5 September 2022 Weekly Analysis
GCMAsia Weekly Report: September 5 – 9
Market Review (Forex): August 29 – September 2
US Dollar
The Dollar Index which traded against a basket of six major currencies received significant bullish momentum last week after a series of upbeat economic data had been unleashed, which prompting investors to shift their capitals toward US Dollar. The Dollar Index has closed its market price at 109.57.
Last week, the US Dollar index extended its gains following a series of employment data has been unleashed. The data such as Nonfarm Payrolls, Initial Jobless Claims and JOLTs Job Openings had given the readings which better than expected. These data were mirroring the current US labor market became strong gradually, which brought positive prospects toward economic progression of the US. On the other sides, the Dollar index was traded within an upward trend amid the aggressive rate hike path from Federal Reserve. According to the speech of Fed members, they had reiterated the importance of rate increase in order to restore price stability even though it would bring some pain toward economic growth. The Fed President Jerome Powell also revealed that the economy needed more rate hikes, with “another unusually large” increase still on the table for the next meeting, which sparked the appeal of US Dollar. Besides that, although the higher-than-expected unemployment rate has limited the gains of US Dollar, but it was caused by a jump in the labor force participation rate to 62.4%, which is at the highest level of the year. As such, the 0.2% rise in the unemployment rate does not reflect that the labor market is at the brink of unfavorable condition.
USD/JPY
The pair of USD/JPY extended its gains last week while closing its market price at 140.21. The pairing received bullish momentum amid the backdrop of Bank of Japan (BoJ) still stand with its dovish monetary policy. The BoJ board member Toyoaki Nakamura claimed that the central bank would maintain its ultra-low rates in order to tackle the current economy slowdown. Besides, he reiterated that the implementation of rate increase by major central banks for stabilizing inflation risk would likely to trigger an outflow of capital from emerging economies, which dragging down the global economic prospects. As the monetary policy of Japan remained divergence against other central banks, market participants tend to shift their capitals away from Japan markets as well as eyeing on other currencies.
EUR/USD
The pair of EUR/USD depreciated last week while closing its market price at 0.9955. The Euro received bearish momentum over the strengthening of US Dollar. Nonetheless, the losses experienced by Euro was limited amid the upbeat CPI data. According to Eurostat, the Eurozone Consumer Price Index (CPI) YoY for August notched up from the previous reading of 8.9% to 9.1%, exceeding the market expectation of 9.0%. The CPI figure which higher than prior had shown that the inflationary issue in Eurozone still having the sign to rise, which adding the odds of rate hikes from ECB in order to tamp down the soaring prices. Earlier of the week, the ECB members have emphasized that the central bank should raise its interest rate, even though it would likely to disrupt economic growth. Besides, they reiterated that higher rate increase would be considered if the inflation risk keep hovering in the Eurozone. As of now, market participant would eye on ECB interest rate decision which scheduled on 8 September.
GBP/USD
The pair of GBP/USD slumped last week while ending last week session at the price of 1.1513. The Pound received bearish momentum last week following the pessimistic economic outlook of UK. According to Reuters, the Bank of England (BoE) had claimed that the UK economy would likely to enter into recession at the 4th quarter of the year as well as the recession would last for more than one year. The bearish economic momentum had dialed down the market optimism on Pound Sterling, prompting investors to shift their capitals toward another currencies such as US Dollar.
Market Review (Commodities): August 29 – September 2
GOLD
Gold price dropped significantly last week while closing its market price at $1711.40 per troy ounces. Gold price received bearish momentum last week amid the hawkish statement from Federal Reserve. The rate hike path has been seen as a ‘must’ choice to stabilize the spiking inflation, leading investors to flee away from the inflation-hedged assets such as gold. Besides, that, the gold price extended it losses over the Iran-US nuclear deal could be imminent and it might be reached in upcoming weeks. As the US and Iran could reach an agreement on the deal, it would likely to reduce the conflict of countries, which stoked a shift of sentiment from the safe haven assets.
CrudeOIL
Crude oil price slumped while ending last week session at the price of $87.25 per barrel. Crude oil price received bearish momentum last week following the aggressiveness of the Fed Chairman regarding the rate hike plan exacerbated the investor worries over the risk of recession. In addition, the new round of lockdown which driven by Covid-19 pandemic in China had also pressured the oil price. As China was the biggest buyer of the black commodities, the lockdown across the major cities in China stoked the demand fears. Furthermore, the Iran-US nuclear deal which might be reached in next few week had also suppressed the price of oil. The US would likely to remove the sanctions on Iran oil as the agreement could be made, which hinted that oil supplies are likely to increase sharply in the future.
Weekly Outlook: September 5 – 9
For the week ahead, investors would continue to focus on crucial economic data such as the ECB Interest Rate Decision and Fed Chair Powell Speaks 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: September 5 – 9
| Time | Market | Event | Actual | Forecast | Previous |
| Monday – 5th September 2022 | |||||
| All Day | USD | United States – Labor Day | – | – | – |
| All Day | CAD | Canada – Labor Day | – | – | – |
| 09:30 | AUD | Retail Sales (MoM) | – | 1.3% | 0.2% |
| 16:30 | GBP | Composite PMI (Aug) | – | 50.9 | 50.9 |
| 16:30 | GBP | Services PMI (Aug) | – | 52.5 | 52.5 |
| 18:00 | CrudeOIL | OPEC Meeting | – | – | – |
| Tuesday – 6th September 2022 | |||||
| 12:30 | AUD | RBA Interest Rate Decision (Sep) | – | – | – |
| 16:30 | GBP | Construction PMI (Aug) | – | 48.0 | 48.9 |
| 22:00 | USD | ISM Non-Manufacturing PMI (Aug) | – | 55.5 | 56.7 |
| Wednesday – 7th September 2022 | |||||
| 09:30 | AUD | GDP (QoQ) (Q2) | – | 1.2% | 0.8% |
| 14:00 | EUR | German GDP (QoQ) (Q3) | – | 0.1% | 0.1% |
| 17:00 | GBP | BoE Gov Bailey Speaks | – | – | – |
| 22:00 | CAD | BoC Interest Rate Decision | – | 3.25 | 2.50% |
| 22:00 | CAD | Ivey PMI (Aug) | – | 48.3 | 49.6 |
| 22:15 | GBP | BoE MPC Treasury Committee Hearings | – | – | – |
| Thursday – 8th September 2022 | |||||
| 00:00 | CrudeOIL | EIA Short-Term Energy Outlook | – | – | – |
| 07:50 | JPY | GDP (QoQ) (Q2) | – | 0.7% | 0.5% |
| 20:15 | EUR | Deposit Facility Rate (Sep) | – | 0.50% | 0.00% |
| 20:15 | EUR | ECB Marginal Lending Facility | – | – | 0.75% |
| 20:15 | EUR | ECB Monetary Policy Statement | – | – | – |
| 20:15 | EUR | ECB Interest Rate Decision (Sep) | – | – | – |
| 20:30 | USD | Initial Jobless Claims | – | 240K | 232K |
| 20:45 | EUR | ECB Press Conference | – | – | – |
| 21:10 | USD | Fed Chair Powell Speaks | – | – | – |
| 22:15 | EUR | ECB President Lagarde Speaks | – | – | – |
| 23:00 | CrudeOIL | Crude Oil Inventories | – | – | -3.326M |
| Friday – 9th September 2022 | |||||
| 20:30 | CAD | Employment Change (Aug) | – | 15.0K | -30.6K |
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