9 November 2020                  Weekly Analysis

GCMAsia Weekly Report: November 9 – 14

Market Review (Forex): November 2 – 6

US Dollar

The dollar index which traded against a basket of six major currency pairs slumped last week following the Joe Biden from Democratic Party won the incumbent Donald Trump in the U.S. election and become the 46th US President. Market participants expected that the winning of Joe Biden could be spurring hopes upon the massive economic stimulus plan in near term, which providing further bearish momentum toward the US Dollar.  The Dollar Index was closing its price on last Friday session at the price of 92.18.

Last week, the significant uncertainty with regards of the geopolitical risk in the United States had triggered massive selloff of the US Dollar.  Yesterday, Joe Biden claimed his victory in the US Presidential Election after the Associated Press, CNN, Reuters and NBC respectively announced him winning in decisive states including Pennsylvania and Nevada and gaining more than the threshold of 270 Electoral College votes needed to secure the presidency. Meanwhile, California Senator Kamala Harris becomes the first Black and Indian-American woman vice president to assist Biden in handling White House’s affair. Nonetheless, Joe Biden’s victory would not be set in stone until the 538 in total of Electoral College follow the well-established protocol which formally go through a process of voting the next president on 14th December 2020. Besides that, Donald Trump have also filed for a lawsuit to appeal against the final result of the presidential election while questioning integrity of absentee and mail-in ballots in some of the states. Such sentiment had triggered further geopolitical uncertainty in the United States, which spurring further selloff for the US Dollar. On the economic data front, the losses experienced by the US Dollar had limited over the backdrop of the string of upbeat economic data from the United States. Economic data such as U.S. ISM Manufacturing Purchasing Managers Index (PMI), U.S. Nonfarm Payrolls and U.S. Unemployment change had all fared much better than the economist forecast. Though, the prospect for the economic from the U.S. region was remains blurred as the spiking numbers of the coronavirus infections across the US region.

With the combination of uncertainty in stimulus, U.S. election results and the spiking numbers of the coronavirus, investors would continue to scrutinize the latest updates with regards of these issues in order to receive further trading signal for the US Dollar.

 

USD/JPY

The pair of USD/JPY recorded losses throughout the entire last week while ending last Friday session at the price of 103.25. The overall bearish momentum for the pair was mainly due to the depreciation of the US Dollar. Besides, the market uncertainties with regards of the US Presidential Election, Brexit and resurgence of pandemic in Eurozone had also spurred risk-off sentiment in the FX market, which prompting investors to shift their portfolio toward the safe-haven asset such as Japanese Yen.

 

EUR/USD

The pair of EUR/USD surged throughout the week while ending last week session at the price of 1.1890. The overall bullish momentum of the pair was mostly due to the weakening in the rival currencies, especially in US Dollar.  Besides, the euro extend its gains over the backdrop of the positive economic data from the German region. According to Markit Economics, the Germany Manufacturing Purchasing Managers Index (PMI) notched up from the previous reading of 58.0 to 58.2, exceeding the market forecast at 58.0. Though, the gains experienced by the euro was limited amid the spiking numbers of the coronavirus infections had prompted some European countries such as Germany, France, Italy and Spain to impose lock-down restriction, which dialed down the market optimism toward the economic progression in European region.

 

GBP/USD

The pair of GBP/USD was traded higher on last week while closing its market price at 1.3155.  The main contribution of bullish momentum on this currency pair were totally from the weakening of US Dollar. Besides, the winning of the Joe Biden over the U.S. election had supported the risk appetite in the FX market, which insinuating further demand for the riskier currency such as the Pound Sterling. Nonetheless, the uncertainty with regards of the Brexit issues had continue to weigh on the pound Sterling. As for now, investors would continue to scrutinize the latest updates with regards of the Brexit issues in order to receive further trading signal.

 

Market Review (Commodities): November 2 – 6

GOLD

Gold price surged tremendously throughout last week with the price of $1960.85 a troy ounce amid the uncertainty over the U.S. election as well as positive hopes upon the aggressive economic stimulus plans had continue to support bullish momentum over the safe-haven commodity. Besides, the spiking numbers of the coronavirus all over the world had also spurred risk-off sentiment in the FX market, which insinuating further demand for the gold commodity.  Nonetheless, investors would continue to scrutinize the latest updates with regards of the latest U.S. economic stimulus plan as well as the U.S. election in order to gauge the likelihood movement for this commodity.

 

CrudeOIL

The price of crude oil plunged throughout the week while closing last Friday session with the price of $36.95 per barrel amid surging of Covid-19 around the globe. Nonetheless, the losses experienced by the commodity was limited over the backdrop of the upbeats inventory data from the United States.

 

On the data front, the U.S. API Weekly Crude Oil Stock had notched down significantly from the previous reading of 4.577M to -8.010M, much better than the economist forecast at -0.600M. Besides, the Energy Information Administration (EIA) reported that the U.S. Crude oil Inventories had decreased from the significant reading of 4.320M to -7.998M, much lower than the market forecast at 0.890M. However, the coronavirus cases had reached more than 10,000,000 infection while more than 1,000,000 people was dead due to the coronavirus. Since the coronavirus infections continue to spike up, the outlook for the commodity remains negative while no signs of strong recover. Nonetheless, investors would continue to eye on the vaccine coronavirus in order to determine the direction for the commodity.

 

Weekly Outlook: November 9 – 13

For the week ahead, investors would continue to focus on the ongoing developments on US Presidential Election and economic data such UK Claimant Count Change and German ZEW Economic Sentiment (Nov) 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: November 9 – 13

Time Market Event Actual Forecast Previous
Monday – 9th November 2020
17:25 EUR ECB President Lagarde Speaks
18:35 GBP BoE Gov Bailey Speaks
Tuesday – 10th November 2020
15:00 GBP Average Earnings Index +Bonus (Sep) 1.0% 0.0%
15:00 GBP Claimant Count Change (Oct)
18:00 EUR German ZEW Economic Sentiment (Nov) 40.0 56.1
20:00 CrudeOIL EIA Short-Term Energy Outlook
23:00 USD JOLTs Job Openings (Sep) 5.590M 6.493M
Wednesday – 11st November 2020
09:00 NZD RBNZ Interest Rate Decision 0.25% 0.25%
09:00 NZD RBNZ Rate Statement
10:00 NZD RBNZ Press Conference
21:00 EUR ECB President Lagarde Speaks
Thursday – 12nd November 2020
15:00 GBP GDP (QoQ) (Q3) 15.8% -19.8%
15:00 GBP Manufacturing Production (MoM) (Sep) 0.9% 0.7%
16:00 GBP BoE Gov Bailey Speaks
21:30 USD Core CPI (MoM) (Oct) 0.2% 0.2%
21:30 USD Initial Jobless Claims 738K 751K
Friday– 13rd November 2020
00:00 USD Crude Oil Inventories -7.998M
00:45 EUR ECB President Lagarde Speaks
21:30 USD PPI (MoM) (Oct) 0.2% 0.4%