04 March 2019 Weekly Analysis
GCMAsia Weekly Report: March 04 – March 08
Market Review (Forex): February 25 – March 1
US Dollar
US dollar extended its gains after hitting four weeks low near 95.65 while closing the market at 96.35 on last Friday.
During earlier last week, the greenback tumbled against its six major peer currencies after US President Donald Trump announced an extension of March 1 tariff deadline toward China following substantial progress talk between two largest economies countries, China and United States. A high possibility of a deal being made triggered bullish momentum in other major currencies such as Euro and Sterling Pound as the risk of global growth slowing down has been dampened, dragging the investor out from Dollar market and shifted their investment portfolio to other major currencies. Moreover, dovish tone that unleashed by Fed Chairman Jerome Powell has also further deteriorated the sentiment in Dollar market. According to the testimony early last week, Powell mentioned that they will continue to keep their monetary policy remain neutral as current economy is running in full employment and the current inflationary pressure is near the ideal benchmark of 2%.
However, Dollar index managed to “wake up” in later of the week amid upbeat data included GDP and Chicago PMI have formed a strong floor to support the currency and pushing up the dollar index to a highest level in one week. According to US Commerce Department, GDP data for the last quarter in year 2018 came in at economist expectation of 2.6% while the Chicago PMI data for last month spiked to 64.7, as compared to economist forecast of only 58.1. Both data portray that the US economic growth is still enhancing and so the market participants chose to shift their capital back to Dollar market following a full of mixed signal’s week.
In conclusion, dollar sentiment is yet unclear as trade deal has not been made as of now and all the market participants will still eyes on the trade talk between both countries and the terms in trade deal would be highly emphasized on as it may determine which country benefited the most.
USD/JPY
USD/JPY was traded higher throughout the entire week while closing the market at the price of 111.90 last Friday. With substantial progress in trade talk and a delay on March 1 tariff deadline, the safe haven yen faced bulk sell off last week as unfreezing of trade talk indicating that the issue of global growth slowdown will be solved soon. Besides, weaker than expected reading of data in Japan that been announced last week has also exacerbated the market sentiment of Japanese Yen. The data of Industrial Production and Retail Sales came in at -3.7% and 0.6% respectively, as compared to economist forecast of -2.4% and 1.4%.
EUR/USD
EUR/USD edged up throughout the week while closing the market at 1.1365 on last Friday trading session. During earlier of the week, euro was traded higher amid global uncertainty vanished gradually following optimism in trade talk between China and United States, eventually the risk appetite of investors heightened and weighed on the riskier currencies such as Euro. Moreover, EUR/USD had also well supported by outperform data such as German Manufacturing PMI and German Unemployment Change. According to Markit Economics and German Federal Statistical Office, German Manufacturing PMI data came in at 47.6, in line with economist forecast while the German Unemployment change data for last month was -21K, as compared to economist expectation of -5k.
GBP/USD
Pound sterling gains against the dollar while closing last Friday’s market at 1.3205 following positive developments in Brexit issue. Early last week, Pound Sterling boosted up significantly following a news reported that Theresa May is planning to further extend the Brexit deadline and avoid United Kingdom from leaving European zone with no deal. More time to negotiate a better term for Brexit and ruling out the possibility of no deal Brexit triggered positive momentum in Pound market. Prior to the last weekend, Theresa May made an announcement that the policy lawmakers will have the opportunity to vote on delay of Brexit if her withdrawal proposal face tumble on March 12th.
Market Review (Commodities): February 25 – March 1
GOLD
Gold price plunged substantially while closing the market with the price of 1293.45 a troy ounce 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. Although trade deal is likely around the corner, market participant is still remain cautious while waiting for further confirmation before selling off their gold portfolio.
Crude Oil
Crude oil price registered losses and has been pressed down while closing last Friday market with the price of $55.75 per barrel. Crude oil record a huge losses in the earlier of the week after Donald Trump ask OPEC to ‘relax’ as oil price is in a too high level and OPEC should press down the price to avoid over hike. However, crude oil price managed to get back into the recovery stage after EIA Crude Oil Inventories data and US API weekly Crude Oil Stock data showed a diminished crude oil inventory level in US while the economist forecasted that US will have a buildup In crude oil inventory on last week. Nevertheless, Crude oil price slumped and fall back to $55.75 per barrel amid US Energy Department announced that they were offering up to 6 million barrels of emergency stocks from the SPR. In such a situation, Trump administration may wield SPR as their weapon against OPEC as Donald Trump is not satisfied with current crude oil’s price level.
As U.S and China remains the world’s two largest oil consuming nations, investors continue to focus on the trade talk progress where a trade agreement between both parties may provide positive outlook for the demand of crude oil.
Weekly Outlook: March 4 – March 8
For the week ahead, investor’s will remain focus on US-China trade developments and various economic data such as ADP Nonfarm Payroll, Nonfarm Payrolls and Unemployment rate to gauge market sentiment and outlook. Besides that, investors also putting their attention on speeches from FOMC member that could provide clearer picture for future interest rate decision.
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: March 4 – March 8
| Monday, March 4 |
Data GBP – Construction PMI (Feb)
Events N/A
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| Tuesday, March 5 |
Data AUD – RBA Interest Rate Decision (Mar) CHF – CPI (MoM) (Feb) USD – ISM Non-Manufacturing PMI (Feb) USD – New Home Sales (Dec)
Events AUD – RBA Rate Statement GBP – BoE Gov Carney Speaks
|
| Wednesday, March 6 |
Data CrudeOIL – API Weekly Crude Oil Stock AUD – GDP (QoQ) (Q4) USD – ADP Nonfarm Employment Change (Feb) CAD – BoC Interest Rate Decision CAD – Ivey PMI (Feb) CrudeOIL – Crude Oil Inventories
Events CAD – BoC Rate Statement
|
| Thursday, March 7 |
Data AUD – Retail Sales (MoM) (Jan) EUR – GDP (QoQ) (Q4) EUR – Deposit Facility Rate EUR – ECB Marginal Lending Facility EUR – ECB Interest Rate Decision (Mar) USD – Initial Jobless Claims
Events EUR – ECB Press Conference
|
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Friday, March 8
|
Data JPY – GDP (QoQ) (Q4) USD – Average Hourly Earnings (MoM) (Feb) USD – Building Permits (Jan) USD – Nonfarm Payrolls (Feb) USD – Unemployment Rate (Feb) CAD – Employment Change (Feb) CrudeOIL – US Baker Hughes Oil Rig Count
Events
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