24 December 2018 Weekly Analysis
GCMAsia Weekly Report: December 24 – 28
Market Review (Forex): December 17 – December 21
US Dollar
The US dollar steadied for the week while closing Friday’s market higher at $96.42. Index dollar was supported by the expected hike rate as U.S Fed increase its benchmark fund rate by 25 basis point from 2.25 to 2.5% last week.
Throughout last week, index dollar was drove higher by the Fed expected rate hike. However, market sentiment for dollar remains mixed as Fed Chairman has released a dovish note on its monetary policy statement and at the same time stressed that rate hikes would be put-on hold if inflations fall below the central bank’s target which is 2%. Besides that, U.S President Donald Trump has also threatened a “very long” government shutdown if the Senate fails to pass spending legislation which also includes a $5 billion in funding for his border wall plans, fueling some concerns in the market. However, dollar bulls were also supported by encouraging economic data such as Initial Jobless Claims with the reading of 214k against forecasted reading 219k, signaling an improving recovery in job markets. Furthermore, consumer sentiment also remains high as Michigan Consumer Sentiment displayed a higher than expected reading with 98.3 against 97.6. Thus, further strengthening the outlook of the economy.
Overall, sentiment towards dollar remains mixed as market will now focus ahead on further data and news to determine further direction as global markets were set to shut for Christmas holiday this week.
USD/JPY
USDJPY continues to appreciate throughout last week while closing Friday’s market at 111.20. The safe-haven Yen continue to facing a huge demand throughout the week amid investors preferences towards the safe-haven market. With a deteriorating outlook for global growth and a political instability as US government shutdown threat looms, safe-haven asset such as gold and yen have attracted bid from the market during times of economic and political stress.
EUR/USD
EURUSD depreciates earlier last week while closing Friday’s market session lower at 1.1366. Euro has been bottomed out and hit fresh lows due to market sentiment threatened by the worst performance for the week from US equities and also economical risk that continue to weight on mainland Europe, UK and US. Besides that, the sentiments were further dragged by cautious ECB where investors fear that the persistent weak data which continue to illustrate a slowdown in economy in EU could delay plans for a rate hike next year.
GBP/USD
GBPUSD struggles throughout the week, closing Friday’s trading session lower at 1.2622. The pair failed to make a recovery and remains shrugged by its uncertainty in Brexit progress as Brexit progress remains on halt due to UK Prime Minister Theresa May tries to save withdrawal agreement due to being unconfident of gaining majority vote for its Brexit plans. As the end date getting nearer, Prime Minister May has announced that the parliament vote on Brexit withdrawal agreement will be commenced at mid-January and a no-deal scenario is it is highly expected by market which could continue dragged pound sterling to the bottom.
Market Review (Commodities): December 17 – December 21
GOLD
Gold price soars throughout last week while closing Friday’s trading session at $1255.80 per troy ounce as dollar uncertainty supported the demand of safe-haven gold. The yellow metal appreciated as risk-off sentiment boosted by political uncertainty from US government and potential economic growth slowdown outlook has caused investors to adding their bets to the yellow metal.
Overall, the demand for safe-haven assets remains strong as investors goes into risk aversion mode from the dollar market amid worsening sentiments.
Crude Oil
The price of crude oil continues to hit fresh lows last week while closing Friday’s trading session lower at $45.31 per barrel.
Bear sentiment continues to knock oil market to its knees amid market expectations of OPEC could not balance the oversupply of crude oil despite its supply cut. Despite OPEC and its allies have agreed to cut global supplies by 1.2M bpd starting next year, fears of oversupply continue to rattle the market with last week Friday’s data have shown that 10 rigs have been added for the week which is the most in six weeks.
Overall, the crude oil continues to plummet to new lows while investors currently wait for OPEC’s plan to hope recover the market with supply cut starting next year.
Weekly Outlook: December 24 – 28
For the week ahead, investors will focus on various data such as CB Consumer Confidence and various Home Sales data which will provide a clearer outlook on US current economic outlook and also the progression of US government shutdown threat.
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 24– 28
| Monday, December 24 |
Data N/A
Events N/A
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| Tuesday, December 25 |
Data N/A
Events N/A
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| Wednesday, December 26 |
Data N/A
Events JAP – Monetary Policy Meeting Minutes JAP – BoJ Governor Kuroda Speaks
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| Thursday, December 27 |
Data USD – Initial Jobless Claims USD – CB Consumer Confidence USD – New Home Sales (Nov)
Events EUR – ECB Economic Bulletin
|
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Friday, December 28
|
Data USD – Pending Home Sales (MoM) (Nov) CrudeOIL – Crude Oil Inventories CrudeOIL – US Baker Hughes Oil Rig Count
Events N/A
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