7 November 2022 Weekly Analysis
GCMAsia Weekly Report: November 7 – November 11
Market Review (Forex): October 31 – November 4
US Dollar
The Dollar Index which traded against a basket of six major currencies, seesawed throughout the week as the market sentiment were mixed.
In the earlier of the week, the Greenback received huge bullish momentum as the recent economic data showed positive reading, showing that the world’s largest economy remains resilient despite tremendous rate hike since the beginning of 2022. In the Fed’s November meeting, the US central bank has implemented a fourth consecutive 75 basis point rate hike to 4.00%, which bringing the rate to the highest level since January 2008. After that, Fed Chairman Jerome Powell reiterated on the FOMC Press Conference that the central bank will continue the path of aggressive rate hike in order to bring down the inflationary risk to 2% target, which sparked the appeal of US Dollar. The continued rate hike and hawkish statement from the Federal Reserve urged the dollar to regain the luster. However, the gains were pared off by the downbeat employment data. According to the Bureau of Labor Statistics, the unemployment rate in the US rose to 3.7% from September’s 3.5%, suggesting some sign of loosening in the US labor market. With these backdrops, the investors took it negatively while recking that the Federal Reserve shift toward a conservative rate hike path, whereby a smaller interest rate increase would happen in December.
Going forward, the market participants are all eyes on the US midterm election, which scheduled to happen on Wednesday. Besides, the long-waited CPI data on Thursday also would enable the investors to determine the long-term trend of the dollar index.
USD/JPY
The pair of USD/JPY was traded sideway throughout the entire last week while closing its market price at 146.60. The currency pair received mixed momentum as the Japanese government vowed that the Japanese yen fluctuated too rapidly in the recent months, one-sided yen fall negative for Japan economy. With that, it hinted that the Japanese government is likely to intervene the currency value to avoid further downside movement. However, the hawkish statement from the Federal Reserve continued to support the pair of USD/JPY, limiting the losses of the pairing.
EUR/USD
The pair of EUR/USD was traded sideway while closing its market price at 0.9958. Earlier of the week, the currency pair received huge bearish momentum as the upbeat economic data and hawkish statement from the Federal Reserve sparked the appeal of the dollar index. However, the losses were limited by the downbeat unemployment rate in the US, whereby the unemployment rate spiked from 3.5% to 3.7%, higher than the consensus forecast at 3.6%. Going forward, the pair of EUR/USD would still be highly dependent on the dollar’s trend.
GBP/USD
The pair of GBP/USD dropped last week while ending last week session at the price of 1.1370. The Pound Sterling lost its ground throughout the week as the Bank of England (BoE) gave a dovish stance regarding the UK economic outlook. In the BoE meeting, BoE raised interest rates to 3% from 2.25%, its biggest rate rise since 1989. Besides, the central bank forecasts inflation will hit a 40-year high of around 11% during the current quarter, but that Britain has already entered a recession that could potentially last two years – longer than during the 2008-09 financial crisis. With such a pessimistic view, the pound sold off by the market participants tremendously despite a 75-basis point of rate hike. Moreover, the fundamental problems facing the British economy remain. In September, the consumer price inflation returned to a 40-year high of 10.1%, and is likely to have risen further last month as the energy prices in UK rose. On the other side, the new UK government is still restructuring their long-term plan to calm down the market uncertainty as well as regaining the confidence of the residents.
Market Review (Commodities): October 31 – November 4
GOLD
Gold price skyrocketed significantly after testing the recent low, while closing its market price at $1680.90 per troy ounce. During the earlier of the week, the gold price received huge selling pressures as the hawkish rate hike comment from the Federal Reserve (Fed) diminished the gold appeal. However, the losses of the gold were reversed last Friday. According to the Bureau of Labor Statistics, the unemployment rate in the US rose to 3.7% from September’s 3.5%, suggesting some sign of loosening in the US labor market. With these backdrops, the investors took it negatively while recking that the Federal Reserve shift toward a conservative rate hike path, whereby a smaller interest rate increase would happen in December. With such a backdrop, it triggered the investors’ demand toward the gold products, causing the gold price skyrocketed more than $60 per troy ounce during the last Friday trading session.
CrudeOIL
Crude oil price rallied while ending last week session at the price of $92.55 per barrel. Crude oil price extended its rally as the oil market was filled up with positive catalyst, including OPEC+ oil production cut, US oil inventories draw as well as the G7 allies’ sanctions on Russian oil, which would go into effect in almost a month. Starting from 1st of Nov, the OPEC and its allies would cut the oil production by 2 million barrels per day, and it will last until the end of next year. Besides, the recent EIA and API inventories data also showed a huge drawn in last week, mirroring that the imbalance issue between supply and demand persists. Last but not least, the price cap sanction from the G7 is expected to curtail the oil export from Russia. With that, the insufficient supply of oil around the global will be deteriorated, which highly urging the oil price to go to a higher level in the future.
Weekly Outlook: November 7 – 11
For the week ahead, investors would continue to focus on crucial economic data such as the US CPI 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: 7 November – 11 November
| Time | Market | Event | Actual | Forecast | Previous |
| Monday – 7th November 2022 | |||||
| 16:40 | EUR | ECB President Lagarde Speaks | – | – | – |
| Tuesday – 8th November 2022 | |||||
| N/A | |||||
| Wednesday – 9th November 2022 | |||||
| 01:00 | CrudeOIL | EIA Short-Term Energy Outlook | – | – | – |
| 23:30 | CrudeOIL | Crude Oil Inventories | – | – | -3.115M |
| Thursday – 10th November 2022 | |||||
| 21:30 | USD | Core CPI (MoM) (Oct) | – | 0.5% | 0.6% |
| 21:30 | USD | CPI (YoY) (Oct) | – | 8.0% | 8.2% |
| 21:30 | USD | Initial Jobless Claims | – | 220K | 217K |
| Friday – 11th November 2022 | |||||
| 15:00 | GBP | GDP (YoY) (Q3) | – | 2.1% | 4.4% |
| 15:00 | GBP | Manufacturing Production (MoM) (Sep) | – | -0.8% | -1.6% |
| 15:00 | EUR | German CPI (YoY) (Oct) | – | 10.4% | 10.4% |
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