26 February 2018 Weekly Analysis
GCMAsia Weekly Report: February 26 – March 2
Market Review (Forex): February 19 – 23
Greenback pared its losses last Friday while traded flat against a basket of six major currencies after Federal Reserve hypothesize that gradual interest rate hike remains appropriate. The dollar index recorded a gain of up to 0.16% and ended the week around 89.88.
Previously, Federal Reserve in its monetary policy report said that the pace of wage gains was moderate albeit being weighed by low productivity. The Feds postulate that the current economic expansion continues to be supported by persistent job gains, rising household wealth, favorable consumer sentiment and accommodative financial conditions.
Although the minutes did not specify the case for an increased pace of interest rate hike within the year, overall hawkish tone adopted by the central bank reaffirms investors expectation for the Fed to raise interest rates by next month. On the other hand, overall gains on the dollar remains limited following an ongoing depreciation in the US bond yields due to the recent fall in Treasury prices.
USD/JPY
Pair of USD/JPY added up 0.04% and closing the week around 106.79.
EUR/USD
Euro extended its losses against the greenback, down 0.21% to $1.2304. The single common currency was under pressure following investors’ concern over the outcome of Italian election which is less than two-weeks away.
GBP/USD
Pound sterling pared its prior losses, up 0.15% to $1.3975 against the US dollar.
Market Review (Commodities): February 19 – 23
GOLD
Gold price received some bearish pressure last Friday while posting a weekly loss amid greenback strength despite Federal Reserve’s call to increase interest rates gradually. Price of the yellow metal sags by $2.18 or 0.16% to $1,329.97 a troy ounce while recording a weekly loss of 1.15%.
In general, gold is sensitive towards rising interest rates which may increases its opportunity cost for holding non-interest yielding assets such as bullion. However, losses on its prices were somewhat limited following an ongoing depreciation in US bond yields after attaining four-years high on Wednesday. Some analyst postulate that it could be a start of a long overdue correction due to the recent fall in US Treasury prices.
Crude Oil
Crude oil price settled higher on last Friday following a drop in Libyan production and optimistic comments from Saudi’s oil chief. Price of the black commodity notched up 1.52% or $0.95 to $63.65 per barrel. For the week, it has recorded a gain of up to 1.85% after suffering tremendous losses on the previous week.
Last Friday, US oilfield services firm Baker Hughes reported an increase in the active oil drilling rigs by one to 799, its highest level since 2nd April 2015. However, the bearish data was offset by an earlier report of a dip in Libyan production due to oilfield shutdown which could reduce daily production by up to 70,000 barrels.
Further bullish support was catalyzed after Saudi Arabia Energy Minister Khalid al-Falih commented that the oil market begins to rebalance, while expecting global inventories to continue its decline throughout the year of 2018. His comments came in the wake of a steady increase of US production which could derail OPEC’s effort in rebalancing global oil price through daily output cuts.
Weekly Outlook: February 26 – March 2
For the week ahead, investors will place their attention on the United States as they are scheduled to their latest revision of GDP while newly elected Fed Chair Jerome Powell is bound to testify on Tuesday.
