05 October 2020 Weekly Analysis
GCMAsia Weekly Report: October 05 – October 09
Market Review (Forex): September 28 – October 02
US Dollar
Dollar index which gauge its value against a basket of six major currencies plunged in overall last week amid uncertainty over new stimulus plan lifted up the market worries over the shrinking US economy. However, a series of upbeat economic data have been successfully floored the losses of dollar index.
According to the latest statistics, US country has recorded more than 7.6 million confirmed cases while the death tolls has risen above the threshold of 200K, showing no sign of slowdown in infection’s curve while being the top most affected country in the world. Besides, Bipartisan talks between Republican and Democrats party continued despite the new bill of stimulus plan which amounted to $2.2 trillion has passed on last Friday with final voting of 214 vs 207. It is because the new round of stimulus aid is expected not be agreed by the Republican-led Senate in the next stage as both parties are having different opinion over the value of the stimulus plan. With a condition of dragging new stimulus plan, most of the economist are expecting the US economy will turns even worst in the next quarter.
On the economic data front, most of the economic data were came in at inspiring reading. According to the Conference Board and National Association of Realtors, US Consumer Confidence Index and Pending Home Sales data came in at 101.8 and 8.8%, far better than the economist forecast at 89.2 and 3.2%. Besides, most of the US labour market’s data were also been released with upbeat reading such as ADP employment data and unemployment rate. However, the market-focused NFP data was released at a disappointed reading of 661K, missing the market forecast of 850K. Nevertheless, the overall positive sentiment produced by the economic data managed to limit the losses of dollar index in last week.
USD/JPY
Pair of USD/JPY was traded lower last week while ending last Friday session at the price of 105.35. The overall bearish sentiment in this currency pair market was mainly contributed by the uncertainty over the US stimulus plan has dragged down the appeal of US dollar, eventually pulled down the value of USD/JPY. Besides, market appetite toward safe haven asset shot up significantly as market are concern over the resurgence of pandemic in the world.
EUR/USD
Pair of EUR/USD jumped on last week while closing last Friday’s trading session with the price of 1.1715. Other than strengthening of US Dollar, the bullish momentum was also came from ECB’s Vice President de Guindos’s comment where ECB need not to adjust their Pandemic Emergency Purchase Programme (PEPP) as of now, but they are totally open to recalibrating measures if economy recovery stalled. However, President of ECB Christine Lagarde revealed that there might be a major tweak in Eurozone inflation’s goal as they are worry about the risk of prices grow in a pace slower than what they were expecting. As of now, Investors are putting their attention on more economic data and further speech from ECB in order to determine the direction of this currency pair.
GBP/USD
The pair of GBP/USD soared on last week while closing its market at 1.2932. The Pound Sterling was having mixed pattern last week yet managed to end the trading session with higher price level after German Chancellor Angela Merkel said she is remained optimistic that a deal on their post-Brexit trade relationship was still possible before year-end despite there was no breakthrough to announce from EU talks with Britain. Besides, latest news has also reported that British Prime Minister Boris Johnson and the head of the EU’s executive, Ursula von der Leyen agreed in a phone call on Saturday to step up Brexit talks to close “significant gaps” barring a new trade partnership. As of now, Brexit issue is still remains as the major catalyst that could left-right the value of pound easily.
Market Review (Commodities): September 28 – October 02
GOLD
Gold price was traded higher in overall last week while closing its market on Friday at $1898.65 per troy ounce. The major commodity which acting as the market safe haven shelter has been went through huge buying pressure after US failed to break through the impasses which existing in the talk of stimulus plan. The dysfunction has left Americans without aid payments or enhanced unemployment benefits that they had relied on to weather the pandemic, causing the pace of recovery turns shaky while allowing the helps toward businesses and household to lapse in this critical time. Moreover, the news regarding to Trump has been tested positive for Covid-19 had also sparked some bullish momentum in this yellow market as it put some uncertainty over the upcoming US election which will be hold in the beginning of November.
CrudeOIL
The crude oil price slumped on last week while closing last Friday session with $37.00 per barrels. This black commodity price was sell-off tremendously by the market participants as number of Covid-19 confirmed cases in worldwide showed a sign of resurgence while US President Donald Trump has also been tested positive for Covid-19 as well. In the midst of Covid-19’s second wave, the global economy is still struggling in the fallout of pandemic outbreak while few of the countries were being forced to re-implement movement restriction in order to limit the spread of Covid-19, which likely will tamper the demand of oil eventually. Moreover, large exporting number of oils in last month has further dragged down the price of crude oil as large sales were being able to be noticed from some customers as they hope to take cargoes as many as possible before US wind down the trade with the sanctioned nation, Venezuela.
Weekly Outlook: October 05 – October 09
For the week ahead, investors would have to scrutinize the latest developments with regards of the outbreak of the coronavirus, trade tensions between U.S. and China and also crucial economic data such as Meeting Minutes and Statement from FOMC in order to receive further trading signals.
As for oil traders, they will be eyeing on US inventories level reported by API and EIA as well as coronavirus vaccine development to gauge the strength of crude demand for world’s largest oil consumer.
Highlighted economy data and events for the week: October 05 – October 09
| Time | Market | Event | Actual | Forecast | Previous |
| Monday – 05th October 2020 | |||||
| 16:30 | GBP | Composite PMI (Sep) | – | 55.5 | 55.7 |
| 16:30 | GBP | Services PMI (Sep) | – | 55.0 | 55.1 |
| 22:00 | USD | ISM Non-Manufacturing PMI (Sep) | – | 56.3 | 56.9 |
| Tuesday – 06th October 2020 | |||||
| 11:30 | AUD | RBA Interest Rate Decision (Oct) | – | 0.25% | 0.25% |
| 11:30 | AUD | RBA Rate Statement | – | – | – |
| 16:30 | GBP | Construction PMI (Sep) | – | 54.3 | 54.6 |
| 20:00 | CrudeOIL | EIA Short-Term Energy Outlook | – | – | – |
| 22:00 | USD | JOLTs Job Openings (Aug) | – | 6.000M | 6.618M |
| Wednesday – 07th October 2020 | |||||
| 04:30 | CrudeOIL | API Weekly Crude Oil Stock | – | – | -0.831M |
| 22:00 | CAD | Ivey PMI (Sep) | – | – | 67.8 |
| 22:30 | CrudeOIL | Crude Oil Inventories | – | – | -1.980M |
| Thursday – 08th October 2020 | |||||
| 02:00 | USD | FOMC Meeting Minutes | – | – | – |
| 19:30 | EUR | ECB Monetary Policy Statement | – | – | – |
| 20:30 | USD | Initial Jobless Claims | – | – | 837K |
| Friday– 09th October 2020 | |||||
| 07:50 | JPY | GDP (QoQ) | – | – | -7.9% |
| 14:00 | GBP | GDP (MoM) | – | – | 6.6% |
| 14:00 | GBP | Manufacturing Production (MoM) (Aug) | – | 3.0% | 6.3% |
| 20:30 | CAD | Employment Change (Sep) | – | 275.0K | 245.8K |