3 April 2023 Weekly Analysis
GCMAsia Weekly Report: April 3 – 7
Market Review (Forex): April 3 – 7
US Dollar
The Dollar Index, traded against a basket of six major currencies, continues its 5 consecutive weeks of losses amid banking jitters easing due to the prior new funding facility supported by the US Treasury.
Last week, the dollar index slumped on Monday after the share price of Deutsche Bank rebounded sharply as the majority of analysts reassured the financial health and liquidity of the bank. The spread of five years senior note Credit Default Swaps (CDS) fell from 226.9 bps to 198.6 bps after investors ease worries about Germany’s largest Bank. In the meantime, US Prime Minister Joe Biden mentioned that the new funding facility to support financial insolvency banks will continue for some time to ensure these banks weather the storm. Therefore, an increase in the money supply in the dollar further weakened the US dollar. The losses of the dollar index are limited by the speech of the second vice chair of the Fed Michael Barr. Barr has broken down the Silicon Valley Bank (SVB) and Signature Banks’ failures were caused by inadequate management issues. The US bank sector remains in a solid position and did not affect by the collapse of both banks.
Lower-than-expected market data also boosted the dollar index fell. On Friday, U.S. gross domestic product slipped to 2.6% from 3.2%, missing market expectations of 2.7%. Meanwhile, initial jobless claims rose by 7,000 to 198,000. The US economy was showed contraction in Q4 2023 as businesses under the pressure of high-interest rates after the Fed’s aggressive rate hike. On the labor market, the data showed that the job market has become fragile. However, a series of economic data has led to discord in view among Fed members.
USD/JPY
The pair of USD/JPY regained its luster while closing its market price at 133.35 after the Bank of Japan (BoJ) maintained its ultra-loosened monetary policy for the time being. The ultra-loosened monetary policy increased the money supply of Yen in the market, thus the value of the Yen depreciated. Besides, Investors sold the safe-haven yen as markets eased concerns about banks. The collapse of SVB and Signature Bank received some respite after the Federal Deposit Insurance Corporations (FCIS) said First Citizen Bancshares would acquire all SBV deposits and loan terms from the regulator.
EUR/USD
The pair of EUR/USD edged up last week while closing its market price at 1.0800. The EURUSD received gains after the German Business Climate index stood at 93.3 readings and above prior readings and market expectations, 91.1 and 91.0 respectively. The Euro currency attract investors’ interest after the Deutsche Bank turmoil turns calm. According to a Bloomberg report, analysts had reassured of the Deutsche Bank’s fundamental solid and not in the weak line in the European banking landscape. Deutsche bank had de-risked and refocused its business model which would help the bank to generate stable and higher profits said an analyst after he reiterated an outperformed rating.
However, the recent German unemployment data and Consumer Price Index (CPI) limited the gains of the Euro. The German Unemployment data showed weak conditions after the result surprisingly increased from 2k to 16k. Simultaneously, the German Unemployment rate slightly increased by 0.1% to 5.6%. The CPI in Eurozone is also down from 8.5% to 6.9%, upbeat the market expectation for 7.1%.
GBP/USD
The pair of GBP/USD extended its gains last week while ending last week’s session at the price of 1.2285. The Bank of England (BoE) Governor Andrew Bailey mentioned that the collapse of SVB and Credit Suisse was due to poor risk management by internal control. The event was purely accidental and not caused by monetary policy. He reiterated that the UK banking sector remained resilient and business activity unexpectedly increased.
Market Review (Commodities): April 3 – 7
GOLD
Gold prices traded lower while closing its market price at $1956.85 per troy ounce. The price of yellow metal close lower under the pressure of regulators further downplayed over a widespread US Banking turmoil. Michael Barr, Fed’s head of banking supervision said in a testimony that the US banking was in good condition and the recent collapsed of SVB was due to mismanagement. This comment boosted investor confidence. Thus, the gold experiences a massive selloff by investors after the banking worries ease.
