02 March 2020 Weekly Analysis
GCMAsia Weekly Report: March 2 – 6
Market Review (Forex): February 24 – 29
US Dollar
The dollar index which measure its value against a basket of six major currency slumped in last week following a string of bleak U.S. data which pointed to weak economic growth in U.S. while closing its market at the price of 97.95. In addition, the U.S stock market tumble amid to the fears upon the outbreak of coronavirus, which prompting the investors to shift-out their portfolio from the United Stated to others countries while spurring a significant selloff the US Dollar.
With regards of the U.S data, Greenback has been plagued with concerns over a backdrop of bleak data from the United Stated. According to Conference Board, U.S. CB Consumer Confidence came in at 130.7, missing the economist forecast at 132.0 as investors fear that the coronavirus would destroy the economic momentum in the U.S. Besides that, U.S. Personal Spending for last month notched down from the preliminary reading of 0.4% to 0.2%, lower than the economist forecast at 0.3%. Meanwhile, the U.S. Initial Jobless Claims increased from the previous reading of 211K to 219K, exceeding the market forecast at 212K while spurring some negative outlook for the jobs market in the United States. As these data fared worse than expectation, which dialing down the market optimisms toward the economic progression in the United Stated while spurring significant selloff for the US Dollar. However, the losses experienced by the U.S Dollar was limited following few positive data from the United States were released. According to National Association of Realtors, U.S. Pending Home Sales for last month notched up from the previous reading of -4.3% to 5.2%, exceeding the economist forecast at 2.2%. Similarly, U.S. Core Durable Goods Order came in at 0.9%, fared better than the economist forecast at 0.2%.
On the coronavirus epidemic front, the U.S. dollar remains under pressure following new developments from the Chinese coronavirus spreading faster outside the China. The US dollar slumped amidst rising concerns surrounding the coronavirus while prompting the higher expectation for the Federal Reserve to cut their interest rate further in order to offset negative effects of the coronavirus on the economy. According to CME Group’s FedWatch Tool, the probability that the Fed could cut its interest rates in March is now at more than 97%, increase from the previous reading of nearly 9% from a week earlier. At this time, market participants should remain fixated upon ongoing headlines of the coronavirus as well as the economic data from the United Stated in order to gauge the likelihood movement for the dollar index.
USD/JPY
Pair of USD/JPY was traded lower last week while ending last Friday session at the price of 108.06. Likewise, Japanese Yen received bullish momentum amid diminishing risk appetite in the FX market. The outbreak of the coronavirus had stoked a shift in sentiment toward safe-haven asset, while insinuating higher demand for the safe-haven currency such as Japanese Yen.
EUR/USD
Pair of EUR/USD surged last week while closing last Friday’s trading session with the price of 1.1050. The overall bullish momentum for the pair was mostly due to the weakness in the rival currencies, especially in U.S dollar. Moreover, the Euro surged over a backdrop of a string of positive data from the European Region. According to the IFO Institute for Economic Research, Germany Ifo Business Climate Index came in at 96.1, exceeding the economist forecast at 95.3 while the Germany Unemployment Change notched down from the preliminary reading of -4K to -10K, better than the market forecast at 3K while indicating the jobs market within the European region remained stable. Besides that, the Euro received a further bullish momentum following the hawkish statement from the President of European Central Bank, Christine Lagarde. She claimed that the European Central Bank was monitoring the coronavirus outbreak “very carefully”, however she said that it was not yet at the stage where it would have a lasting impact on inflation. Such hawkish statement indicated the higher probability for the European Central Bank to hold its interest rates during their monetary meeting, while spurring a further demand on the Euro.
GBP/USD
The pair of GBP/USD was traded lower throughout the entire week while closing its market at 1.2815. Pound Sterling slumped as the uncertainty of the coronavirus caused the investors to shift their portfolio from the riskier asset such as Pound Sterling to other safe-haven asset such as Japanese Yen. Indeed, the pound sterling slumped following the UK confirmed a hardline stance on the trade talks with the EU, spurring some negative prospect for the trade negotiation between both countries. Besides that, pound sterling received further bearish momentum as the new UK Finance Minister, Rishi Sunak, claimed that he cannot simultaneously raise public spending as fast as Prime Minister Boris Johnson wants. Consequently, he could postpone loosening fiscal policy in UK, which spurring a further significant selloff of the Pound Sterling.
Market Review (Commodities): February 24 – 29
GOLD
Gold price was traded higher while closing its market on Friday at $1585.85 per troy ounce. Earlier last week, the gold price was traded higher amid to the outbreak of the coronavirus, which diminishing the risk appetite sentiment in the FX market while prompting investors to shift their portfolio toward safe-haven asset such as gold. However, on last Friday, the gold market suffered from the biggest one-day decline since 2013 as investors sell the gold metal to cover margin calls. At this time, investors need to scrutinize the latest updates with regards of the updates of the coronavirus in order to gauge the likelihood movement for the commodity.
