22 May 2017 Weekly Analysis
GCMAsia Weekly Report: May 22 – 26
Market Review (Forex): May 15 – 19
U.S. Dollar
The greenback resumed its decline last Friday, notching its largest weekly loss in nearly a year as political turbulence around Trump administration continued to dominate overall market sentiment.
The dollar index ended the week with 0.79% lower, hovering near six-months low of 97.00 while giving up its gains made following last year’s US election in November. For the week, the index has shed more than 2.12%, its worst weekly loss since last July. Thus far, the index has fallen more than 5% from its 14-years high of 103.82 on January 3rd as investors lose their faith in “Trump trade” agenda.
US dollar received renewed selling pressure following reports that a senior White House adviser is a person of interest in the investigation over the alleged Russian interference in November’s presidential election. The Justice Department appointed a former FBI director as special counsel to investigate possible collusion between Trump’s campaign team and Russia. Overall sentiment turned grey as political uncertainty may delay Trump’s effort to push through his economic agenda such as tax reform and large fiscal spending.
USD/JPY
Pair of USD/JPY was down 0.2% to 111.25, recording its first weekly decline in five-weeks, shedding prior gains by 1.82% for the week.
EUR/USD
The euro rallied to fresh six-months high last Friday, with the EUR/USD adding up 0.95% to 1.1207. The euro continued to be underpinned after investor shifted their attention back to the outlook of monetary policy from European Central Bank as political risk subsided while recent economic data indicated economic recovery in the currency bloc.
GBP/USD
Great British Pound gained against its US counterpart, appreciating 0.73% to $1.3034 while ended the week with total gain of 1.16%.
Market Review (Commodities): May 15 – 19
GOLD
Gold prices inches higher on Friday, registering its largest weekly gain since mid-April as political uncertainty surrounding Trump administration place immense pressure on the dollar, while at the same time boosting the demand for the precious metal. Spot gold price was up 0.21% to $1,255.27 during late Friday trading.
The greenback received broad selling pressure following fresh report that a senior White House adviser is a person of interest in the investigation of Trump-Russia political saga. Investors sentiment were hit over fears that US political system could be engulfed in crisis, preventing lawmakers to push through tax or spending reforms. Likewise, higher uncertainty and risk in the market would prompt higher demand for gold as it is one of the safe-haven asset other than the Japanese yen.
Crude Oil
Crude futures settled at four-weeks high with prices soaring a weekly gain of more than 5% amid higher optimism that key major producers will extend output cuts beyond prior agreed-on June deadline when they meet later this month. Crude oil price rose 2% during last Friday, while ended the week at $50.33 a barrel. It has settled above the level of $50 for the first time in four weeks.
Oil ministers from Organization of the Petroleum Exporting Countries and other major producers will be meeting in Vienna on May 25th to decide whether to extend their current daily production cut beyond June 30th dateline. Most market analyst expects the oil cartel to extend output cuts for another nine months until March 2018 instead of six months as previously expected.
Otherwise, data from energy services provider Baker Hughes showed that US active drilling rig increased for 18th week in a row. US rig count rose by 8 to 720 in total, its highest level since April 2015.
U.S. Baker Hughes Oil Rig Count
Active oil drilling rig in US was increased by 8 last week to a total of 720 thus far.
Weekly Outlook: May 22 – 26
For the week ahead, investors will be looking forward for Wednesday’s Federal Reserve meeting minutes to scavenge fresh signals regarding the timing of next US interest rate hike. Revised data on US first quarter growth and private sector survey data from the Euro zone will also be in focus.
As for oil traders, market participants will be focusing on the Organization of the Petroleum Exporting Countries highly-anticipated meeting on Thursday to see any major plans to extend their current production-cut deal. Likewise, fresh weekly information from US regarding stockpiles of crude and refined products on Tuesday and Wednesday will also be in the limelight.
Highlighted economy data and events for the week: May 22 – 26
| Monday, May 22 |
Data N/A
Events N/A
|
| Tuesday, May 23 |
Data EUR – German GDP (QoQ ) (Q1) EUR – German Manufacturing PMI (May) EUR – German Ifo Business Climate Index (May) EUR – Manufacturing PMI (May) EUR – Markit Composite PMI (May) EUR – Services PMI (May) USD – New Home Sales (Apr) Crude Oil – API Weekly Crude Oil Stock
Events GBP – Inflation Report Hearings
|
| Wednesday, May 24 |
Data USD – Existing Home Sales (Apr) CAD – BoC Interest Rate Decision Crude Oil – Crude Oil Inventories
Events EUR – ECB President Draghi Speaks USD – FOMC Meeting Minutes
|
| Thursday, May 25 |
Data GBP – Business Investment (QoQ) (Q1) GBP – GDP (QoQ) (Q1)
Events Crude Oil – OPEC Meeting
|
|
Friday, May 26
|
Data USD – Core Durable Goods Orders (MoM) (Apr) USD – GDP (QoQ) (Q1) USD – Michigan Consumer Sentiment (May) Crude Oil – U.S. Baker Hughes Oil Rig Count
Events N/A
|
Technical weekly outlook: May 22 – 26
Dollar Index
DOLLAR_INDX, Daily: Dollar index has slipped out from the bottom level of downward channel, signaling a change in trend direction to move further downwards. MACD histogram which continues to illustrate downward signal suggests the dollar index to extend its losses after breaking the support level of 96.90.
Resistance level: 97.55, 98.90
Support level: 96.90, 95.85
GBPUSD
GBPUSD, Daily: GBPUSD was traded lower following prior retracement while currently testing near the support level of 1.2985. MACD indicator which continues to drift outside of upward momentum suggests GBPUSD to be traded lower in short-term as technical correction. Otherwise, long-term trend direction still suggests GBPUSD to extend its upward momentum.
Resistance level: 1.3130, 1.3270
Support level: 1.2985, 1.2855
USDJPY
USDJPY, Daily: USDJPY was traded higher following prior rebound from the support level of 110.60 while currently testing near the 60-moving average line (green). A closure above the line would suggest USDJPY to extend its upward momentum towards the target of resistance level at 112.15.
Resistance level: 112.15, 113.40
Support level: 110.60, 108.10
EURUSD
EURUSD, Daily: EURUSD extended its gains following prior formation of golden cross by both moving average line. With regards to MACD histogram which portrays significant upward signal and momentum, a closure above the resistance level of 1.1260 would suggest EURUSD to move further upwards.
Resistance level: 1.1260, 1.1365
Support level: 1.1145, 1.0975
GOLD
GOLD_, Daily: Gold price remains traded within a narrow triangle while currently testing near the top level of the triangle. A retracement from this level would suggest gold price to be traded lower in short-term, towards the target of support level at 1240.70. Otherwise, a breakout would signal gold price to experience a change in trend direction to move further upwards thereafter.
Resistance level: 1263.15, 1295.80
Support level: 1240.70, 1216.60
Crude Oil
CrudeOIL, Daily: Crude oil price extended its gains following prior closure above both moving average line and 61.8 level of Fibonacci retracement. As the MACD histogram continues to illustrate upward signal and momentum, it is suggested to advance further up, towards the target of resistance level at 52.80.
Resistance level: 52.80, 55.20
Support level: 50.85, 49.50