29 May 2017 Weekly Analysis
GCMAsia Weekly Report: May 29 – June 2
Market Review (Forex): May 22 – 26
U.S. Dollar
The greenback rose against a basket of six major peers following Friday’s data that shows US first quarter economic growth was revised higher than previously expected. The dollar index was up 0.2% to 97.33 after touching one-week high of 97.47.
US economy slowed less than initially thought for the first three months of the year. The latest reading of Gross Domestic Product shows an annual growth rate of 1.2%, slightly higher than initial estimate of 0.7%. Although it is the weakest expansion since the first quarter of 2016, economists postulate that it may rebound sharply for the second quarter of the year.
Prior to the release, the dollar came under pressure following dovish meeting minutes from the Federal Reserve which has spooked off dollar-bulls whom are expecting for more hawkish rate hike sentiment.
US Gross Domestic Product
—– Forecast
US GDP for first quarter came in at 1.2%, slightly better than previous revision of 0.7% seen.
USD/JPY
Japanese yen remained resilient with the pairing of USD/JPY shedding 0.43% to 111.34.
EUR/USD
Euro was offered lower during late Friday trading, down 0.26% to $1.1182.
GBP/USD
Pound sterling fell to one-month low with the pair of GBP/USD nosedive 1.1% to $1.2798 after opinion poll shows that the Labor Party is narrowing the gap with Conservative Party well ahead of upcoming elections on June 8th.
Market Review (Commodities): May 22 – 26
GOLD
Gold prices rose to one-month high on Friday as economic and political uncertainty continues to underpin the demand for safe haven assets. Price of the yellow metal was up 0.82% to $1,266.65 while adding up 1.16% of gains for the week. Gold remained higher although the greenback rebounds from its prior low after data showed that the US economy slowed less than expected for the first quarter.
The demand for gold remained supported as expectations for fiscal stimulus under Trump’s administration faded due to political turmoil in Washington. Investors sentiment was hit by ongoing worries that US political system might engulfed in crisis which could further delay lawmakers to push through tax and spending reforms.
Crude Oil
Oil prices settled higher on Friday, rebounding from prior low as it skydived more than 5% following the release of official statement from OPEC’s meeting in Vienna. Crude oil price settled up 1.9% or 90 cents and ended the week at $49.80 per barrel. For the week, it has pared some losses to less than 2% following Thursday’s slumped after the meeting concluded.
OPEC and other producing countries agreed to extend their production cut deal until the end of first quarter of 2018. While OEPC’s move was widely expected, some oil traders hoped that the producers would agree for deeper cuts in order to drain global glut of crude supplies more effectively. So far, the production cut agreement which began earlier this year had little impact on global inventory levels due to rising supply from non-participating producers such as Libya, Nigeria and United States.
Otherwise, US oilfield services provider Baker Hughes showed that US drillers has added rigs for 19th consecutive week last Friday. The US rig count was increased by 2 to a total of 722 thus far, its highest level since April 2015.
U.S. Baker Hughes Oil Rig Count
Active oil drilling rig in US was increased by 2 last week to a total of 722 thus far.
Weekly Outlook: May 29 – June 2
For the week ahead, market participants will be focusing on Friday’s highly anticipated US Nonfarm Payrolls report for further indication of next interest rate hike and its trajectory throughout the year. As for euro zone, investors will be waiting for monthly inflation data to assess the timing of ECB in tapering their massive asset purchase program as the economic zone continues to show progressive recovery.
In the oil market, traders will keep an eye on fresh weekly information regarding US stockpiles of crude and refined products on Wednesday and Thursday to gauge the strength of demand in the world’s largest oil consumer.
Highlighted economy data and events for the week: May 29 – June 2
| Monday, May 29 |
Data N/A
Events ECB President Draghi Speaks
|
| Tuesday, May 30 |
Data AUD – Building Approvals (MoM) (Apr) EUR – German CPI (MoM) (May) USD – Personal Spending (MoM) (Apr) USD – CB Consumer Confidence (May)
Events N/A
|
| Wednesday, May 31 |
Data CNY – Manufacturing PMI (May) CNY – Non-Manufacturing PMI (May) EUR – German Unemployment Change (May) GBP – Net Lending to Individuals EUR – CPI (YoY) (May) CAD – GDP (MoM) (Mar) USD – Chicago PMI (May) USD – Pending Home Sales (MoM) (Apr) Crude Oil – API Weekly Crude Oil Stock
Events NZD – RBNZ Gov Wheeler Speaks
|
| Thursday, June 1 |
Data AUD – Private New Capital Expenditure (QoQ) (Q1) AUD – Retail Sales (MoM) (Apr) CNY – Retail Sales (MoM) (Apr) EUR – German Manufacturing PMI (May) GBP – Manufacturing PMI (May) USD – ADP Nonfarm Employment Change (May) USD – Initial Jobless Claims USD – ISM Manufacturing PMI (May) Crude Oil – Crude Oil Inventories
Events N/A
|
|
Friday, June 2
|
Data GBP – Construction PMI (May) USD – Nonfarm Payrolls (May) USD – Unemployment Rate (May) USD – Trade Balance (Apr) CAD – Trade Balance (Apr) Crude Oil – U.S. Baker Hughes Oil Rig Count
Events N/A
|
Technical weekly outlook: May 29 – June 2
Dollar Index
DOLLAR_INDX, Daily: Dollar index remained traded within a downward channel following prior rebound from the bottom level. It is suggested to be traded higher in short-term within the channel towards the target of resistance level at 98.35.
Resistance level: 98.35, 99.65
Support level: 97.10, 95.30
GBPUSD
GBPUSD, Daily: GBPUSD was traded lower following previous retracement from a high of 1.3045 while currently testing at the support level of 1.2795. With regards to MACD histogram which illustrates significant downward signal and momentum, a closure below the level of 1.2795 would suggest GBPUSD to extend its downward momentum.
Resistance level: 1.3045, 1.3180
Support level: 1.2975, 1.2640
USDJPY
USDJPY, Daily: USDJPY remained traded within a narrowing triangle while currently testing near the bottom level of the triangle. Recent closure above the 60-moving average line (green) suggests USDJPY to be traded higher in short-term, 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 was traded lower following prior retracement from the resistance level of 1.1260. MACD histogram begins to illustrate downward signal suggests EURUSD to extend its downward momentum after breaking the support level of 1.1145.
Resistance level: 1.1260, 1.1365
Support level: 1.0975, 1.0850
GOLD
GOLD_, Daily: Gold price has recently breakout from the top level of narrowing triangle, signaling a change in trend direction to move further upwards. MACD histogram which illustrate significant upward signal and momentum suggests gold price to move further upwards after breaking the resistance level of 1273.70
Resistance level: 1273.70, 1295.15
Support level: 1244.85, 1216.00
Crude Oil
CrudeOIL, Daily: Crude oil price remained traded within a downward channel following prior retracement from the top level. With regards to the upward signal and momentum which begins to subside, crude oil price is expected to be traded lower in short-term after closing below the 60-moving average line (green).
Resistance level: 50.00, 52.00
Support level: 48.45, 47.00