17 December 2018 Weekly Analysis
GCMAsia Weekly Report: December 17 – 21
Market Review (Forex): December 10 – December 14
US Dollar
The US dollar appreciated throughout the week while closing Friday’s market higher at $97.40. Dollar bulls was being supported by poor performance by other currencies especially Euro and Pound sterling. Further supporting the dollar was strong US data including CPI and PPI meeting economist’s expectation while Friday’s Retail Sales came in higher than expected.
Throughout last week, pound and euro market were haunted by growing political tensions including Brexit uncertainties and ECB dovish statement. The large sell-off from both markets led investors to flee into dollar market with expectations of rate hike this week. Although previously Fed Chairman Jerome Powell provided dovish statement regarding current interest rate achieving a ‘neutral’ rate, sentiment still remains stronger towards the dollar market. Besides that, Friday’s Retail Sales data also had a reading of 0.2%, exceeding economists’ expectation of 0.1%, indicating higher consumer confidence and stable wage growth.
Overall, sentiment towards dollar remains strong ahead of rate hike expectations while investors await further rate hike confirmation during Fed’s meeting this week.
USD/JPY
USDJPY appreciated throughout last week while closing Friday’s market at 113.40. The safe-haven Yen faced a large sell-off throughout the week amid investors preferences towards the dollar market. With expectations that Bank of Japan (BOJ) will remain their interest rate at low levels, this week press conference is very unlikely to bring an impact toward the Yen.
EUR/USD
EURUSD was depreciating earlier last week while closing Friday’s market session lower at 1.1300. Overall depreciation on Euro was mainly due to European Central Bank (ECB) dovish statement regarding future economy outlook where ECB President Mario Draghi emphasized a slower growth rate forecast for the year 2018, 2019 and 2020. Although ECB removed their Quantitative Easing (EQ) program, investors only reacted towards the dovish future economic outlook as they fear that ECB might delay their interest rate hike next year.
GBP/USD
GBPUSD further its bearish momentum throughout last week, closing Friday’s trading session lower at 1.2585. The pair underwent a large sell-off when UK Prime Minister Theresa May faces a no-confidence vote by her own Conservative Party. Although she was able to maintain her current position while postponing Parliament vote on the Brexit deal, Brexit uncertainties remained as she struggles to renegotiate with EU for better terms.
Market Review (Commodities): December 10 – December 14
GOLD
Gold price was falling throughout last week while closing Friday’s trading session at $1237.80 per troy ounce as the investors risk appetite favors the dollar market. The yellow metal fell from its high levels while investors waits for this week Fed’s rate hike.
Overall, the demand for safe-haven assets worsen as investors seek higher profits from the dollar market amid worsening sentiments in the euro and pound market.
Crude Oil
The price of crude oil was traded sideways overall last week while closing Friday’s trading session lower at $51.20 per barrel.
Current market conditions for crude oil remains mixed as market participants currently react towards inventories level reports. Although OPEC and its allies had already reached into agreement to cut global supplies by 1.2M bpd starting next year, increasing US inventories kept oil bulls at bay. However, recent reports from the International Energy Agency (IEA) forecasted next year crude inventory level to fall if OPEC’s plan holds effective until June 2019. The global balancing of crude oil inventory level will provide support for its price in future time.
Overall, the crude oil begins to rally after falling to a year low while investors wait for OPEC’s production cut to be effective on January next year.
Weekly Outlook: December 17 – 21
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 17 – 21
| Monday, December 17 |
Data EUR – CPI (YoY) (Nov)
Events N/A
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| Tuesday, December 18 |
Data EUR – German Ifo Business Climate Index USD – Building Permits (Nov)
Events AUD – Mid-Year Economic and Fiscal Outlook AUD – RBA Meeting Minutes
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| Wednesday, December 19 |
Data GBP – CPI (YoY) (Nov) CAD – Core CPI (MoM) (Nov) USD – Existing Home Sales (Nov) CrudeOIL – Crude Oil Inventories CrudeOIL – API Weekly Cure Oil Stock
Events N/A
|
| Thursday, December 20 |
Data USD – Fed Interest Rate Decision NZD – GDP (QoQ) (Q3) AUD – Employment Change (Nov) JPY – BoJ Interest Rate Decision GBP – Retail Sales (MoM) (Nov) GBP – BoE Interest Rate Decision USD – Philadelphia Fed Manufacturing Index (Dec)
Events USD – FOMC Economic Projections USD – FOMC Statement USD – FOMC Press Conference JPY – BoJ Monetary Policy Statement JPY – BoJ Press Conference
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Friday, December 21
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Data GBP – GDP (YoY) (Q3) GBP – GDP (QoQ) (Q3) USD – Core Durable Goods Orders (MoM) (Nov) USD – GDP (QoQ) (Q3) CAD – Core Retail Sales (MoM) (Oct) CAD – GDP (MoM) (Oct) CrudeOIL – US Baker Hughes Oil Rig Count
Events N/A
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