6 February 2023 Weekly Analysis
GCMAsia Weekly Report: February 6 – 10
Market Review (Forex): January 30 – February 3
US Dollar
The Dollar Index which traded against a basket of six major currencies rebounded from its recent low throughout the past one week amid the release of a series of positive economic data. The Dollar Index has closed its market price at 102.76.
Last week, the dollar index received significant bullish momentum following a series of upbeat economic data has been unleashed. According to the US Bureau of Labor Statistics, US NonFarm Payrolls printed a stronger-than-expected reading at 517K, higher than both the previous and forecast reading at 260K and 185K respectively, while posting the strongest jobs numbers since August 2022. On top of that, the US labor market also experienced a further drop on unemployment rate from the prior month reading’s 3.5% to 3.4% in January. Prior to that, the US Initial Jobless Claims and Non-Manufacturing PMI were also giving the better-than-expected figures, which indicating that the labor market and economy condition in the US remained strong. With that, it sparked the speculation of continuous aggressive rate hike by Fed.
However, the gains experienced by Dollar Index was limited after Fed’s Chairman acknowledged that the inflationary risk was easing. Last week, the US central bank decided to raise its interest rate by 25 basis point to 4.75%, which was the second consecutive lower rate hike after the four 75 basis point hikes in a row. In the Press Conference, Federal Reserve Chair Jerome Powell claimed that there was a significant effects in bringing down inflation pressure, whereby hinting that Fed would likely to step back from its aggressive contractionary monetary policy in the March meeting. Though, it was noteworthy that the Fed might continue to increase its rates as they were committed to restore price stability, according to the speech of Fed in Press Conference. Thus, the likelihood of another rate hike might not be excluded.
USD/JPY
The pair of USD/JPY was traded higher last week while closing its market price at 131.96. The Japanese Yen received significant bearish momentum over the strengthening of US Dollar. With the backdrop of upbeat economic data, the likelihood of aggressive rate hike path might be continue to implement, prompting the pairing to fly higher. On the other hand, the gains of USDJPY extended following the Bank of Japan Deputy Governor Masayoshi Amamiya would likely to take over the bank’s governor. The Yen had beaten down as the market saw the potential extension of ultra-loosen monetary policy, which dragged down the appeal of Yen.
EUR/USD
The pair of EUR/USD depreciated last week while closing its market price at 1.0786. As the value of US Dollar heightened over the past week, the EURUSD received significant bearish momentum. Though, the losses of Euro was limited amid the hawkish statement of European Central Bank (ECB). Last week, the ECB had hiked its rate by 50 basis point to 3.00%. After that, ECB President Christine Lagarde claimed that it was possible to have another half-of-a-percentage hike in the March meeting in order to restore price stability.
GBP/USD
The pair of GBP/USD slumped last week while ending last week session at the price of 1.2038. As the value of US Dollar heightened over the past week, the GBPUSD received significant bearish momentum. Furthermore, the Pound Sterling lost its ground following the expectation of scaling back of rate hike path. Last week, the Bank of England (BoE) has raised its interest rate by 50 basis point to 4.00%. However, the central bank had seen a peaking CPI in the current basis, which hinted that a smaller rate hikes in the next meeting might be implemented.
Market Review (Commodities): January 30 – February 3
GOLD
Gold prices recorded some losses while closing its market price at $1864.41 per troy ounces. A series of upbeat economic data has dialed up the market optimism toward economic progression in the US, urging the safe haven asset retreated from its recent high level. Nonetheless, the losses of gold price was limited following the dovish statement from Fed. As the Fed’s Chairman acknowledged that the inflationary risk was easing, it provided a sign of lower rate hike might be carried out in the March meeting. Going forward, the overall trend of gold price would highly dependent on the updates with regards of Fed’s interest rate decision.
CrudeOIL
Crude oil prices slipped while ending last week session at the price of $73.36 per barrel. The oil price had faced a heavy sell-off pressure over the past week following the rising of crude oil inventories. According to EIA, the US Crude Oil Inventories increased by 4.140M barrels, exceeding the market forecast of 0.376M barrels, while it showed stockpiles in the US. On the other hand, the OPEC+ group decided to maintain the producers’ group’s current oil output policy on the OPEC meeting, whereas it indirectly shown that the increase of crude oil supply. Nonetheless, the losses experienced by oil price was limited after the implementation of sanction against Russia’s oil products on 5 February, which would likely to shown the diminishing of oil circulation in the market. As the sanction implemented by EU countries, Russia might take action by declining the sales of its oil products to the EU.
Weekly Outlook: February 6 – 10
For the week ahead, investors would continue to focus on crucial economic event such as 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: February 6 – 10
| Time | Market | Event | Actual | Forecast | Previous |
| Monday – 6th February 2023 | |||||
| 08:30 | AUD | Retail Sales (MoM) | – | -3.9% | 1.7% |
| 17:30 | GBP | Construction PMI (Jan) | – | 49.6 | 48.8 |
| 23:00 | CAD | Ivey PMI (Jan) | – | 42.3 | 33.4 |
| Tuesday – 7th February 2023 | |||||
| 02:00 | EUR | ECB President Lagarde Speaks | – | – | – |
| 11:30 | AUD | RBA Interest Rate Decision (Feb) | – | 3.35% | 3.10% |
| Wednesday – 8th February 2023 | |||||
| 01:00 | CrudeOIL | EIA Short-Term Energy Outlook | – | – | – |
| 01:40 | USD | Fed Chair Powell Speaks | – | – | – |
| 05:30 | CrudeOIL | API Weekly Crude Oil Stock | – | – | 6.330M |
| 23:30 | CrudeOIL | Crude Oil Inventories | – | 0.376M | 4.140M |
| Thursday – 9th February 2023 | |||||
| 15:00 | EUR | German CPI (YoY) (Jan) | – | 9.2% | 8.6% |
| 17:45 | GBP | BoE MPC Treasury Committee Hearings | – | – | – |
| 18:00 | EUR | EU Economic Forecasts | – | – | – |
| 18:00 | EUR | EU Leaders Summit | – | – | – |
| 21:30 | USD | Initial Jobless Claims | – | 194K | 183K |
| Friday – 10th February 2023 | |||||
| 15:00 | GBP | GDP (QoQ) (Q4) | – | 0.4% | 1.9% |
| 15:00 | GBP | Manufacturing Production (MoM) | – | -0.2% | -0.5% |
| 18:00 | EUR | EU Leaders Summit | – | – | – |
| 21:30 | CAD | Employment Change (Jan) | – | 17.3K | 104.0K |
| 23:00 | USD | Michigan Consumer Sentiment (Feb) | – | 64.9 | 64.9 |
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