03 May 2021 Weekly Analysis
GCMAsia Weekly Report: May 3 – 7
Market Review (Forex): April 26 – 30
US Dollar
The dollar index which traded against a basket of six major currency pairs have soared throughout last week while ending the market at the price of 91.23. With market optimism supported by positive data coupled with rising inflationary pressure, the greenback experience huge bid.
From data perspective, most of the key stats were skewed to the positive. U.S Core Durable Goods Order came in as expected at 1.6% while GDP improved to 6.4%, surpassed market expectation of 6.2%. On top of that, CB Consumer Confidence also improved for April at 121.7 against expectation of 113.0. While Initial Jobless Claims came in slightly weaker at 553K against 549K expectation, the results is also considered positive as it fell compared to the previous reading. Inflationary pressures were also on the rise with FED’s preferred Core PCE Price Index rising by 1.8% in March.
Besides that, the market also digests Fed’s latest policy decision which handed down on last Wednesday. While Fed Chairman Jerome Powell have acknowledged the U.S. economy’s growth, he remains skeptical and added that there was not enough evidence of substantial further progress to cause a tone shift in policy change. Still, optimism towards U.S economy recovery especially in the labor market could potentially cause Fed to tapering its asset earlier than expected. Therefore, the expectation has boost greenback demand, sending the price to March 2021 high.
Despite with the dovish tone from Fed, the greenback is expected to extend its gains in near term on the backdrop of U.S stimulus package, improving economy outlook while market continue to monitor for any further catalyst that may affect the currency.
USD/JPY
The pair of USD/JPY have surged throughout last week while ending the market at the price of 109.32. Last week, BoJ have maintain its policy unchanged and took a more optimistic view of Japan’s growth outlook. However, the central bank has cut its price forecast to 0.1% for this year following renewed virus emergency. On top of that, a new forecast for fiscal 2023 also confirmed that the Japan governor Haruhiko Kuroda will likely fail to reach his goal of stable 2% price growth during his current term.
EUR/USD
EUR/USD have plunged last week and ending the week with the price of 1.1793. On data front, most data were skewed to the negative as a result of latest spike of new COVID-19 cases. German IFO Business Climate Index fell to 96.8 against 97.8 expectation. Besides that, German Unemployment Change also weaker than market expectation with 9K against expectation of -10K while German GDP for first quarter also disappointed with the reading of -1.7% against -1.5% expectation. On top of that, the pair was also further dragged by optimism towards greenback which diminishing the appeal of the Euro.
GBP/USD
The pair of GBP/USD also plunged throughout last week while ending the trading session at the price of 1.3813. Following the lack of stats to provide direction, the pair movement was mostly driven by the strength of greenback. On top of that, the pair was also affected by the risk of Scottish Election. Polls are pointing to a majority for pro-independence parties in Scotland’s parliament, which might intensify pressure for a referendum on independence and act as a headwind for the pound sterling.
Market Review (Commodities): April 26 – 30
GOLD
Gold price was traded lower in overall while ending last week market at the price of $1768.66. Following with the appreciation of U.S dollar and a surge in treasury yield last week, the demand for the yellow metal have fell. On the backdrop of strong U.S consumer confidence, U.S bonds start to experience huge sell off pressure which also cause the treasury yield to follow suit. Aside from that, the commodity also facing headwinds from increasing optimism towards economic recovery.
CrudeOIL
The price of crude oil have retreated from its high before market session end, but manage to close the market with gains in overall at the price of $63.44 per barrel. On the earlier half of the week, the commodity tried to ignore COVID-19 disaster in India and rose on optimism over demand growth for this year projected by OPEC+ and positive inventory data. However, the ongoing rally was snapped after news of growing lockdowns in India as well as Brazil which is another major market for oil. The third largest importer of oil, India have record 18 million infections last week and many states and capitals such as New Delhi and Mumbai have gone into lockdown and curfew which affect fuel consumption. Rystad Energy also warned last week that the crisis in India could reduce an extra 915,000 bpd in fuel consumption for May 2021.
Weekly Outlook: May 3 – 7
For the week ahead, investors would continue to focus on U,S stimulus, coronavirus situation as well as economic data such ADP Nonfarm Employment and Nonfarm Payrolls to determine further direction.
As for oil traders, they will be also 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: May 3 – 7
| Time | Market | Event | Actual | Forecast | Previous |
| Monday – 3 May 2021 | |||||
| 15:55 | EUR | German Manufacturing PMI (Apr) | – | 66.4 | 66.4 |
| 22:00 | USD | ISM Manufacturing PMI (Apr) | – | 65.0 | 64.7 |
| Tuesday – 4 May 2021 | |||||
| 12:30 | AUD | RBA Interest Rate Decision (May) | – | 0.10% | 0.10% |
| 12:30 | AUD | RBA Rate Statement | – | – | – |
| 16:30 | GBP | Manufacturing PMI (Apr) | – | 60.7 | 60.7 |
| Wednesday – 5 May 2021 | |||||
| 06:45 | NZD | Employment Change (QoQ) (Q1) | – | 0.2% | 0.6% |
| 20:15 | USD | ADP Nonfarm Employment Change (Apr) | – | 815K | 517K |
| 22:00 | USD | ISM Non-Manufacturing PMI (Apr) | – | 64.3 | 63.7 |
| 22:30 | USD | Crude Oil Inventories | – | – | 0.090M |
| Thursday – 6 May 2021 | |||||
| 16:30 | GBP | Composite PMI (Apr) | – | 60.0 | 60.0 |
| 16:30 | GBP | Services PMI (Apr) | – | 60.1 | 60.1 |
| 19:00 | USD | BoE Interest Rate Decision (May) | – | 0.10% | 0.10% |
| 20:30 | USD | Initial Jobless Claims | – | 540K | 553K |
| Friday – 7 May 2021 | |||||
| 16:30 | GBP | Construction PMI (Apr) | – | 62.5 | 61.7 |
| 20:30 | USD | Nonfarm Payrolls (Apr) | – | 978K | 916K |
| 20:30 | USD | Unemployment Rate (Apr) | – | 5.7% | 6.0% |
| 20:30 | CAD | Employment Change (Apr) | – | -187.5K | 303.1K |
| 22:00 | CAD | Ivey PMI (Apr) | – | 60.5 | 72.9 |