9 April 2018 Weekly Analysis
GCMAsia Weekly Report: April 9 – 13
Market Review (Forex): April 2 – 6
Greenback fell against a basket of other major currencies last Friday over renewed fears of trade war among two of the world largest economies while mixed US job reports did little to change overall market sentiment. The dollar index recorded a loss of 0.33% while last quoted around 89.92 during late Friday trading.
The currency slid last Friday after China postulate that they are prepared to retaliate “forcefully” against the US if President Donald Trump followed through his plan to impose an additional tariff upon $100 billion worth of imports from China. The protectionism policy suggested by Trump may result in a full-blown trade war that will bring significant setback upon the global economy and future US growth.
Earlier, the greenback received selling pressure following the release of mixed bag Nonfarm Payrolls report by the US Labor Department. Per the report, the US economy has generated fewer than expected jobs for the month of March, with only 103,000 versus 193,000 seen. Likewise, the unemployment hovered unchanged at 4.1%, missing economist expectation to ticked down by 0.1% to 4.0%. However, the losses were limited after wage growth came in within expectation with 0.3%, adding some upward support towards the overall inflationary pressure.
US Nonfarm Payrolls
—– Forecast
Nonfarm Payrolls for the month of March missed economist expectation with only 103,000 jobs created.
US Unemployment Rate
—– Forecast
Unemployment rate for the month of March stabilizes at 4.1%, missing economist expectation to ticked down by 0.1% to 4.0%.
US Average Hourly Earnings
—– Forecast
Wage growth came in within expectation with 0.3% for the month of March.
USD/JPY
US dollar was quoted lower against the Japanese counterpart, down 0.42% to 106.93 over renewed perceived risk towards US-China trade tension.
EUR/USD
Euro extended its gains against the greenback, rising 0.33% while ended the week at $1.2281.
GBP/USD
Pound sterling pushed forward against the dollar, with pairing of GBP/USD advancing 0.61% to $1.4087. The sterling extended its bullish stance since last month after Britain and European Union reached consensus for a Brexit transition deal while Bank of England remained bullish with higher chances for an interest rate hike in the coming months.
Market Review (Commodities): April 2 – 6
GOLD
Gold price nudged up higher during last Friday over the backdrop of heightened US-China trade tension and a weaker US dollar. Price of the precious metal rose $6.76 or 0.51% while ended the week at $1,333.38 a troy ounce. In the event of higher perceived risk in the market, investors’ demand towards the metal will increase in order to safe guard their capital from higher risk of losses. Likewise, a weaker greenback generally enables user of other currency to purchase the asset at a cheaper price as it is denominated in US dollar.
Crude Oil
Crude oil price settled at two-weeks low on Friday after investors fled from risky assets amid escalating trade tension between the United States and China. The precious commodity extended its losses by 2.84% or $1.81 to $61.89 during late Friday trading.
Overall risk aversion in the market escalates following China’s vow to “fight back” forcefully against Trump administration if they follow through to enact additional tariff upon China’s import which amounts to $100 billion. Heightened trade tension between two of the largest economies in the world has sparked worries among investors as it may change overall trade pattern and threatens global economic growth.
Additionally, crude oil price extended its losses after US oilfield services provider Baker Hughes releases bearish report for its oil rig counts. According to the report, the number of US oil drilling rigs rose by 10 to 808, its highest level since March 27 this year. The report has added ongoing fears over rising US output which has reached a record high of 10.46 million barrels per day last week.
Weekly Outlook: April 9 – 13
For the week, investors will continue to keep an eye over trade tension between US and China to gauge overall market sentiment and prospects. Otherwise, European Central Bank and Federal Reserve is set to publish their respective meeting minutes which will provide further signal with regards to future monetary policy outlook.
As for oil traders, they will place their focus on monthly report from Organization of the Petroleum Exporting Countries (OPEC) and International Energy Agency to gauge global oil market demand and supply levels.
