run last week while investors will keep their eyes on this Friday’s Nonfarm Payrolls data which will cause large fluctuations in the market.
USD/JPY
USDJPY appreciated overall last week while closing Friday’s market at 113.45. The safe-haven Yen being sold earlier last week when sentiment remained strong on dollar. However, the Yen was largely bought when expectations for future rate hikes remained uncertain due to Fed’s dovish statement causing increased in demand for safe-haven assets. Overall, investors preference remained towards riskier assets, causing safe-haven assets to depreciate in value.
EUR/USD
EURUSD was depreciating throughout last week, closing Friday’s market session lower at 1.1310. Overall fall for the euro was due to a large sell-off as investors preference favor towards the dollar market. Current economy outlook for the euro worsens as its CPI data came in at 2.0%, missing economists’ expectations by 10-basis point. The slowdown in European economy growth might affect European Central Bank (ECB) plans to tighten its policy as well as eliminating its bond-buying program (QE).
GBP/USD
GBPUSD was traded lower throughout last week as Brexit progress to its final stage which is getting approved by the UK Parliament, closing Friday’s trading session lower at 1.2740. The Parliament will be expected to vote for the Brexit deal on 11th December where the results will bring a large impact towards the entire UK as well as Euro zone. Current outlook for Brexit lacks of hope for investors, causing them to retreat towards safe-haven dollar.
Market Review (Commodities): November 26 – November 30
GOLD
Gold price was traded sideways throughout last week while closing Friday’s trading session lower at $1222.00 per troy ounce as the investors risk sentiment favors the dollar market. The yellow metal was traded lower earlier last week during dollar gains, while climbing back up later following Fed’s dovish statement.
Overall, demand for safe-haven varies last week while investors will now focus on this Friday’s Nonfarm Payroll data which will also bring large impact for the gold market.
Crude Oil
The price of crude oil was traded sideway last week while closing Friday’s trading session slightly higher at $50.60 per barrel.
Current market outlook for crude remains mixed as its gains were supported by Russia’s agreement to work together with Saudi Arabia to cut supplies for crude in spite of growing global inventories. However, the gains for crude was limited by EIA reports on growing crude inventories for the 13 weeks in a row. As US President Donald Trump continues to emphasize that oil prices should be kept as low as possible, investors concern that US crude production will continue to increase the crude oil inventory level.
Overall, the crude oil continued to be traded at low levels while investors hope that the OPEC’s meeting on 6th December will help improve sentiment towards the oil market.
Weekly Outlook: December 3 – 7
For the week ahead, investors will focus on various data such as US Nonfarm Payroll which is a major indicator for a country’s labor market, bringing a very significant impact towards the dollar market.
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 3 – 7
| Monday, December 3 |
Data EUR – German Manufacturing PMI (Nov) GBP – Manufacturing PMI (Nov) USD – ISM Manufacturing PMI (Nov)
Events
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| Tuesday, December 4 |
Data AUD – RBA Interest Rate Decision (Dec) GBP – Construction PMI (Nov)
Events AUD – RBA Rate Statement GBP – BoE Gov Carney Speaks
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| Wednesday, December 5 |
Data AUD – GDP (QoQ) (Q3) GBP – Services PMI (Nov) USD – ADP Nonfarm Employment Change (Nov) USD – ISM Non-Manufacturing PMI (Nov) CAD – BoC Interest Rate Decision CrudeOIL – API Weekly Crude Oil Stock CrudeOIL – Crude Oil Inventories
Events EUR – ECB President Draghi Speaks USD – Fed Chair Powell Testifies
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| Thursday, December 6 |
Data AUD – Retail Sales (MoM) (Oct) CAD – Ivey PMI (Nov)
Events CAD – BoC Gov Poloz Speaks
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Friday, December 7
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Data USD – Nonfarm Payrolls (Nov) USD – Unemployment Rate (Nov) CAD – Employment Change (Nov)
Events USD – Fed Chair Powell Speaks
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