4 May 2020                 Weekly Analysis

GCMAsia Weekly Report: May 4 – 9

Market Review (Forex): April 27 – May 2

US Dollar

The dollar index which traded against a basket of six major currency pairs slumped last week amid accelerating of risk appetite in FX market following several countries laid out plans to ease restrictions on business which have been closed due to the coronavirus pandemic, while spurring significant selloff on the US dollar. Besides, the US dollar extend its losses over the backdrop of downbeat data from the United States. The Dollar index was closing its price on last Friday session at the price of 98.93.

 

For last week, the economic data from United States were mostly dominated by dismal prospect, despite some of the results were fared better than expectation. According to Conference Board, the U.S. CB Consumer Confidence notched down from the previous reading of 118.8 to 86.9, missing the economist forecast at 87.9. The U.S. Gross Domestic Product (GDP) for last quarter had declined massively from preliminary reading of 4.8% to -4.8%, worse than the economist forecast at -4.0%, according to Bureau of Economic Analysis. Similarly, the U.S. Pending Home Sales for last month notched down significantly from the previous reading of 2.3% to -20.8%. Meanwhile, the Department of Labor from the United States stated that the U.S. Initial Jobless Claims came in at 3,839K, worse than the market forecast at 3,500K as well. Such negative economic data had further dialed down the market optimism toward the economic momentum in the United States, while spurring further selloff for the US Dollar. Nonetheless, the losses experienced by the Dollar index was limited following the positive manufacturing data was released on last Friday. According to Institute for Supply Management, the U.S. ISM Manufacturing Purchasing Managers Index (PMI) came in at 41.5, slightly better than the market forecast at 36.9. Besides, the Federal Reserve maintained its interest rate at 0.25% while reiterated that they are committed to use its full range of monetary tools to support the U.S. economy.

 

On the coronavirus epidemic front, the U.S. death toll from the novel coronavirus spike up by 1,450 on Sunday, bringing the total number of fatalities to more than 67,600 people. Besides that, the Baltimore-based university had recorded that more than 1.15 million people had infected the coronavirus. As for now, the United States has by far the highest death toll of any country in the global pandemic. Nonetheless, Gilead Sciences claimed that its experimental antiviral drug Remdesivir would able to help improve the symptoms in COVID-19 patients who were given the drug early, spurring some positive prospect for the coronavirus development. Despite that, the investors were remained cautious for their trading strategy as the U.S. President Donald Trump threated to impose new tariffs on China over the coronavirus crisis, which insinuating some risk-off sentiment in the market. Despite that, at this time investors would continue to scrutinize the latest development of the coronavirus pandemic and the trade war issues between U.S. and China in order to receive further trading signals.

 

USD/JPY

Pair of USD/JPY was traded lower last week while ending last Friday session at the price of 106.82. The overall bearish momentum for the pair was mostly prompting by the weakening in the U.S Dollar. Besides that, the Japanese Yen surged following the Bank of Japan consider to scrapping the limits on the bond purchase while easing more funding for the companies in order to combat the economic damage due to the coronavirus pandemics. Moreover, the trade tensions between the United States and China intensified following the U.S. Diplomats allege China for intentional mishandling of the coronavirus outbreak, which weighing on the global risk-tone sentiment while spurring further demand for the safe-haven Japanese Yen.

 

EUR/USD

Pair of EUR/USD surged on last week while closing last Friday’s trading session with the price of 1.0979. The overall bullish momentum of the pair was mostly due to the weakening in the rival currencies, especially in US Dollar. Besides, the Euro received further bullish momentum following the German was planning to ease its coronavirus restrictions. According to CNBC, Germany is going to re-open museums, galleries, zoos and playgrounds and allow religious services to resume, such measures were agreed by the Chancellor, Angela Merkel, and the leaders of 16 federal states.

 

GBP/USD

The pair of GBP/USD surged on last week while closing its market at 1.2491. The overall bullish momentum for the pair was mainly due to the appreciation of the US Dollar and increasing risk appetite in the FX market, which brief boost in demand for the riskier currency. Nonetheless, the gains experienced by the Pound Sterling over the backdrop of bleak economic data from the United Kingdom. According to Markit/CIPS, the U.K. Manufacturing Purchasing Manager index (PMI) had declined significantly from the previous reading of 47.8 to 32.6, missing the economist forecast at 32.8. Nonetheless, at this time investors would continue to scrutinize the latest updates with regards of the Britain and U.S. launch talks for a major free trade agreement in this week in order to gauge the likelihood movement for the pair.

