8 April 2019 Weekly Analysis
GCMAsia Weekly Report: April 8 – 12
Market Review (Forex): April 1 – April 5
US Dollar
Dollar index extended its gains throughout last week while closing Friday’s market higher at 96.95. The appeal towards US dollar were bolstered following better-than-expected Nonfarm Payrolls report from last Friday.
Throughout the entire last week, US upbeat data and positive development in trade talk between China and US have form a strong support to dollar market and eventually boosted the dollar value upward. Earlier, ISM Manufacturing data came in at 55.3, stronger than the economist forecast of 54.5. It portrays that US economy outlook is still remain resilient despite retails sales data came in at a slower pace on last Monday. Moreover, positive economic outlook has also been confirmed following a decrease in Initial Jobless Claim data. Last but not least, Non-Farm Payroll and Unemployment rate which act as the key data representing the current economic outlook fortunately came in at a rate higher than economist forecast. NFP data showed a reading of 196K, beating the expectation of 175K while unemployment rate hit the economist forecast of remained at 3.8%. Both data have triggered bullish momentum toward the dollar market as data did not obviously showed any sign of economic downturn in US.
In conclusion, dollar appeal is still remain strong due to upbeat data and market participant’s optimistic in solving trade impasses with China. Investors this week will focus on possible developments in Brexit and China trade talk to further gauge the market’s movement.
USD/JPY
USD/JPY extended its gains to a higher level throughout the week and closing last Friday market at the price of 111.70. Such momentum was due to US upbeat data announced last week have boosted the risk sentiment of investors and sold off safe-haven yen. Besides that, Japanese Yen has also faced large sell off pressure from the market due to its own gloomy economic outlook which shown in weaken Tankan Large Manufactures Index and obvious decrease in household spending. Downbeat data has further stepped on the Japanese yen and urged investors to move their asset toward riskier asset such as Dollar and Euro.
EUR/USD
Overall, Euro was traded lower throughout last week while closing last Friday’s market at 1.1215. The pair remained pressure amid Brexit deadlock and pessimistic data been announced in the early last week. Deadlock in Brexit is still a major issue that continue to haunt the sentiment in Eurozone as impasses on UK exiting European Union apparently affecting the countries that involved as both parties have depth understanding that unfair deal will further deteriorated their economic growth outlook. On the other sides, weak Eurozone CPI and German Manufacturing PMI data have reaffirmed the dovish stance of ECB where they might extend their easing monetary policy for a longer period.
GBP/USD
Pound sterling managed to obtain little gains throughout last week while closing last Friday’s market at 1.3035. The pair has undergoes a high volatile week as negative development in Brexit triggered huge fluctuation in the currency value. In the early last week, Prime Minister Theresa May Brexit draft faced a third time defeat with UK Parliament voting 388 against 286. After that, Theresa May has planned to ask EU for an extension to the Brexit deadline, but as of now European Union is unlikely to approve her further extension of Brexit unless there is a progress in solving Ireland backstop issue. Prior to 12th April Brexit deadline, UK is now under pressure of deciding whether hard Brexit or request further delay while remaining in EU and participating in the next European Union general elections. Besides, the pair of GBP/USD had been further dragged down following upbeat NFP data triggered huge buy in momentum in US Dollar.
Market Review (Commodities): April 1 – April 5
GOLD
Gold price managed to hold its ground while closing last week Friday trading session with the price of $1291.30 a troy ounce. The safe-have metal has been traded mix throughout the week as news on positive progress between US-China trade talk last week have lifted the investor confidence toward US Dollar while impasses in Brexit development contrasting boosted the demand of safe haven metal. Despite NFP data came in at a higher rate than economist forecast, but the shininess of yellow metal did not faded away, instead gold price continued to rise with US Dollar at the same pace.
Crude Oil
The price of crude oil continues to accelerate further and closing last week market at $63.30 per barrel, posting another biggest weekly increases following further signs of crude oil production cut. Besides, there was a report showed one of the senior US official have stated that US is considering more sanction on Iran and one halted Venezuela’s crude export terminal sent the crude oil price higher in the early last week. In spite of last week crude oil inventories data obviously showed a build-up in inventories, but market optimism toward OPEC and allies country production cut efforts remained strong and eventually dragged up the crude oil price.
In conclusion, crude oil production cut from OPEC and US sanctions against Iran and Venezuela successfully uplifted the market long term confidence toward the commodity. As of now, market participant remain in focus on further catalyst that could affect the oil market such as the coming data.
Weekly Outlook: April 8 – 12
For the week ahead, investor’s will shift their attention towards Brexit progress and this week crucial data such as CPI and PPI to further gauge the market’s movement.
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: April 8 – 12
| Monday, April 8 |
Data EUR – German Trade Balance (Feb) USD – Factory Orders (MoM) (Feb)
Events N/A
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| Tuesday, April 9 |
Data CHF – Unemployment Rate s.a. (Mar) USD – JOLTs Job Openings (Feb)
Events N/A
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| Wednesday, April 10 |
Data CrudeOIL – API Weekly Crude Oil Stock GBP – GDP (MoM) GBP – Manufacturing Production (MoM) (Feb) EUR – Deposit Facility Rate EUR – ECB Marginal Lending Facility EUR – ECB Interest Rate Decision (Apr) USD – Core CPI (MoM) (Mar) USD – CPI (MoM) (Mar)
Events CrudeOIL – OPEC Monthly Report EUR – ECB Press Conference
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| Thursday, April 11 |
Data USD – PPI (MoM) (Mar)
Events USD – FOMC Meeting Minutes CrudeOIL – OPEC Meeting
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Friday, April 12
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Data USD – Michigan Consumer Sentiment (Apr) EUR – Industrial Production (MoM) (Feb)
Events CrudeOIL – U.S. Baker Hughes Oil Rig Count.
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