10 December 2018 Weekly Analysis
GCMAsia Weekly Report: December 10 – 14
Market Review (Forex): December 3 – December 7
US Dollar
The US dollar was traded mix throughout the week while closing Friday’s market lower at $96.51. The dollar was gaining earlier last week amid higher than expected ISM Manufacturing PMI and easing of trade war tensions. However, US ADP Nonfarm Employment and Nonfarm Payroll (NFP) data came in lower than expected which sent the dollar falling back to its previous support level.
Earlier last week, dollar extended its bullish momentum when US ISM Manufacturing PMI data had an actual reading of 59.3, much higher than expected of 57.6. However, dollar started to depreciate later last week when both ADP Nonfarm Employment and Nonfarm Payrolls data failed to meet their expectations. ADP Nonfarm Employment Change came in at 179K compared to 196K while NFP came in at 155K compared to 200K. While US Unemployment Rate maintained at 3.7%, the poor NFP data indicated a bearish labor market which caused the dollar to undergo large sell-off before market close for the weekend.
Overall, sentiment towards dollar begins to turn sour as future conditions remains cloudy due to trade war as well as poor US data. Investors will now pay their attention to the final rate hike this year by US Federal Reserve and further confirmation for future rate hikes.
USD/JPY
USDJPY depreciated last week while closing Friday’s market at 112.70. The safe-haven Yen was largely bought throughout the week amid uncertainties in forex market. While Bank of Japan continues to keep rates at bay to achieve their targeted 2% inflation, investors flee to safe-haven Yen as risk appetite worsens due to Brexit uncertainties and possibility for future US rate hike to be revoke. Overall, investors preference shifted towards safe-haven assets last week, increasing the value for both Yen and gold prices.
EUR/USD
EURUSD was depreciating earlier last week, but regained its strength by closing Friday’s market session higher at 1.1400. Overall gains for the euro was due to Brexit uncertainties and weakening dollar. While European Central Bank (ECB) interest rate is expected to be fixed until next year, they are also expected to provide long-term loans for other banks. However, no official news addressed to the loans, but the ECB is expected to provide further confirmation during their press conference this week.
GBP/USD
GBPUSD was traded mix throughout last week while maintaining its bearish momentum, closing Friday’s trading session lower at 1.2735. Investors are now eyeing on UK Parliament vote on Brexit agreement, where either outcome will bring large impact towards the pound sterling. Current outlook remains cloudy as UK Prime Minister Theresa May might face a no-confidence vote where she will be forced to resign if it reaches a number of 76 votes.
Market Review (Commodities): December 3 – December 7
GOLD
Gold price was extending its gains throughout last week while closing Friday’s trading session at $1248.30 per troy ounce as the investors risk appetite worsens. The yellow metal surged to a 5-months high due to poor US data and also expectations of future rate hike being paused or revoke by the Fed.
Overall, the demand for safe-haven remains strong while last Friday’s NFP data continues to worsen investors risk appetite.
Crude Oil
The price of crude oil was traded higher overall last week while closing Friday’s trading session lower at $52.10 per barrel.
Current market outlook for crude oil seems positive as OPEC meeting resulted in a cut of oil production by 1.2 million bpd to help boost the market. The alliance will take 1.2M bpd for the first 6 months where 15-member OPEC cartel will contribute 800K bpd and Russia and other allied producers will contribute to 400k bpd reduction. However, the gains of the crude oil were limited as investors were already expecting a 1.4M cut in production, thus causing oil close the market lower.
Overall, the crude oil begins to rally after falling to a year low while investors will now focus on global crude oil inventory with the effective of OPEC production cut.
Weekly Outlook: December 10 – 14
For the week ahead, investors will focus on various data such as US PPI and Retail Sales data which will provide a clearer view on US current economic outlook and also UK Parliament vote on Brexit deal.
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 10 – 14
| Monday, December 10 |
Data GBP – GDP (YoY) (Q3) GBP – GDP (MoM) GBP – Manufacturing Production (MoM) (Oct) GBP – Monthly GDP 3M/3M Change USD – JOLTs Job Openings
Events N/A
|
| Tuesday, December 11 |
Data GBP – Average Earnings Index + Bonus GBP – Claimant Count Change (Nov) EUR – German ZEW Economic Sentiment (Dec) USD – PPI (MoM) (Nov)
Events N/A
|
| Wednesday, December 12 |
Data USD – Core CPI (MoM) (Nov) CrudeOIL – API Weekly Crude Oil Stock CrudeOIL – Crude Oil Inventories
Events GBP – UK Parliament vote on Brexit deal
|
| Thursday, December 13 |
Data CHF – SNB Interest Rate Decision EUR – Deposit Facility Rate EUR – ECB Marginal Lending Facility EUR – ECB Interest Rate Decision (Dec)
Events CHF – SNB Monetary Policy Assessment CHF – SNB Press Conference EUR – ECB Press Conference
|
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Friday, December 14
|
Data JPY – Tankan Large Manufacturers Index (Q4) JPY – Tankan Large Non-Manufacturers Index (Q4) CNY – Industrial Production (YoY) (Nov) EUR – German Manufacturing PMI (Dec) USD – Core Retail Sales (MoM) (Nov) USD – Retail Sales (MoM) (Nov)
Events N/A
|
| Saturday, December 15 | Data
Events EUR – ECB President Draghi Speaks |