18 February 2019 Weekly Analysis
GCMAsia Weekly Report: February 18 – February 22
Market Review (Forex): February 11 – February 15
US Dollar
US dollar continued its bullish momentum against a basket of major currencies throughout the entire week while closing last week’s market at the price of 96.70.
During early last week, Greenback extended its gains as European market sentiment was remained sour due to the concern over global economic recession. Investor risk appetite has been rifted and thus they shifted their investment portfolio from riskier asset to safe haven asset such as US dollar, Japanese yen and Gold. Besides, ongoing trade talk was remained as a critical focus point against market participants as trade impasses has been entangled Dollar market for few months.
Next, Dollar index was quoted up after upbeat data has been released on later of the week. According to the US Labor Department, Core CPI data came in at 2.2% beating economist expectation with only 2.1%. It portrays that the inflationary pressure is on the pace of gradual appreciation and the US economic growth is still resilient. Eventually, it may catalyst Federal Reserve to change their policy back to expansionary instead of holding interest rate neutral. Market optimism has successfully triggered bullish momentum in Dollar market and buy in greenback in bulk.
In conclusion, the ongoing trade talk between the world’s two largest economic powerhouses continues to be a major driver for market sentiment over the past year as recent progress remains in favor towards the U.S, causing investors to piling into the safety of the greenback following the fears of global growth slowdown. In the meantime, market are currently keeping their eyes on the details of trade talk’s result to comprehend which party will be in favored to before entering to the market.
USD/JPY
USD/JPY continue its bullish trend throughout the week while closing the market at the price of 110.45 last Friday session. Global economic growth slowing down has induced the market participants to sell off the major currencies and placed their capital in safe haven dollar and Japanese Yen. However, market sentiment in Dollar market is “sweeter” than Yen market due to progress in trade talk and strong data been announced throughout the week. Indeed, Investors order’s volume entered into dollar market rose and subsequently spurred up the pair of USD/JPY.
EUR/USD
Last week, EUR/USD extend its losses throughout the week while closing its market at 1.1290 last Friday. On the occasion of economic growth slowing down crisis, economic data in European zone that has been released on last week was poor enough and weaker than economist’s expected reading, including Industrial Production data and German GDP data. Both data showed that the existing issues which haunts the European market is worsening and further dragged down the shininess of Euro. Moreover, European government debt yields fell to two years low also exerted negative pressure and dragged down the value of Euro. However, the focus now seems to have shifted from Eurozone recession fears to the easing US China trade tensions later of last week.
GBP/USD
Pound sterling extend its bearish trend throughout the week while closing the market last Friday at 1.2885. During earlier of the week, Pound Sterling faced broad sell off after UK GDP data came in at 0.2%, as compared to 0.3% economist expectation. It portrays that market’s worries toward UK’s economy has been exacerbated as the data is bound to embrace recessive risk after Brexit. Besides, UK Prime Minister Theresa May faced another defeat on Brexit strategy negotiation last Wednesday as the plan did not rule out the possibility of hard Brexit. As of now, investor’s confidence level toward Theresa May has worsen as Irish backstops is still remain unsolved in Brexit.
Market Review (Commodities): February 11 – February 15
GOLD
Gold price remains strong in overall, closing the market at the price of $1321.00 a troy ounce last Friday. During early of the week, gold as a safe haven asset remained “scented” in the market as global growth slowdown and trade dispute between US and China has dragged down investor’s risk appetite, thus shifted their investment portfolio to safe haven asset such as gold and Japanese yen. The demand of gold heightened even more in the later of the week after Donald Trump commented that ongoing trade talk was going well.
Crude Oil
Crude oil price extended its gains toward the 3 months highest level while closing the market at $55.80 last Friday. Throughout the entire week, positive data such as API weekly crude oil stock and OPEC monthly report has well supported the crude oil price. According to American Petroleum Institute, API Weekly Crude Oil Stock came in at -0.9980 M which is far lower than economist expectation of 2.514M. The huge gap between actual reading and forecast triggered large buy in pressure on crude oil. Other than that, OPEC said its crude output had fallen more than 0.8 Million barrels per day in January. The supply glut cut were mainly shouldered by Saudi Arabia and Russia while US sanctions against Venezuela has also take into effect.
Besides that, the ongoing trade tension between US and China also currently affecting the current outlook for the crude oil. U.S and China are the world’s two largest oil consuming nations, the ongoing dispute between the two countries may dragged down the commodity’s global demand.
Weekly Outlook: February 18 – February 22
For the week ahead, investor’s will focus their attention on trade talk progress and various economic data such as Existing Home Sales and Fed Monetary Policy Report to gauge the market sentiment and future outlook.
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: February 18 – February 22
| Monday, February 18 |
Data N/A
Events N/A
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| Tuesday, February 19 |
Data GBP – Average Earnings Index +Bonus (Dec) GBP – Claimant Count Change (Jan) GBP – Unemployment Rate (Dec) EUR – German ZEW Economic Sentiment (Feb)
Events AUD – RBA Meeting Minutes
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| Wednesday, February 20 |
Data EUR – German PPI (MoM) (Jan) GBP – CBI Industrial Trends Orders (Feb)
Events N/A
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| Thursday, February 21 |
Data USD – API Weekly Crude Oil Stock AUD – Employment Change (Jan) EUR – German CPI (MoM) (Jan) EUR – German Manufacturing PMI (Feb) EUR – German Services PMI (Feb) EUR – Manufacturing PMI (Feb) EUR –Markit Composite PMI (Feb) EUR – Services PMI (Feb) USD – Core Durable Goods Orders (MoM) (Dec) USD – Philadelphia Fed Manufacturing Index (Feb) USD – Manufacturing PMI (Feb) USD – Markit Composite PMI (Feb) USD – Services PMI (Feb) USD – Existing Home Sales (Jan)
Events USD – FOMC Meeting Minutes EUR – ECB Publishes Account of Monetary Policy Meeting
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Friday, February 22
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Data USD – Crude Oil Inventories EUR – German GDP (QoQ) (Q4) EUR – German Ifo Business Climate Index EUR – CPI (YoY) (Jan) CAD – Core Retail Sales (MoM) (Dec)
Events CAD – BoC Gov Poloz Speaks EUR – ECB President Draghi Speaks USD – Fed Monetary Policy Report USD – U.S. Baker Hughes Oil Rig Count
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