CrudeOIL
Crude oil prices soar at the end of last week’s session at the price of $80.50 per barrel. The oil prices experienced huge buying momentum after the banking jitters were eased. The acquisition of SVB by Frist Citizens Bank boosted investor confidence as global business activity was not affected by the incident. In addition, Iraq’s appeal against Turkey succeeds, by banning Kurdistan from exporting crude oil to Turkish ports. The following bans affected the crude oil supply decrease by 0.5% of the total world production.
Weekly Outlook: April 3 – 7
For the week ahead, investors would continue to focus on crucial economic data such as ISM Non-Manufacturing PMI and Nonfarm Payroll this week to determine further direction. Besides that, the ongoing situation with the banking sector crisis in US and EU will also be in the eyes of investors.
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: April 3 – 7
| Time | Market | Event | Actual | Forecast | Previous |
| Monday – 3th April 2023 | |||||
| All Day | CNY | China – Ching Ming Festival | – | – | – |
| 07:50 | JPY | Tankan Large Manufacturers Index (Q1) | – | 3 | 7 |
| 07:50 | JPY | Tankan Large Non-Manufacturers Index (Q1) | – | 20 | 19 |
| 09:30 | AUD | Retail Sales (MoM) | – | 0.2% | 1.9% |
| 09:45 | CNY | Caixin Manufacturing PMI (Mar) | – | 51.7 | 51.6 |
| 15:55 | EUR | German Manufacturing PMI (Mar) | – | 44.4 | 44.4 |
| 16:30 | GBP | Manufacturing PMI (Mar) | – | 48.0 | 48.0 |
| 18:00 | CrudeOIL | OPEC Meeting | – | – | – |
| 22:00 | USD | ISM Manufacturing PMI (Mar) | – | 47.5 | 47.7 |
| Tuesday – 4th April 2023 | |||||
| All Day | CNY | China – Ching Ming Festival | – | – | – |
| 12:30 | AUD | RBA Interest Rate Decision (Apr) | – | 3.85% | 3.60% |
| 22:00 | USD | JOLTs Job Openings (Feb) | – | 10.400M | 10.824M |
| Wednesday – 5th April 2023 | |||||
| 04:30 | CrudeOIL | API Weekly Crude Oil Stock | – | – | -6.076M |
| 10:00 | NZD | RBNZ Interest Rate Decision | – | 5.00% | 4.75% |
| 16:30 | GBP | Composite PMI (Mar) | – | 52.2 | 52.2 |
| 16:30 | GBP | Services PMI (Mar) | – | 52.8 | 52.8 |
| 20:15 | USD | ADP Nonfarm Employment Change (Mar) | – | 205K | 242K |
| 22:00 | USD | ISM Non-Manufacturing PMI (Mar) | – | 54.5 | 55.1 |
| 22:30 | CrudeOIL | Crude Oil Inventories | – | 0.092M | -7.489M |
| Thursday – 6th April 2023 | |||||
| 04:30 | CrudeOIL | API Weekly Crude Oil Stock | – | – | -6.076M |
| 10:00 | NZD | RBNZ Interest Rate Decision | – | 5.00% | 4.75% |
| 16:30 | GBP | Composite PMI (Mar) | – | 52.2 | 52.2 |
| 16:30 | GBP | Services PMI (Mar) | – | 52.8 | 52.8 |
| 20:15 | USD | ADP Nonfarm Employment Change (Mar) | – | 205K | 242K |
| 22:00 | USD | ISM Non-Manufacturing PMI (Mar) | – | 54.5 | 55.1 |
| 22:30 | CrudeOIL | Crude Oil Inventories | – | 0.092M | -7.489M |
| Friday – 7th April 2023 | |||||
| All Day | NZD | New Zealand – Good Friday | – | – | – |
| All Day | CAD | Canada – Good Friday | – | – | – |
| All Day | GBP | United Kingdom – Good Friday | – | – | – |
| All Day | AUD | Australia – Good Friday | – | – | – |
| All Day | CHF | Switzerland – Good Friday | – | – | – |
| All Day | EUR | Germany – Good Friday | – | – | – |
| All Day | USD | United States – Good Friday | – | – | – |
| 20:30 | USD | Nonfarm Payrolls (Mar) | – | 238K | 311K |
| 20:30 | USD | Unemployment Rate (Mar) | – | 3.6% | 3.6% |
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