CrudeOIL
Oil price was traded lower while closing last week market session with $45.23 per barrel. The oil price was traded lower as investors afraid that the recent outbreak of coronavirus would jeopardize the future outlook of crude oil market.
According to the latest news, the coronavirus continues to spread from its epicenter in central China to countries around the world. Iran announced 11 more deaths from the coronavirus, bringing its death toll to 54, which is the most outside of China. The number of infections in Italy increased to 1,694 people, while number in France increased to 130. In the United Stated, the Washington on the west coast of Seattle has reported its second death from coronavirus. Meanwhile, South Korea claimed that four people died overnight and 476 new cases of the coronavirus were confirmed. In total, 22 people have now died from the virus in South Korea with 4,212 people infected.
However, the losses experienced by the crude oil was limited following the US EIA crude oil inventories data was released last week. According to EIA institute, crude oil inventories level came in at 0.452M, unexpectedly lower than economist forecast at 2.005M. Besides that, the oil prices pared its losses as hopes that a bigger than expected production cut from OPEC and the stimulus from the global central banks could offset the economic gloom from the coronavirus outbreak. According to Reuters, several key members of the Organization of the Petroleum Exporting Countries (OPEC) are mulling an additional production cut of 1 million barrels per day, more than the 600,000 bpd which proposed during last month. Nonetheless, market participants would have to remain their eye on the OPEC+ meeting which scheduled on the beginning of March in order to scrutinize the oil supply level in the future. Besides, the news regarding to the coronavirus also must not be neglected as it also acts as an important catalyst to determine the direction of the crude oil.
Weekly Outlook: March 2 – 6
For the week ahead, investors will pay attention upon key event such as ISM Manufacturing PMI and NFP data which will be announced by US in order to further gauge the currencies movement.
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 2 – 6
| Time | Market | Event | Actual | Forecast | Previous |
| Monday – 2nd Mac 2020 | |||||
| 09:45 | CNY | Caixin Manufacturing PMI (Feb) | – | 45.7 | 51.1 |
| 16:55 | EUR | German Manufacturing PMI (Feb) | – | 47.8 | 47.8 |
| 17:30 | GBP | Manufacturing PMI (Feb) | – | 51.8 | 51.9 |
| 23:00 | USD | ISM Manufacturing PMI (Feb) | – | 50.4 | 50.9 |
| Tuesday – 3rd Mac2019 | |||||
| 11:30 | AUD | RBA Interest Rate Decision (Mar) | – | 0.75% | 0.75% |
| 11:30 | AUD | RBA Rate Statement | – | – | – |
| 17:30 | GBP | Construction PMI (Feb) | – | 48.4 | 48.4 |
| 18:00 | EUR | CPI (YoY) (Feb) | – | 1.2% | 1.4% |
| Wednesday – 4th Mac 2020 | |||||
| 05:30 | CrudeOIL | API Weekly Crude Oil Stock | – | – | 1.300M |
| 08:30 | AUD | GDP (QoQ) (Q4) | – | 0.4% | 0.4% |
| 17:30 | GBP | Composite PMI (Feb) | – | 53.3 | 53.3 |
| 17:30 | GBO | Services PMI (Feb) | – | 53.3 | 53.3 |
| GBP | BoE MPC Treasury Committee Hearings | – | – | – | |
| 21:15 | USD | ADP Nonfarm Employment Change (Feb) | – | 170K | 291K |
| 23:00 | USD | ISM Non-Manufacturing PMI (Feb) | – | 54.9 | 55.5 |
| 23:00 | CAD | BoC Interest Rate Decision | – | 1.75% | 1.75% |
| 23:30 | USD | Crude Oil Inventories | – | – | 0.452M |
| Thursday –5th Mac 2020 | |||||
| 18:00 | USD | OPEC Meeting | – | – | – |
| Friday– 6th Mac 2020 | |||||
| 01:00 | GBP | BoE Gov Carney Speaks | – | – | – |
| 01:45 | CAD | BoC Gov Poloz Speaks | – | – | – |
| 08:30 | AUD | Retail Sales (MoM) (Jan) | – | – | -0.5% |
| 21:30 | USD | Nonfarm Payrolls (Feb) | – | 175K | 225K |
| 21:30 | USD | Unemployment Rate (Feb) | – | 3.6% | 3.6% |
| 21:30 | CAD | Employment Change (Feb) | – | 10.0K | 34.5K |
| 21:30 | CAD | Ivey PMI (Feb) | – | – | 57.3 |