26 March 2018 Weekly Analysis
GCMAsia Weekly Report: March 26 – 30
Market Review (Forex): March 19 – 23
Dollar index extended its losses during late American trading session last Friday as investors flock to safe-haven over the backdrop of heightened political and economic uncertainty from Washington. The index plunged 0.42% while ended the week at around 89.48 against a basket of six major currencies.
Last Thursday, US President Donald Trump announced tariffs upon $50 billion worth of Chinese imports in order to curb high trade deficit among both countries while punishing China’s unfair seizure of US intellectual property. In retaliation, China announced that they are planning to enact tariff on a list of 128 US goods which amounts to $3 billion. The exchanges between two countries has sparked worries in the market as it may lead to a global trade war with no benefits for either end.
Likewise, selling pressure was catalyzed further following Trump’s threat to veto the $1.3 trillion spending bill that was passed last Friday as it does not include funding for the border wall near Mexico nor the deal with 800,000 Deferred Action for Childhood Arrivals (DACA) recipients. However, losses were limited after Trump reportedly signed the bill albeit being displeased to do so.
USD/JPY
Pair of USD/JPY tumbled down 0.51% to 104.74 due to rising demand for safe-haven assets as risk in the financial market arises.
EUR/USD
Euro rose 0.41% while ended the week around $1.2352 against the US dollar.
GBP/USD
Pairing of GBP/USD extended gains by 0.24% to $1.4131 following news that the European Union has agreed to adopt a negotiation stance with regards to future trade relationship with the UK after Brexit.
Market Review (Commodities): March 19 – 23
GOLD
Gold price rallied to its highest level in more than a month following strong safe-haven demand amid escalating trade tension between US and China that may spark global trade war in the near future. Price of the yellow metal skyrocketed 1.37% while closing the week at around $1,347.23 a troy ounce.
The world’s two largest economics appeared on the edge of an impasse as US imposes tariffs upon $60 billion worth of Chinese imports in order to reduce rising trade deficit and to punish the latter for “stealing” US intellectual properties.
In retaliation, China is considering enacting similar measures upon $3 billion of US imports which may see 15% duty and 25% tariff on certain products. Further supporting the safe-haven assets was a large sell-off in the greenback as investors fear a trade war could negatively impact the US economy.
Crude Oil
Crude oil price extended its gains sharply amid news that the Organization of the Petroleum Exporting Countries (OPEC) and Russia is considering a move to extend their production cut into 2019. Price of the precious commodity rose 2.56% while ended the week at one-month high of $65.75 per barrel.
According to the Saudi Arabian Energy Minister Khalid al-Falih, he postulates that OPEC members will need to continue their coordination with Russia and other non-OPEC members in restraining supplies into 2019 to reduce global oversupply glut. Prior, OPEC has introduced measures to cut daily crude output by 1.8 million barrels per day in hopes to prop up global oil prices. The pact which began in January 2017 is set to expire at the end of this year.
However, further upside on the commodity were limited following rising crude output from the United States which has climbed to a record high of 10.4 million barrels per day last week. Thus far, the United States has already surpassed Saudi Arabia in production as the second largest global producer while they are expected to overtake Russia as the top producer by late 2018. Rising production from the US may undermine OPEC’s effort in rebalancing global oil demand and supply.
Weekly Outlook: March 26 – 30
For the week ahead, investors will place their attention upon the latest revision of GDP from US, UK and Canada in order to gauge respective countries’ economic performance. Likewise, secondary data from the US such as Consumer Confidence and Sentiment will be sidelined that may shed some light on consumer’s behavior and future spending patterns.
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 26 – 30
| Monday, March 26 |
Data NZD – Trade Balance (MoM) (Feb) GBP – Gross Mortgage Approvals
Events N/A
|
| Tuesday, March 27 |
Data AUD – HIA New Home Sales (MoM) (Feb) USD – CB Consumer Confidence (Mar)
Events USD – FOMC Member Dudley Speaks USD – FOMC Member Mester Speaks USD – FOMC Member Bostic Speaks
|
| Wednesday, March 28 |
Data CrudeOIL – API Weekly Crude Oil Stock NZD – ANZ Business Confidence (Mar) EUR – GfK German Consumer Climate (Apr) USD – GDP (QoQ) (Q4) USD – GDP Price Index (QoQ) (Q4) USD – Goods Trade Balance (Feb) USD – Pending Home Sales (MoM) (Feb) CrudeOIL – Crude Oil Inventories CrudeOIL – Gasoline Inventories
Events N/A
|
| Thursday, March 29 |
Data GBP – Nationwide HPI (MoM) EUR – German Unemployment Change (Mar) EUR – German Unemployment Rate (Mar) GBP – GDP (QoQ) (Q4) GBP – GDP (YoY) (Q4) EUR – German CPI (MoM) (Mar) USD – Core PCE Price Index (MoM) (Feb) USD – Core PCE Price Index (YoY) (Feb) USD – Initial Jobless Claims USD – Personal Spending (MoM) (Feb) USD – Personal Income (MoM) (Feb) CAD – GDP (MoM) (Jan) CAD – RMPI (MoM) (Feb) USD – Michigan Consumer Sentiment (Mar)
Events USD – FOMC Member Bostic Speaks
|
|
Friday, March 30
|
Data CrudeOIL – US Baker Hughes Oil Rig Count JPY – Household Spending (YoY) JPY – Tokyo CPI (YoY) (Mar) JPY – Industrial Production (MoM) (Feb)
Events USD – FOMC Member Harker Speaks
|
Technical Weekly Outlook: March 26 – 30
Dollar Index
DOLLAR_INDX, Daily: Dollar index extended its losses following prior retracement from the strong resistance level at 90.00. MACD histogram which has recently formed a death cross signal suggests the index to extend its losses towards the support level of 88.40.
Resistance level: 90.00, 90.95
Support level: 89.40, 88.40
GBPUSD
GBPUSD, Daily: GBPUSD extended gains following prior closure above the resistance level at 1.3970. MACD histogram and both MA lines which illustrate bullish bias suggests the pair to advance further up. However, a close above the threshold of 1.4210 is required to further clarify such bias.
Resistance level: 1.4210, 1.4390
Support level: 1.3970, 1.3800
USDJPY
USDJPY, Daily: USDJPY sheds its prior gains following a retrace from the 20-MA line (red). Both MA line and MACD histogram which portrays bearish bias suggests the pair to extend its losses towards the direction of support level at 103.35.
Resistance level: 105.45, 105.95
Support level: 103.35, 100.60
EURUSD
EURUSD, Daily: EURUSD remains traded within a descending channel while recently consolidates in between the range of 1.2270 and 1.2400. Stochastic Oscillator which illustrate further upside bias towards the overbought region may suggest the pair to advance further up in short-term. Otherwise, long-term trend direction is still subject to the descending channel formation unless a breakout occurs at either side of the channel.
Resistance level: 1.2400, 1.2500
Support level: 1.2270, 1.2170
GOLD
GOLD_, Daily: Gold price rose sharply following prior closure and breakout from the top level of descending triangle. MACD histogram which illustrate the formation of golden cross may suggests further extension of gains. However, a close above the strong resistance level of 1353.70 is required to acquire further verification.
Resistance level: 1353.70, 1366.00
Support level: 1340.00, 1312.00
Crude Oil
CrudeOIL, Daily: Crude oil price extended gains following prior breakout from the top level of narrowing triangle. Both MA lines which continues to narrow upwards may suggest the commodity price to advance further up after successfully breaking the strong resistance level at 66.65.
Resistance level: 66.65, 69.10
Support level: 63.75, 60.80