6 April 2020                Weekly Analysis

GCMAsia Weekly Report: April 6 – 11

Market Review (Forex): March 30 – April 4

US Dollar

The dollar index which traded against a basket of six major currency pairs surged last week as investors shift their portfolio toward the safe-haven currency amid worsening economic fallout from the coronavirus outbreak, while closing last Friday session at the price of 110.66. Nonetheless, the gains experienced by the safe-haven dollar was limited over the backdrop of the bleak jobs data from the United Stated region.

For last week, most of the employment data were dominated by dismal data, despite some of the results were fared better than the market expectations. The outbreak of the coronavirus had tremendously destroyed the U.S. economy while millions of Americans are expected to lose their jobs due to the pandemic crisis and worst of the damage is yet to happen. According to the recent jobs data, the U.S. Initial Jobless Claims spiked from the preliminary reading of 3,283K to 6,648K, exceeding the economist forecast at 3,500K. Similarly, the U.S Private Sector shed 27,000 jobs for last month, which is the first decline in the private sector hiring since September 2017, according to the Automatic Data Processing (ADP). Besides that, the U.S Nonfarm Payrolls massively decline from the previous reading of 275K to -701K while the U.S. Unemployment rate climbed up from 3.5% to 4.4%. Indeed, it is worth to mention that the March ADP and Nonfarm Payrolls report will barely begin to reflect the devastating fallout in the jobs market from the United Stated since the report were merely covered before the U.S government imposed the social distancing measures. The real economic damage on the jobs market could be much worse. However, the losses experienced by the US dollar was limited following some of the positive economic data were released on last week. According to National Association of Realtors, the U.S. Pending Home Sales for last month came in at 2.4%, exceeding the forecast at -1.0%. Besides, the U.S. ISM Manufacturing Purchasing Managers Index (PMI) and ISM Non-Manufacturing Purchasing Managers Index (PMI) were both fared better than the expectation, which increase some of the market optimism toward the economic progression in the United Stated.

On the coronavirus epidemic front, the global cases of the coronavirus outbreak have shot past one million with more than 53,000 fatalities as death tolls kept soaring in the United States and western Europe while the world economy spiraled disastrously. According to CNBC, the death tolls of Italy came in at 15,887 people, followed by Spain with 12,641 deaths, while the total number of the infections from the United States had topped up to 336,673 people while more than 9500 people died from the virus. Such negative sentiment in the market had diminished the risk appetited for the investors, while insinuating significant demand for the safe-haven US Dollar. Nonetheless, at this time investors would continue to scrutinize the latest updates with regards of the coronavirus as well as the economic data from the United Stated to gauge the likelihood movement for the pair.

 

USD/JPY

Pair of USD/JPY was traded higher last week while ending last Friday session at the price of 108.70. The overall bearish momentum for the pair was mostly prompting by the strengthen in US Dollar. Besides, the Japanese Yen slumped following the Japanese government is set to announce a state of emergency on 7th April, which will take effect on 8th April as investors’ fears that such policy would affect the economic momentum in the Japan region. At this time, investors would scrutinize the latest Japanese economic stimulus package which will be announced soon in order gauge the likelihood movement for the pair within short period.

 

EUR/USD

Pair of EUR/USD slumped on last week while closing last Friday’s trading session with the price of 1.0808. The overall bearish momentum of the pair was mostly due to the strengthen in the rival currencies, especially in US Dollar. Besides that, the worsening condition of the coronavirus pandemic in the Europe region had dialed down market optimism toward the economic progression from the Europe region. The French Prime Minister Édouard Philippe announced on last week that there will be an extension of a nationwide lockdown in an effort to diminish the coronavirus cases across France. Investors expected that the lockdown policy would undoubtedly harm the economic growth within the Europe region, which spurring significant selloff for the Euro. However, investors would eye on the latest economic stimulus plan from the European Central Bank in order to receive further trading signal.

 

GBP/USD

The pair of GBP/USD slumped on last week week while closing its market at 1.2216. The Pound Sterling received bearish momentum as the UK services and manufacturing sector in late March deteriorated as business and households paused activities to prevent the spread of the coronavirus. According to Markit Economics, U.K Composite Purchasing Managers’ Index (PMI) notched down from the preliminary reading of 53.0 to 36.0, missing the forecast at 36.2 while the U.K. Services Purchasing Managers Index (PMI) massively declined from the previous reading of 53.2 to 34.5, worse than the market forecast at 34.8. Besides, as the coronavirus continually spreading around the world, the risky asset pound sterling sank to its weakest in decades last month as investors shifted their risky currencies to the safe-haven asset such as the US Dollar. Moreover, the pound sterling received further bearish momentum following the UK Prime Minister Boris Johnson was admitted to hospital for tests on Sunday after suffering the persistent coronavirus symptoms for 10 days, according to Reuters.

