09 August 2021 Weekly Analysis
GCMAsia Weekly Report: August 9 – 13
Market Review (Forex): August 2 – 6
US Dollar
The dollar index which traded against a basket of six major currency pairs surged over the backdrop of string of upbeat economic data last week, which dialed up the market optimism toward the economic progression in the United States. Meanwhile, the hawkish statement from the member of Federal Reserve had also spurred further bullish momentum on the US Dollar last week. The Dollar Index was closing its price on last Friday session at the price of 92.05.
According to the FOMC statement, the Fed Vice Chair Richard Clarida claimed that the Federal Reserve may start to taper its aggressive monetary policy as the US economy had recovered faster than widely thought. The bullish comments from the Federal Reserve had spurred a rebound in U.S. Treasury yields, which increasing the appeal of the US Dollar. Contractional monetary policy would be decreasing the money circulation in the financial market as well as inflation risk in future, which increasing the appeal of US Dollar. On the economic data front, most of the crucial economic data from Unites States had fared better than expectation results. According to Bureau of Labor Statistics, U.S Unemployment rate notched down significantly from the previous reading of 5.9% to 5.4%, better than the market forecast at 5.7%. Meanwhile, U.S. Nonfarm Payroll came in at 943K, which also fared better than market expectation at 870K, which dialed up the market optimism toward the economic progression in the United States.
Nonetheless, market participants will continue to scrutinize the latest crucial inflation data as well as the monetary statement from Federal Reserve to receive further trading signal. There are four Fed official’s members would be speaking this week and will no doubt offer their own opinion with regards of whether tapering the monetary policy.
USD/JPY
The pair of USD/JPY received bullish momentum on last week while ending last Friday session at the price of 110.20. The overall bullish momentum for the pair of USD/JPY was mainly due to the appreciation of the US Dollar. Nonetheless, spiking numbers of the Delta variant in Asian region had also stoked a shift in sentiment toward safe-haven asset, which limiting the gains experienced by the pair of USD/JPY.
EUR/USD
The pair of EUR/USD slumped throughout the week while ending last week session at the price of 1.1755. The overall bearish momentum for the pair of EUR/USD last week was mainly due to the appreciation of the US Dollar. On the economic data front, most of the crucial data came in at bleak results. According to Markit/CIPS, Eurozone Services Purchasing Managers Index (PMI) and Eurozone Markit Composite Purchasing Managers Index (PMI) came in at 59.8 and 60.2, which both fared worse than market expectation at 60.4 and 60.6 respectively.
GBP/USD
The pair of GBP/USD slumped last week while closing its market price at 1.3860. The overall bearish momentum for the pair of GBP/USD last week was mainly due to the appreciation of the US Dollar. Nonetheless, the losses experienced by the pair of GBP/USD was limited by the hawkish sentiment from the Bank of England last week. According to Bloomberg, the Bank of England Governor Andrew Bailey have signaled that the U.K. economic has rebounded sharply from its pandemic recession, analysts expected the inflation rate will now exceed 3% this year. A sharp increase in inflation rate could provide a hint that tightening monetary policy may be required earlier than expected. Nonetheless, as for now the BoE decided to maintain its current interest rates unchanged at 0.10% while leave its quantitative easing policy unchanged in a bid to support the economic recovery.
Market Review (Commodities): August 2 – 6
GOLD
Gold price plunged last week with the price of $1815.00 per troy ounce amid the hawkish statement as well as bullish economic data last week had spurred hopes that the Federal Reserve might start to implement contractionary monetary policy early than expected, which diminishing the appeal of the safe-haven commodity. Market participants speculated that the contractional monetary policy from the Federal Reserve would diminish the inflation risk in future, which prompting investors to shift their portfolio from the safe-haven gold into other US Treasury bond. Nonetheless, the overall statement from the Fed remained vague for now, hence investors should continue to scrutinize the latest updates with regards of the future monetary policy plan to gauge the likelihood movement for the gold commodity.
CrudeOIL
The price of crude oil slumped significantly last week while closing last Friday session with the price of $73.15. The crude oil price received bearish momentum last week over the backdrop of the bearish inventory data last week. According to Energy Information Administration, U.S. Crude Oil Inventories came in at 3.626M, missing the market forecast at -3.102M. Besides, the oil market extends its losses amid spiking numbers of the Delta variant around the world had spurred negative prospect for the oil demand. Nonetheless, investors would continue to scrutinize the latest updates with regards of Covid-19 development in order to gauge the likelihood movement for this black-commodity.
Weekly Outlook: August 9 – 13
For the week ahead, investors would continue to focus on crucial economic data such as US Initial Jobless Claims in order to determine further direction. Besides that, the ongoing situation with coronavirus 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: August 9 – 13
| Time | Market | Event | Actual | Forecast | Previous |
| Monday – 9th August 2021 | |||||
| 22:00 | USD | JOLTs Job Openings (Jun) | – | 9.270M | 9.209M |
| Tuesday – 10th August 2021 | |||||
| 17:00 | EUR | German ZEW Economic Sentiment (Aug) | – | 57.0 | 63.3 |
| Wednesday – 11st August 2021 | |||||
| 20:30 | USD | Core CPI (MoM) (Jul) | – | 0.4% | 0.9% |
| 22:30 | USD | Crude Oil Inventories | – | -3.102M | 3.626M |
| Thursday – 12nd August 2021 | |||||
| 14:00 | GBP | GDP (QoQ) (Q2) | – | 4.8% | -1.6% |
| 14:00 | GBP | Manufacturing Production (MoM) (Jun) | – | 0.4% | -0.1% |
| 20:30 | USD | Initial Jobless Claims | – | 373K | 385K |
| 20:30 | USD | PPI (MoM) (Jul) | – | 0.6% | 1.0% |
| Friday – 13rd August 2021 | |||||
| 09:30 | AUD | Employment Change (Jul) | – | 30.0K | 29.1K |