4th April 2022 Weekly Analysis
GCMAsia Weekly Report: April 4 – 8
Market Review (Forex): March 28 – April 1
US Dollar
The Dollar Index which traded against a basket of six major currencies received significant bearish momentum last week amid the backdrop of downbeat economic data. Nonetheless, the losses of US Dollar was limited following the rising tensions of Russia-Ukraine conflict. The Dollar Index has closed its market price at 98.54.
Last week, US has released few of the economic data, and it did not meet market expectations while the data released. According to Bureau of Economic Analysis, US Gross Domestic Product (GDP) QoQ came in at the reading of 6.9%, which lower than the market forecast of 7.1%. On the other hand, US Initial Jobless Claims notched up from the previous reading of 188K to 202K, exceeding the market forecast of 197K. The passive economic data of US had dialed down the market optimism toward economic progression in US, prompting investors to selloff safe-haven Dollar. Besides, President Joe Biden appeared a speech which he decided to launched the largest release ever from the US emergency oil reserve and challenged oil companies to drill more in an attempt to bring down gasoline prices that have soared during Russia’s war with Ukraine. He also reiterated that the US will release 1 million barrels of oil per day from its strategic reserves. The additional oil supply from Biden would likely to diminish commodities price, causing the slump of inflation risk in other countries. It led investors to purchase other currencies which having better prospects, spurred further bearish momentum on US Dollar.
Nonetheless, the losses of US Dollar had been limited amid the rising tension of Russia-Ukraine conflict. According to Reuters, Russian armies bombarded the outskirts of Kyiv and a besieged city in northern Ukraine on 30 March 2022 after promising to reduce attacks there in what the West dismissed as a ploy by Moscow to stem its heavy losses and regroup for other offensives. It had stoked a shift market sentiment toward safe-haven assets such as US Dollar in order to protect their capital.
USD/JPY
The pair of USD/JPY extended its gains last week while closing its market price at 122.54. The pairing received bullish momentum amid the backdrop of Bank of Japan remained its dovish tone. According to Reuters, the Bank of Japan (BoJ) intervened to stop government bond yields from rising above its key target, while rising U.S. yields pushed the dollar higher against other currencies too. The BoJ also reiterated on 28 March 2022, which it was committed to keeping monetary policy loose, and it had made two offers to buy an unlimited amount of government bonds with maturities of more than five years and up to 10 years. It brought negative prospects toward Japanese Yen, prompted investors to selloff Yen and it spurred further bullish momentum on the pair.
EUR/USD
The pair of EUR/USD surged last week while closing its market price at 1.1041. The Euro received bullish momentum following the additional oil supply from President Biden. As President decided to release its emergency oil reserve, it would diminish the import cost of companies in Europe region since Europe was the most dependent of Russia oil. It dialed up the market optimism toward economic momentum in Europe, prompting investors to shift their capitals toward Euro. Nonetheless, the gains of Euro was limited over the backdrop of passive economic data. According to Destatis, Germany Unemployment Change notched down from the previous reading of -32K to -18K, lower than the market forecast of -20K. Besides, Germany Manufacturing Purchasing Managers Index (PMI) recorded at the reading of 56.9, while it lower than the market forecast of 57.6. The downbeat economic data had dragged down the market sentiment toward Europe economic progression, spurred some bearish momentum on the Euro.
GBP/USD
The pair of GBP/USD depreciated last week while ending last week session at the price of 1.3114. The overall trend for Pound remained bearish last week following the passive speech from Bank of England Governor Andrew Bailey. According to Reuters, Bank of England Governor Andrew Bailey said swings in commodity markets after Russia’s invasion of Ukraine posed a risk to financial stability and the challenges facing the world economy are bigger than after the global financial crisis. Besides, he reiterated that the surge of commodities price and agricultural markets had caused the companies to cut trading volumes due to strained liquidity. It hinted the unstable economic progression in England, dialed down the market optimism on Pound. Nonetheless, the losses of Pound was limited amid the backdrop of upbeat economic data. According to Office for National Statistics, UK Gross Domestic Product (GDP) YoY recorded at the reading of 6.6%, exceeding the market forecast of 6.5%. It brought positive prospects toward UK region economic momentum, spurred bullish momentum on Pound.
Market Review (Commodities): March 28 – April 1
GOLD
Gold price edged down last week while closing its market price at $1923.85 per troy ounces. Gold price received bearish momentum last week following the easing tension between Russia-Ukraine in early week. Ukraine claimed that it was hoping that the first face-to-face peace talks with Russia in over two weeks. The peace negotiation was set on 29 March 2022 and it could lead to a ceasefire, according to Reuters. It dialed down the market optimism toward safe-haven assets such as gold, prompting investors to shift their capitals toward risk-appetite products. However, the losses of gold price was limited upon Russia bombs Ukraine cities, according to Reuters reported on 30 March 2022. The rising tensions of Russia invasion of Ukraine had led investors to purchase safe-have gold in order to protect their capitals.
CrudeOIL
Crude oil price depreciated while ending last week session at the price of $99.38 per barrel. Crude oil price received bearish momentum amid the backdrop of surging cases of Covid-19 in China. According to Reuters, Shanghai had launched a two-stage lockdown of the city of 26 million people on 28 March 2022, closing bridges and tunnels, and restricting highway traffic to contain surging local COVID-19 cases. Besides, Shanghai claimed on 1 April 2022, which set to put the vast majority of its residents under COVID lockdown, as it expands curbs to include the western half of the city and extends restrictions in the east. Lockdown in China would lead to the restriction of economic activities, causing the demand of oil to reduce. Besides, President Biden decided to hike oil supply from its emergency reserve, putting further pressure on the oil price.
Weekly Outlook: April 4 – 8
For the week ahead, investors would continue to focus on crucial economic data such as the Initial Jobless Claims and Fed monetary policy decision this week in order to determine further direction. Besides that, the ongoing situation with Ukraine-Russia war 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 4 – 8
| Time | Market | Event | Actual | Forecast | Previous |
| Monday – 4th April 2022 | |||||
| 9:30 | AUD | Retail Sales (MoM) | – | 1.80% | 1.60% |
| 17:05 | GBP | BoE Gov Bailey Speaks | – | – | – |
| Tuesday – 5th April 2022 | |||||
| 12:30 | AUD | RBA Interest Rate Decision (Apr) | – | 0.10% | 0.10% |
| 12:30 | AUD | RBA Rate Statement | – | – | – |
| 16:30 | GBP | Composite PMI (Mar) | – | 59.7 | 59.7 |
| 16:30 | GBP | Services PMI (Mar) | – | 61 | 61 |
| 18:00 | EUR | ISM Non-Manufacturing PMI (Mar) | – | 58 | 56.5 |
| Wednesday – 6th April 2022 | |||||
| 16:30 | GBP | Construction PMI (Mar) | – | 57.3 | 59.1 |
| 22:00 | CAD | Ivey PMI (Mar) | – | – | 60.6 |
| 22:30 | USD | Crude Oil Inventories | – | – | -3.449M |
| Thursday – 7th April 2022 | |||||
| 2:00 | USD | FOMC Meeting Minutes | – | – | – |
| 19:30 | EUR | ECB Publishes Account of Monetary Policy Meeting | – | – | – |
| 20:30 | USD | Initial Jobless Claims | – | 200K | 202K |
| Friday – 8th April 2022 | |||||
| 12:30 | INR | Interest Rate Decision | – | – | 4.00% |
| 20:30 | CAD | Employment Change (Mar) | – | 80.0K | 336.6K |
Risk Statement:
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