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 26 – March 2
| Monday, February 26 |
Data USD – New Home Sales (Jan)
Events USD – FOMC Member Bullard Speaks EUR – ECB President Draghi Speaks
|
| Tuesday, February 27 |
Data NZD – Trade Balance (MoM) (Jan) USD – Core Durable Goods Orders (MoM) (Jan) USD – CB Consumer Confidence (Feb)
Events USD – Fed Chair Powell Testifies
|
| Wednesday, February 28 |
Data CrudeOIL – API Weekly Crude Oil stock JPY – Industrial Production (MoM) (Jan) NZD – ANZ Business Confidence (Feb) CNY – Manufacturing PMI (Feb) CNY – Non-Manufacturing PMI (Feb) EUR – GfK German Consumer Climate (Mar) EUR – German Unemployment Change (Feb) EUR – German Unemployment Rate (Feb) EUR – CPI (YoY) (Feb) USD – GDP (QoQ) (Q4) USD – GDP Price Index (QoQ) (Q4) CAD – RMPI (MoM) (Jan) USD – Chicago PMI (Feb) USD – Pending Home Sales (MoM) (Jan) CrudeOIL – Crude Oil Inventories CrudeOIL – Gasoline Inventories
Events N/A
|
| Thursday, March 1 |
Data AUD – Private New Capital Expenditure (QoQ) (Q4) CNY – Caixin Manufacturing PMI (Feb) GBP – Nationwide HPI (MoM) (Feb) EUR – German Manufacturing PMI (Feb) EUR – Manufacturing PMI (Feb) GBP – Manufacturing PMI (Feb) USD – Core PCE Price Index (YoY) (Jan) USD – Core PCE Price Index (MoM) (Jan) USD – Initial Jobless Claims USD – Personal Income (MoM) (Jan) USD – Personal Spending (MoM) (Jan) USD – ISM Manufacturing Employment (Feb) USD – ISM Manufacturing PMI (Feb)
Events USD – Fed Chair Powell Testifies
|
|
Friday, March 2
|
Data JPY – Household Spending (YoY) (Jan) JPY – National Core CPI (YoY) (Jan) JPY – Tokyo Core CPI (YoY) (Feb) EUR – German Retail Sales (MoM) (Jan) GBP – Construction PMI (Feb) CAD – GDP (MoM) (Dec) USD –Michigan Consumer Sentiment (Feb) CrudeOIL – US Baker Hughes Oil Rig Count
Events USD – FOMC Member Dudley Speaks GBP – BoE Gov Carney Speaks GBP – UK Prime Minister May Speaks
|
Technical Weekly Outlook: February 26 – March 2
Dollar Index
DOLLAR_INDX, Daily: Dollar index was traded lower following prior retracement from the psychological level at 90.00. While MACD histogram continues to illustrate substantial upward signal provides some bullish bias, break above the resistance of 90.00 is required in order to gain further validation.
Resistance level: 90.00, 91.30
Support level: 88.40, 86.80
GBPUSD
GBPUSD, Daily: GBPUSD remains traded within a narrowing triangle while recently retraced from the mid-level. Recent price action which coincides with the downward signal from MACD histogram suggests the pair to be traded lower in short-term. Otherwise, long-term trend direction can only be determined after a successful breakout from either side of the triangle formation.
Resistance level: 1.3970, 1.4210
Support level: 1.3800, 1.3600
USDJPY
USDJPY, Daily: USDJPY remained under pressure following prior retracement before the 20-MA line (red). Both lines which continues to expand downwards suggests further bearish bias for the pair to extend its losses towards the direction at 105.95.
Resistance level: 108.40, 109.70
Support level: 105.95, 103.35
EURUSD
EURUSD, Daily: EURUSD extended its losses while forming a double top formation with the neckline at 1.2270. MACD histogram which illustrate significant downward signal suggests further bearish bias. Thus, a break is required at the neckline of 1.2270 in order to further validate such bias.
Resistance level: 1.2500, 1.2600
Support level: 1.2270, 1.2170
GOLD
GOLD_, Daily: Gold price extended its losses following prior retracement from 1353.70 while forming a double top formation. MACD histogram which illustrate persistent downward signal suggests the commodity price to advance further down after closing below the 60-MA line (green).
Resistance level: 1340.00, 1353.70
Support level: 1312.00, 1295.00
Crude Oil
CrudeOIL, Daily: Crude oil price extended gains following prior rebound from the support level at 60.80. MACD histogram which illustrate significant upward signal suggests the commodity price to advance further up after successfully breaking the resistance level at 63.75.
Resistance level: 63.75, 66.65
Support level: 60.80, 59.00