12 March 2018 Weekly Analysis
GCMAsia Weekly Report: March 12 – 16
Market Review (Forex): March 5 – 9
Greenback struggled to extend its recovery last Friday following mixed sentiment given off by the latest release of Nonfarm Payrolls report. The dollar index recorded a loss of 0.08% to 90.10 during late Friday trading.
According to the US Labor Department, the economy has created 313,000 jobs in the month of February, well above economist expectation for only 200,000 jobs. The data supersedes January reading of 239,000 jobs. However, unemployment rate remained unchanged at 4.1%, missing economist forecast for a decline of 0.1% to 4.0%.
However, most of the attention remained focused on the Average Hourly Earnings – one of the key contributor to domestic inflation pressure which could lead to a faster pace of interest rate hike throughout the year.
For the month of February, Average Hourly Earnings rose only 0.1%, missing economist expectation for a 0.2% rise. Investors cut their bullish bets on the dollar as many had expected wage growth to rise at a faster pace following January’s strong reading. Likewise, the dollar received further bearish pressure following a surge in Canadian dollar after a sharp uptick in oil price.
US Nonfarm Payrolls
—– Forecast
US Nonfarm Payrolls for the month of February came in at 313K versus 200K seen.
US Unemployment Rate
—– Forecast
US Unemployment rate remained constant at 4.1%
US Average Hourly Earnings
—– Forecast
US Average Hourly Earnings came in at 0.1%, missing economist expectation of 0.2%.
USD/JPY
Pair of USD/JPY extended gains by 0.56% to 106.81 following dovish tone adopted by the Bank of Japan (BoJ). BoJ reiterates that the central bank would patiently continue their aggressive stimulus program in order to achieve 2% target of inflation, hence dialing down market’s bullish bet on the safe-haven Yen.
EUR/USD
Pair of EUR/USD ticked down 0.02% while closing the week at around $1.2308.
GBP/USD
Pair of GBP/USD extended gains by 0.33% to $1.3854.
Market Review (Commodities): March 5 – 9
GOLD
Gold price received some bullish support during late Friday trading session as US dollar fails to garner bullish bets over the mixed bagged Nonfarm Payrolls report. Price of the precious metal rose $1.51 or 0.11% while ending the week at $1,323.49 a troy ounce. Initial reaction on the NFP report was rather positive after US Department of Labor reported that the economy generated 313,000 jobs, exceeding economist forecast for 200,000.
However, traders cut off their bullish bets after Average Hourly Earnings came in lower than expected with only 0.1% – signaling a slower pickup in inflationary pressure and may hinder US Federal Reserve from hiking interest rate at a faster pace. Otherwise, current upside on the precious metal remains limited as geopolitical risk in the Korean Peninsula subside following South’s announcement to hold an inter-Korean summit which will address the ongoing nuclear threats from the North.
Crude Oil
Crude oil price rose sharply during last Friday as traders cheered over possible slowdown in the US oil output. Price of the black commodity skyrocketed $1.84 or 3.05% while closing the week at $62.18 per barrel.
According to the US oilfield service provider Baker Hughes, the number of active drilling rigs in the US fell by four to a total of 796. The decrease helped to ease investors’ concern over rising US oil production which was large driven by shale that has jumped to a record high of almost 10.4 million barrels per day.
Also supporting the oil prices were a weaker greenback following data which shows a slowdown in wage growth – one of the key factors that may lead to higher inflation and subsequently faster pace of interest rate hike. Evidently, the depreciation of greenback may help to increase crude oil’s appeal to investors as it is cheaper for those whom uses other currency.
Weekly Outlook: March 12 – 16
For the week ahead, investors will keep a close eye on the latest revision of CPI and Retail Sales from the United States in order to attain further clues with regards to the pace of interest rate hike throughout the year.
As for oil traders, they will be focusing on the monthly report released by Organization of the Petroleum Exporting Countries (OPEC) and International Energy Agency (IEA) to acquire further signal with regards to global oil supply and demand as well as their forecast on the industry for the near future.
