7th March 2022 Weekly Analysis
GCMAsia Weekly Report: March 7 – 11
Market Review (Forex): February 28 – March 04
US Dollar
The dollar index which traded against a basket of six major currencies received significant bullish momentum last week amid Russia-Ukraine war since last week had sparked higher market volatility, which stoked a shift in sentiment toward safe-haven asset such as US Dollar. Meanwhile, the US Dollar extend its gains following the Federal Reserve unleashed their hawkish tone toward the monetary policy decision. The Dollar Index has ended last week session at the price of 96.50.
According to Reuters, the Ukrainian atomic energy ministry claimed that a generating unit at the Zaporizhzhia nuclear power plant, the largest of its kind in Europe, has been hit during an attack by Russian troops. Besides, the Council of the European Union as well as United States had voted on sanction to exclude Russian banks from SWIFT system in order to harm their ability to operate globally while cutting off Russia financial market from the rest of the world. The sanction has insinuated expectation that it may have indirect effect toward Russian export sector as they struggle to run their business without a substantial payment method to make any transactions. Such sanction would likely to jeopardize the global supply chain, which spurring significant inflation risk in future while increasing the odds for Fed to implement a more aggressive contractionary monetary policy to combat the inflation risk. Contractionary monetary policy would likely to reduce the money circulation in the financial market, enhancing the appeal for the US Dollar.
On the economic data front, the US Dollar received further bullish momentum over the backdrop of bullish economic data from the United States region last week, which increasing the market optimism toward the economic progression in the United States. According to Bureau of Labor Statistics, US Nonfarm Payrolls notched up significantly from the previous reading of 481K to 678K, exceeding the market forecast 400K. On the other hand, US Unemployment Rate came in at 3.8%, which also fared better than market expectation at 3.9%.
As conclusion, due to the rising tensions between Russia and Ukraine as well as the hawkish expectation from Federal Reserve, the overall trend for the US Dollar would be most likely to remain bullish in short-term basis. Nonetheless, investors would need to continue to scrutinize the latest updates with regards of the monetary policy decision from Fed as well as Russia-Ukraine development to gauge the likelihood movement for the US Dollar.
USD/JPY
The pair of USD/JPY received bearish on last week amid appreciation of Japanese Yen while ending last Friday session at the price of 114.65. The safe-haven Japanese Yen received significant bullish momentum last week over the backdrop of rising tensions between Russia-Ukraine, which prompting investors to shift their portfolio from riskier equity market into safe-haven asset such as Japanese Yen.
EUR/USD
The pair of EUR/USD slumped throughout the week while ending last week session at the price of 1.0875. The Euro dipped down significantly amid market participants remained concerns toward the economic progress in European region. The rising tensions between Russia-Ukraine would likely to continue to jeopardize the economic momentum in the European region. Besides, the Europe countries imported mostly 40% of its natural gas consumption and more than quarter demand for oil from Russia. The supply disruption concerns due to the implementation of sanctions from European region would upsurge the cost for raw materials for European companies, which leading to a higher inflation risk in future while dragging down the appeal for Euro.
GBP/USD
The pair of GBP/USD depreciated last week while closing its market price at 1.3215. Due to lack of market catalyst from the market in United Kingdom last week, the overall movement for the pair of GBP/USD was mainly due to the appreciation of the US Dollar. Besides, the risk-off sentiment in the global financial market would also trigger a selloff for the riskier currencies such as Pound Sterling, which spurring further bearish momentum on the pair of GBP/USD. As for now, investors would continue to remain their focus toward the relationship between Russia-Ukraine as well as further economic data to receive further trading signal for Pound Sterling.
Market Review (Commodities): February 28 – March 4
GOLD
Gold price was surged significantly last week with the price of $1970.15 per troy ounce amid heightening geopolitical tensions between Russia-Ukraine had diminish the risk appetite in the global financial market, which prompting investors to shift their portfolio toward safe-haven gold. On the other hand, the rising commodity prices had caused the US inflation rate hit 40 year-high. According to the latest US inflation indicator data, The Personal Consumption Expenditure Index increased by 5.8% in the year of December and 6.1% in the 12 months to January. The readings also indicated the fastest growth inflation rate since 1982. Rising inflation risk in future would likely to prompt investors to enter the safe-haven gold market in order to hedge against the inflation risk. Nonetheless, as for now investors would continue to focus on the monetary policy decision from Fed to receive further trading signal.
CrudeOIL
The price of crude oil surged last week while closing last Friday session with the price of $114.98 per barrel. The crude oil price hit multi-year highs on last week following major countries had implemented numerous sanctions upon Russia. Market participants remained concerns that the sanction on the oil and gas industries would likely to interrupt the oil supply, which spurring bullish momentum on this black commodity. Besides, the oil market extends its gains over the backdrop of bullish inventory data. According to Energy Information Administration (EIA), the US Crude Oil Inventories declined from the previous reading of 4.515M to -2.597M, better than the market forecast at 2.748M.
Weekly Outlook: March 7 – 11
For the week ahead, investors would continue to focus on crucial economic data such as the Initial Jobless Claims and inflation data 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: March 7 – 11
| Time | Market | Event | Actual | Forecast | Previous |
| Monday – 7th March 2022 | |||||
| N/A | |||||
| Tuesday – 8th March 2022 | |||||
| N/A | |||||
| Wednesday – 9th March 2022 | |||||
| 7:50 | JPY | GDP (QoQ) (Q4) | – | 1.40% | 1.30% |
| 23:00 | USD | JOLTs Job Openings (Jan) | – | 10.925M | 10.925M |
| 23:30 | USD | Crude Oil Inventories | – | – | -2.597M |
| Thursday – 10th March 2022 | |||||
| 18:00 | EUR | EU Leaders Summit | – | – | – |
| 20:45 | EUR | ECB Monetary Policy Statement | – | – | – |
| 20:45 | EUR | ECB Interest Rate Decision (Mar) | – | – | – |
| 21:30 | USD | Core CPI (MoM) (Feb) | – | 0.50% | 0.60% |
| 21:30 | USD | Initial Jobless Claims | – | 216K | 215K |
| 21:30 | EUR | ECB Press Conference | – | – | – |
| Friday – 11st March 2022 | |||||
| 15:00 | GBP | GDP (MoM) | – | – | -0.20% |
| 15:00 | GBP | Manufacturing Production (MoM) (Jan) | – | 0.20% | 0.20% |
| 18:00 | EUR | EU Leaders Summit | – | – | – |
| 21:30 | CAD | Employment Change (Feb) | – | 160.0K | -200.1K |