 

Market Review (Commodities): March 30 – April 4

GOLD

Gold price was traded higher in overall last week while closing its market on Friday at $1616.55 a troy ounce as the risk-off sentiment in the FX market following the bleak jobs data from the U.S. region was released. Last week, the United States lost 701,000 jobs in March as the coronavirus pandemic bumped up the nation’s unemployment rate by the most in a month since 1975, according to the Labor Department Statement. Besides, the spike of the cases in the coronavirus had also spurred further demand for the safe-haven metal. Nonetheless, at this time, investors would continue to scrutinize the latest updates with regards of the coronavirus, fiscal and monetary policy from the global central bank and further economic data to receive further trading signals for the commodity.

 

CrudeOIL

The crude oil price received bullish momentum on last week while closing last Friday session with $28.50 per barrel. The oil market edged higher on last week following the U.S. President Donald Trump tweets that he expected the world oil producers to resume the talk with regards of the oil production cuts. According to Trump twitter on last Thursday, he claimed that he had brokered a deal for Saudi Arabia, Russia and other oil producers to cut the amount between 10 million and 15 million barrels of oil supply from daily world output. The crude oil prices rose approximately 25% on Thursday following his tweets. Then, the oil market appreciated by another 12% on last Friday following OPEC delegates claimed that a global cut of 10 million barrels a day was “a realistic goal”, according to Bloomberg. Besides, according to Reuters, Russia President Vladimir Putin was scheduled to meet Russian oil industry executives on last week to discuss the situation on the world energy market. However, the oil market slumped in Asia early trading session on Monday as OPEC+ delayed the meeting scheduled between Saudi Arabia and Russia to Thursday. The tensions between the two producers had led to a three-day postponement, which spurring some fears that the oil production deals would unable to be achieved, while providing some negative sentiment toward the oil market.

 

Besides that, the gains experienced by the oil market was limited following the skyrocketed in crude oil inventories. According to EIA, US Crude oil inventories notched up from the previous reading of 1.623M to 13.834M, exceeding the market forecast at 3.997M. Moreover, the overall oil market sentiment remains weak due to the negative impact of the coronavirus, which minimize the future demand for the oil commodity. Nonetheless, investors would continue to scrutinize the latest updates with regards of the OPEC+ and Russia meeting in order to gauge the likelihood movement for the black commodity.

 

Weekly Outlook: April 6 – 11

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, and crucial data such as U.S. Initial Jobless Claims and also U.S. PPI 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. Besides that, investors would also focus on the meeting between OPEC+ and Russia which scheduled on this Thursday to gauge the likelihood movement for the oil commodity.

 

Highlighted economy data and events for the week: April 6 –  11

Time Market Event Actual Forecast Previous
Monday – 6th April 2020
16:30 GBP Construction PMI (Mar) 52.6 44.0
Tuesday – 7th April 2020
12:30 AUD RBA Interest Rate Decision (Apr) 0.25% 0.25%
12:30 AUD RBA Rate Statement
22:00 USD JOLTs Job Openings (Feb) 6.476M 6.963M
22:00 CAD Ivey PMI (Mar) 54.1
Wednesday – 8th April 2020
22:30 CrudeOIL Crude Oil Inventories 13.834M
Thursday –9th April 2020
02:00 USD FOMC Meeting Minutes
14:00 GBP GDP (YoY) 1.1% 0.6%
14:00 GBP Manufacturing Production (MoM) (Feb) 0.2% 0.2%
19:30 EUR ECB Publishes Account of Monetary Policy Meeting
20:30 USD Initial Jobless Claims 5,000K 6,648K
20:30 USD PPI (MoM) (Mar) -0.3% -0.6%
20:30 CAD Employment Change (Mar) -350.0K 30.3K
22:00 USD Michigan Consumer Sentiment (Apr) 75.0 89.1
Friday– 10th April 2020
20:30 USD Core CPI (MoM) (Mar) 0.1% 0.2%
01:00

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CrudeOIL U.S. Baker Hughes Oil Rig Count 562