 

Market Review (Commodities): April 27 – May 2

GOLD

Gold price was traded lower in overall last week while closing its market on Friday at $1670.40 a troy ounce. The gold price slumped on last week following few countries were planning the re-open their economic activities while the global central bank had launched massive stimulus measures to protect the global economies from the coronavirus pandemic. Besides, National Institutes of Health’s National of Allegory and Infection Diseases (NIAID) showed that the Gilead Sciences’ Remdesivir led to faster recovery in the coronavirus patients, which spurring positive prospect for the coronavirus pandemic. However, the losses experienced by the gold commodity was limited as the risk appetite declined following the U.S. President Donald Trump heightened geopolitical pressure by threatening new tariffs against China over the coronavirus crisis, which dragged down the appeal of the stock markets on last week while insinuating significant demand for the safe-haven commodity.  Nonetheless, investors would continue to focus on the trade tension between U.S and China, the updates of the coronavirus and also further economic data in order to receive further trading signal.

 

CrudeOIL

The crude oil price received significant demand on last week while closing last Friday session with $19.53 per barrels. The oil market was traded higher on last week as market participants expected that the oil production cut from OPEC and its allies which started on 1st May would able to tackle a supply glut due to the coronavirus crisis. According to Reuters, the Organization of the Petroleum Exporting Countries (OPEC), Russia and other producers, known as OPEC+ have agreed to cut the oil production by 9.7 million barrels per day from 1st May 2020. Besides, several countries and region, including China’s central province of Hubei had been easing the lockdown restrictions due to the coronavirus pandemic, which spurring positive prospect for the oil demand in the future. On the data front, according to Energy Information Administration (EIA), the U.S. Crude Oil inventories notched down from the previous reading of 15.022M to 8.991M, better than the market forecast at 10.619M, which diminishing the fears of oversupply on the oil commodity.

 

Weekly Outlook: May 4 – 9

For the week ahead, investors would have to scrutinize the latest developments with regards of the outbreak of the coronavirus, economic stimulus from the global central bank, trade tensions between U.S. and China and also crucial economic data such as Nonfarm Payrolls from the U.S. region in order to receive further trading signals.

 

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: May 4 – 9

Time Market Event Actual Forecast Previous
Monday – 4th May 2020
09:45 CNY Caixin Manufacturing PMI (Apr) 50.3 50.1
15:55 EUR German Manufacturing PMI (Apr) 34.4 45.4
Tuesday – 5th May 2020
12:30 AUD RBA Interest Rate Decision (May) 0.25% 0.25%
12:30 AUD RBA Rate Statement
16:30 GBP Composite PMI (Apr) 12.9 36.0
16:30 GBP Manufacturing PMI (Apr) 44.0 39.3
16:30 GBP Services PMI (Apr) 12.3 34.5
22:00 USD ISM Non-Manufacturing PMI (Apr) 44.0 52.5
Wednesday – 6th Mei 2020
06:45 NZD Employment Change (QoQ) (Q1) 0.0%
09:30 AUD Retail Sales (MoM) (Mar) 8.2% 0.5%
16:30 GBP Construction PMI (Apr) 22.2 39.3
20:15 USD ADP Nonfarm Employment Change (Apr) -20,000K -27K
22:30 CrudeOIL Crude Oil Inventories 10.619M 8.991M
Thursday – 7th May 2020
14:00 GBP BoE Interest Rate Decision (May) 0.10% 0.10%
19:00 GBP BoE Inflation Report
19:00 GBP BoE MPC Meeting Minutes
20:30 USD Initial Jobless Claims 3,893K
22:00 CAD Ivey PMI (Apr) 41.0 26.0
Friday – 8th May 2020
20:30 USD Nonfarm Payrolls (Apr) -21,000K -701K
20:30 USD Unemployment Rate (Apr) 16.0% 4.4%
20:30 CAD Employment Change (Apr) -2,750.0K -1,010.7K
01:00

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CrudeOIL U.S. Baker Hughes Oil Rig Count 325