7 January 2018 Weekly Analysis
GCMAsia Weekly Report: January 7 – January 11
Market Review (Forex): December 31 – January 4
US Dollar
The US dollar plunged and closed lower at 95.70 last Friday as US dollar’s market sentiment worsen due to recessive global economic growth.
During early of the week, an ease in trade war between China and U.S and downbeat data from China boosted up the US dollar momentum and reached a high level of 96.50. In such stronger dollar market, investors took the opportunity to buy into the currency. However, poor data readings from ISM Manufacturing PMI has limited the bullish momentum after coming in at only 54.1, weaker than economist forecast of 57.7. The bearish data has massively dialed down the confidence level of investors toward the Dollar market, resulting in a shift of investment portfolio towards safe heaven asset such as gold and Japanese Yen. Late last week, US Dollar extended its losses after unemployment data was released. A difference of 20 basis point between expectation and the actual reading has pulled the dollar index further although Nonfarm Payroll data showed that the number of individual being employed during the previous month has seen an significant increased.
Overall, market participants are still remained cautious toward the Dollar index while they speculate Federal Reserve might put a pause on its tightening monetary policy in early 2019.
USD/JPY
USDJPY continue its downward trend even though the pair made a strong rebound at low level of 107.15 later of the week. Last Thursday, Japanese Yen skyrocketed after Apple Inc. issued a rare revenue warning that has triggered risk aversion in the market. Likewise, further gains in Yen is also supported by the weaker than expected reading of Caixin Manufacturing data from China.
EUR/USD
EURUSD weakened throughout the week amid poor data and a possible slowdown in global economic growth while closing the week at 1.1395. Early last week, European Zone has announced manufacturing data for several countries and its readings have shown significant drawback in the European manufacturing sector. The data builds up bearish expectation that the European Central Bank (ECB) might maintain its interest rate at the same level for the time being. However, as Euro currency movements were more subject to Dollar movement, the dollar’s decline on last week led to a rise in Euro.
GBP/USD
Earlier last week, GBPUSD plummeted to its lowest level at 1.2515 due to the downward pressure from Dollar index amid optimism of Sino trade war while coupled with bearish economic data from China. However, sterling has successfully made a bullish comeback due to a decline in the dollar that was driven by poor data that signals diminishing momentum in the US economy.
Market Review (Commodities): December 31 – January 4
GOLD
Gold price continue to move higher while closing last week’s market at $1284.90 per ounce following US mixed data and dovish note from Federal Reserve chair Jerome Powell. The uncertainty in market outlook and a potential political turmoil in the US has encouraged investors to shield away from riskier market and bid into safe haven market such as yen and gold.
Overall, gold price is still on track to extend its upward trend due to uncertainty in global outlook and US political issues such as Mexico border wall conundrum.
Crude Oil
Crude oil has eventually changed its trend from bearish to bullish while closing last week’s market at $48.30 per barrel.
Early last week, crude oil price was traded lower amid trade war tensions and possible slowdown in global economic growth which has dialed down the investor’s confidence level towards the oil market. Besides that, sentiment was also further worsened as market participants worried that the OPEC production cut which takes into effect on 1th January might not able to rebalance the low crude oil prices. Yet, crude oil surged to $48.90 per barrel, its highest level in two weeks after U.S Baker Hughes Oil Rig Count showed that the oil rig has decreased from 885 to 877. The data portrays that the oil drilling activity in US has slowed down substantially.
Overall, crude oil is slowly recovering from prior losses while market participants will now place their attention upon OPEC’s oil production cut plan that limits the downside of the commodity price.
Weekly Outlook: December 31 – January 4
For the week ahead, investors will focus on various data such as the highly anticipated ISM Non-Manufacturing PMI and Core CPI which will provide a clearer outlook on current US economic condition and future prospect.
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 31 – January 4
| Monday, January 7 |
Data EUR – Retail Sales (MoM) (Nov) USD – ISM Non-Manufacturing PMI (Dec) CAD – Ivey PMI (Dec)
Events N/A
|
| Tuesday, January 8 | Data
EUR – German Industrial Production (MoM) (Nov) CHF – Retail Sales (YoY) USD – JOLTs Job Openings (Nov)
Events N/A
|
| Wednesday, January 9 |
Data USD – API Weekly Crude Oil Stock EUR – Unemployment Rate (Nov) CAD – BoC Interest Rate Decision USD – Crude Oil Inventories
Events CAD – BoC Monetary Policy Report CAD – BoC Rate Statement GBP – BoE Gov Carney Speaks
|
| Thursday, January 10 |
Data USD – Initial Jobless Claims USD – New Home Sales
Events CAD – BOC Press Conference USD – FOMC Meeting Minutes EUR – ECB Publishes Account of Monetary Policy Meeting
|
|
Friday, January 11
|
Data AUD – Retail Sales (MoM) (Nov) GBP – GDP (MoM) GBP – Manufacturing Production (MoM) (Nov) GBP – Monthly GDP 3M/3M Change USD – Core CPI (MoM) (Dec)
Events USD – Fed Chair Powell Speaks
|
| Saturday, January 12 |
Data
Event N/A
|