Highlighted economy data and events for the week: March 12 – 16
| Monday, March 12 |
Data JPY – BSI Large Manufacturing Conditions (Q1)
Events N/A
|
| Tuesday, March 13 |
Data AUD – NAB Business Confidence (Feb) JPY – Tertiary Industry Activity Index (MoM) EUR – German ZEW Economic Sentiment (Mar) USD – Core CPI (MoM) (Feb) USD – CPI (MoM) (Feb)
Events GBP – Spring Forecast Statement CAD – BoC Gov Poloz Speaks
|
| Wednesday, March 14 |
Data CrudeOIL – API Weekly Crude Oil Stock AUD – Westpac Consumer Sentiment (Mar) CNY – Fixed Asset Investment (YoY) (Feb) CNY – Industrial Production (YoY) (Feb) EUR – German CPI (MoM) (Feb) EUR – Industrial Production (MoM) (Feb) USD – Core Retail Sales (MoM) (Feb) USD – PPI (MoM) (Feb) USD – Retail Sales (MoM) (Feb) USD – Business Inventories (MoM) (Jan) CrudeOIL – Crude Oil Inventories CrudeOIL – Gasoline Inventories
Events JPY – Monetary Policy Meeting Minutes CrudeOIL – OPEC Monthly Report
|
| Thursday, March 15 |
Data NZD – GDP (QoQ) (Q4) CHF – SNB Interest Rate Decision USD – Import Price Index (MoM) (Feb) USD – Initial Jobless Claims USD – NY Empire State Manufacturing Index (Mar) USD – Philadelphia Fed Manufacturing Index (Mar) USD – Philly Fed Employment (Mar) CAD – ADP Nonfarm Employment Change
Events CHF – SNB Monetary Policy Assessment CrudeOIL – IEA Monthly Report
|
|
Friday, March 16
|
Data JPY – Industrial Production (MoM) (Jan) EUR – CPI (YoY) (Feb) USD – Building Permits (Feb) USD – Housing Starts (MoM) (Feb) CAD – Manufacturing Sales (MoM) (Jan) USD – Industrial Production (MoM) (Feb) USD – JOLTs Job Openings (Jan) USD – Michigan Consumer Sentiment (Mar) CrudeOIL – US Baker Hughes Oil Rig Count
Events N/A
|
Technical Weekly Outlook: March 12 – 16
Dollar Index
DOLLAR_INDX, Daily: Dollar index was traded higher following prior rebound from the minor support near 89.40. However, MACD histogram which illustrate diminishing upward momentum may suggests the index to be traded lower in short-term as technical correction. First target will be focusing on the support level at 90.00.
Resistance level: 90.95, 91.70
Support level: 90.00, 89.40
GBPUSD
GBPUSD, Daily: GBPUSD remans traded within a descending triangle following prior reentry into the formation. MACD histogram which illustrate diminishing downward momentum may suggests the pair to be traded higher in short-term, towards the upper level of the triangle. Otherwise, long-term trend direction can only be determined following a successful breakout from either side of the triangle.
Resistance level: 1.3970, 1.4210
Support level: 1.3800, 1.3600
USDJPY
USDJPY, Daily: USDJPY halts its bearish descend following prior breakout from the downward trend line. Recent closure above the 20-MA line (red) while coupled with upward signal from the MACD histogram suggests the pair to extend its gains, towards the direction of 108.40.
Resistance level: 108.40, 109.70
Support level: 105.95, 105.45
EURUSD
EURUSD, Daily: EURUSD remains traded within a descending channel following prior retracement from the top level. MACD histogram which illustrate the formation of death cross suggests further bearish bias. Thus, a close below the strong support level at 1.2270 would provide further clarification.
Resistance level: 1.2400, 1.2500
Support level: 1.2270, 1.2170
GOLD
GOLD_, Daily: Gold price remains traded within a descending triangle following prior retracement from the top level. Both MA lines which has formed a death cross signal suggests further bearish bias for the commodity price. Hence, it is suggested to extend its losses in short-term, towards the strong support level of 1312.00. Otherwise, long-term trend direction can only be determined following a successful breakout from either side of the triangle.
Resistance level: 1340.00, 1353.70
Support level: 1312.00, 1295.00
Crude Oil
CrudeOIL, Daily: Crude oil price remains traded within a narrowing triangle following prior rebound from the bottom level. Stochastic Oscillator which illustrate a rebound signal prior to the oversold region suggests the commodity price to extend its gains in short-term, towards the upper level of the triangle.
Resistance level: 63.75, 66.65
Support level: 60.80, 59.00