Highlighted economy data and events for the week: April 9 – 13
| Monday, April 9 |
Data EUR – German Trade Balance (Feb) GBP – Halifax House Price Index (YoY) (Mar) CAD – Housing Starts (Mar)
Events N/A
|
| Tuesday, April 10 |
Data AUD – NAB Business Confidence (Mar) USD – PPI (MoM) (Mar) CAD – Building Permits (MoM) (Feb)
Events USD – FOMC Member Kaplan Speaks
|
| Wednesday, April 11 |
Data CrudeOIL – API Weekly Crude Oil Stock AUD – Westpac Consumer Sentiment (Apr) CNY – CPI (YoY) (Mar) CNY – PPI (YoY) (Mar) GBP – Industrial Production (MoM) (Feb) GBP – Manufacturing Production (MoM) (Feb) GBP – Trade Balance (Feb) USD – Core CPI (MoM) (Mar) CrudeOIL – Crude Oil Inventories CrudeOIL – Gasoline Inventories
Events EUR – ECB President Draghi Speaks
|
| Thursday, April 12 |
Data EUR – French CPI (MoM) (Mar) EUR – Industrial Production (MoM) (Mar) USD – Import Price Index (MoM) (Mar) USD – Initial Jobless Claims CAD – New Housing Price Index (MoM) (Feb)
Events USD – FOMC Meeting Minutes CrudeOIL – OPEC Monthly Report EUR – ECB Publishes Account of Monetary Policy Meeting
|
|
Friday, April 13
|
Data EUR – German CPI (MoM) (Mar) CNY – Trade Balance (USD) (Mar) EUR – Trade Balance (Feb) USD – JOLTs Job Openings (Feb) USD – Michigan Consumer Sentiment (Apr) CrudeOIL – US Bakar Hughes Oil Rig Count
Events GBP – BoE Gov Carney Speaks USD – FOMC Member Kashkari Speaks CrudeOIL – IEA Monthly Report USD – FOMC Member Rosengren Speaks USD – FOMC Member Bullard Speaks USD – FOMC Member Kaplan Speaks
|
Technical Weekly Outlook: April 9 – 13
Dollar Index
DOLLAR_INDX, Daily: Dollar index remains traded within a sideways channel while recently retraced from the resistance level of 90.00. MACD histogram which illustrate substantially diminished upward momentum may suggest the index to be traded lower in short-term in the event of a closure below the 20-MA line (red).
Resistance level: 90.00, 90.65
Support level: 89.40, 88.40
GBPUSD
GBPUSD, Daily: GBPUSD remained traded within an uptrend following prior rebound from the trendline near 1.4000. Diminishing downward momentum as illustrated by MACD histogram suggests the pair to extend its gains in short-term, towards the direction of 1.4240.
Resistance level: 1.4240, 1.4430
Support level: 1.4000, 1.3800
USDJPY
USDJPY, Daily: USDJPY has recently broke out from the top level of descending channel, signaling a change in trend direction to move further upwards. MACD histogram which illustrate substantial bullish signal suggests the pair to extend its gains after closing above the 60-MA line (green).
Resistance level: 108.40, 109.70
Support level: 105.95, 105.45
EURUSD
EURUSD, Daily: EURUSD remains traded within a sideways channel while currently testing at the lower boundaries. MACD histogram which illustrate substantial downward signal may suggest the pair to be traded lower in short-term, towards the direction of strong support level at 1.2200.
Resistance level: 1.2340, 1.2500
Support level: 1.2200, 1.2000
GOLD
GOLD_, Daily: Gold price remains traded within a sideways channel while currently testing at the mid-threshold. Recent retracement from the resistance level of 1340.00 suggests some bearish bias. Thus, a closure below the 20-MA line (red) would provide further clarification. Otherwise, long-term trend direction could only be determined after a successful breakout from either side of the channel.
Resistance level: 1340.00, 1353.70
Support level: 1312.00, 1295.00
Crude Oil
CrudeOIL, Daily: Crude oil price was traded lower following prior retracement from the strong resistance level at 66.65 while concurrently formed an ascending triangle formation. MACD histogram which illustrate substantial downward signal may suggests the commodity price to extend its losses in short-term, towards the lower level of the triangle.
Resistance level: 63.75, 66.65
Support level: 60.80, 59.00