25 February 2019 Weekly Analysis
GCMAsia Weekly Report: February 25 – March 1
Market Review (Forex): February 18 – February 22
US Dollar
US dollar extend its losses against a basket of major currencies while closing last week’s market at the price of 96.35.
Last week, the greenback slips against its major rivals following dovish comments from Federal Reserve vice chairman, Randal Quarles. At the Chicago Booth U.S Monetary Policy Forum that happen in New York, Fed vice chairman Randal Quarles stated plans for balance sheet to be used as a tool to combat potential headwinds in the labor market or pace of inflation. Besides that, New York Federal Reserve President John Williams also delivered a dovish note last week, stated that correlation, known as Phillips Curve between employment and inflation is “alive and kicking” and warned Fed to be vigilant and careful about declining inflation expectations.
Moreover, trade talk between US and China remains uncertain as US President Donald Trump has open to extend the deadline of March 1 for increasing tariff on $200 billion worth of Chinese goods from 10% to 25% as long as both parties made progress in negotiations.
In conclusion, dollar sentiment remains pressured by dovish expectations while market remains vigilant and cautious on the trade developments which currently lack of clarity in key issues such as intellectual property and tech transfers and also inflation data such fourth-quarter GDP which set to be released on Thursday this week which was already delayed by the 35-day partial government shutdown.
USD/JPY
USD/JPY was traded flat throughout the week while closing the market at the price of 110.63 last Friday session. With global uncertainty continues to haunt the market, the safe-haven yen manage to hold its ground last week despite manufacturing data numbers in Japan continues to struggle. Market is currently in focused on trade developments where an agreement between two economic powerhouses could increase investor’s risk appetite and weight on the safe-haven Yen.
EUR/USD
Last week, EUR/USD remains steady while ending the Friday market at 1.1331 as lack of fresh catalyst from EU and external factors continue to dominate trader’s attention. However recent reports shows that EU may also be dragged into its own trade war between US President Donald Trump and EU President Jean-Claude Junker over US agricultural industry and also EU automobile imports/exports which could threaten a potential chasm in two-sided trade.
GBP/USD
Pound sterling gains against the dollar while closing last Friday’s market at 1.3055 following positive developments. According to recent news, the extension of the Brexit official deadline is high likely to be inevitable as UK Prime Minister Theresa May planning to extend Article 50 and delay vote on her fresh Brexit plan by two weeks to March 12. Besides that, various media reports stated that few EU officials are ready to give as much as 21 months of extension to the formal date of March 29 when it comes to the UK’s departure from the EU, which adding further positive sentiment for the sterling.
Market Review (Commodities): February 18 – February 22
GOLD
Gold price records huge losses last week, closing the market with the price of 1327.43 last Friday session. Gold’s appeal as a safe-haven asset have diminished as increasing optimism between US – China trade war have increased investor’s risk appetite and viewed as a great opportunity to sell after a strong gains for gold. As trade talk remains in progress, market awaits further confirmation to weigh on the yellow metal as China is also one of the active purchasers for the yellow commodities.
Crude Oil
Crude oil price registered gains and pressed higher while closing last Friday market with the price of $57.15 per barrel following investors celebrated trade talk optimism between US – China during last week where US President Donald Trump met with China’s top trade representative, Vice Premiere Liu He. Besides that, ongoing evidence of declines in world-wide oil output such as Baker Hughes weekly rig-count data edge back by 4 to 853, increasing further positive momentum for the commodity.
As U.S and China remains the world’s two largest oil consuming nations, investors continue to focus on the progress where a trade agreement between both parties may provide positive outlook for the demand of crude oil.
Weekly Outlook: February 25 – March 1
For the week ahead, investor’s will remain in focus on US-China trade developments and various economic data such as Durable Goods Orders and Building Permits to gauge market sentiment and outlook. Besides that, investors also putting their attention on speeches from FED members that could provide hidden hints for future rate hike plans.
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 25 – March 1
| Monday, February 25 |
Data CHF – Employment Level (Q4)
Events GBP – BoE Gov Carney Speaks
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| Tuesday, February 26 |
Data USD – Building Permits (Dec) USD – CB Consumer Confidence (Feb)
Events GBP – Inflation Report Hearings GBP – U.K. Prime Minister May Speaks USD – Fed Chair Powell Testifies
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| Wednesday, February 27 |
Data CrudeOIL – API Weekly Crude Oil Stock NZD – Trade Balance USD – Core Durable Goods Orders (MoM) (Jan) CAD – Core CPI (MoM) (Jan) USD – Pending Home Sales (MoM) (Jan) CrudeOIL – Crude Oil Inventories
Events USD – Fed Chair Powell Testifies
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| Thursday, February 28 |
Data JPY – Industrial Production (MoM) (Jan) CHF – GDP (QoQ) (Q4) USD – GDP (QoQ) (Q4) USD – Chicago PMI (Feb)
Events N/A
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Friday, March 1
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Data EUR – German Manufacturing PMI (Feb) EUR – German Unemployment Change (Feb) GBP – Manufacturing PMI (Feb) EUR – CPI (YoY) (Feb) CAD – GDP (MoM) (Dec) USD – ISM Manufacturing PMI (Feb) USD – Michigan Consumer Sentiment (Feb)
Events N/A
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