10 April 2023 Weekly Analysis
GCMAsia Weekly Report: April 10 – 14
Market Review (Forex): April 3 – 7
US Dollar
The U.S. dollar index, which traded against a basket of six major currencies, continued to come under investor selling pressure for a sixth straight week following a series of mixed economic data were released.
Last week, the dollar index slipped as the consumer confidence reduced and the manufacturing activity in the US showed a contraction. The Michigan consumer sentiment index dipped for the first time in four months, from 63.4 to 62.0 in February. The data revealed multiple signals that consumers increasingly expect a recession ahead. Besides, the ISM manufacturing PMI also slumped for 5 straight months, from 47.7 to 46.3 in February. Data show that the manufacturing industry is facing the impact of high-interest rates after the Federal Reserve aggressively raised interest rates. According to the Bureau of Labor Statistics, the JOLTS jobs opening also reduced to the lowest level in 2 years at 9.931 million, further signaled that the firms are in contraction situations. Therefore, the dollar index continued to slip after a series of downbeat economic data was released.
However, the losses in the dollar index against a basket of currencies were limited after the investor regained confidence in the labor data. Investors were expecting an increase in initial jobless claims as recent economic data had been pessimistic, but the actual number came in at 228k, down from the previous reading at 246k and below the 4-week average of 237k. Nonfarm payrolls also came in at a reading that close to market forecasts, at 236k versus 239k. Simultaneously, the unemployment rate was slightly reduced by 0.1% to 3.5%. The data indicated labor market has an improvement in the unemployment rate coming from increasing number of labor in the government, leisure, and hospital sector.
USD/JPY
The pair of USD/JPY edged down while closing its market price at 132.10 after the investor pull off their money from Greenback. The high interest rate environment has affected the U.S. economy negatively. Most businesses took a conservative move rather than expanding their businesses. New vacancies in the U.S. also fell to a 2-year low as the rate hikes weighed on the U.S. economy. As a result, the dollar continued to experience tremendous sell-off pressures. The Japanese yen has been in favor by investors amid increased demand for safe-haven instruments following a string of dismal economic data.
EUR/USD
The pair of EUR/USD was traded up last week while closing its market price at 1.0910. The euro rose against the dollar after the release of the Eurozone Composite Purchasing Managers Index. According to S&P Global, the growth of Eurozone PMI mainly contributed by the rising business activity in Spain, where it hit the 16-month high. While German and France’s two largest economies lagged at 52.6 and 52.7, but still hit the fresh highs in 10 months. As a result, the Eurozone economy rounded off the first quarter with a three consecutive monthly expansion in the private sector, signaling a marked improvement in the overall economy. The Eurozone service PMI increased from 52.7 to 55.0, slightly lower than the market expectation of 55.6. However, the reading stands above 50 level still indicates the Eurozone service sector generally expanding.
GBP/USD
The pairs of GBP/USD extended its gains last week to close at 1.2430. The composite PMI came in at 52.2, in line with market expectations despite the economists predicted a contraction in the UK economy. The UK manufacturing PMI fell to 47.9 from 49.3, slightly below market expectations of 48.0. The services PMI came in at 52.9, above market expectations of 52.8. The main reason for sterling’s rise was attributed to the weakness of the dollar. The dollar came under pressure as the consumer sentiment and manufacturing PMI came in below market expectations.
Market Review (Commodities): April 3 – 7
GOLD
Gold prices rose to close at $2005.35 a troy ounce. Gold prices were favored by investors after they raised expectations for a future recession. Signs of a slowing economy have prompted investors to think the Fed will pause its rate hike strategy. However, gold prices retraced from 2030 after the dollar rebounded from 2-year lows. In the long-term perspective, the Fed hinted that the central bank might pause its rate hike after the next one more tightening move. Therefore, gold is expected to break out higher in the future.
CrudeOIL
Crude oil prices edged up at the end of last week’s session at the price of $80.79 per barrel. The oil prices slightly retraced from its recent high after investors reacted to OPEC production cuts. However, the oil prices managed to regain its luster alongside the dollar weakened, whereby the depreciation of US dollar allowed other countries to purchase the black commodity at a cheaper prices. Furthermore, the crude oil prices rose after US oil inventories showed a larger-than-expected draw. The API weekly crude oil declined by -4.346 million, while EIA crude oil inventories came in at -3.739 million. As a conclusion, the oil prices edged higher throughout the week amid a weaker dollar and a drop in U.S. inventories.
Weekly Outlook: April 10- 14
For the week ahead, investors would continue to focus on crucial economic data such as Consumer Price index and FOMC meeting this week to determine further direction. Besides that, the latest situation of the banking sector crisis in US and EU 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: April 10 – 14
| Time | Market | Event | Actual | Forecast | Previous |
| Monday – 10th April 2023 | |||||
| All Day | GBP | United Kingdom – Easter | – | – | – |
| All Day | EUR | Germany – Easter | – | – | – |
| All Day | CHF | Switzerland – Easter | – | – | – |
| All Day | AUD | Australia – Easter | – | – | – |
| All Day | NZD | New Zealand – Easter | – | – | – |
| Tuesday –11th April 2023 | |||||
| N/A | |||||
| Wednesday – 12th April 2023 | |||||
| 0:00 | CrudeOIL | EIA Short-Term Energy Outlook | – | – | – |
| 4:30 | CrudeOIL | API Weekly Crude Oil Stock | – | – | -4.346M |
| 20:30 | USD | Core CPI (MoM) (Mar) | – | 0.40% | 0.50% |
| 20:30 | USD | CPI (MoM) (Mar) | – | 0.30% | 0.40% |
| 20:30 | USD | CPI (YoY) (Mar) | – | 5.20% | 6.00% |
| 21:00 | GBP | BoE Gov Bailey Speaks | – | – | – |
| 22:00 | CAD | BoC Monetary Policy Report | – | – | – |
| 22:00 | CAD | BoC Interest Rate Decision | – | 4.50% | 4.50% |
| 22:30 | CrudeOIL | Crude Oil Inventories | – | -2.329M | -3.739M |
| 23:00 | CAD | BOC Press Conference | – | – | – |
| Thursday – 13th April 2023 | |||||
| 2:00 | USD | FOMC Meeting Minutes | – | – | – |
| 3:15 | GBP | BoE Gov Bailey Speaks | – | – | – |
| 9:30 | AUD | Employment Change (Mar) | – | 20.0K | 64.6K |
| 14:00 | GBP | GDP (MoM) (Feb) | – | 0.20% | 0.30% |
| 14:00 | GBP | Manufacturing Production (MoM) (Feb) | – | 0.30% | -0.40% |
| 14:00 | GBP | Monthly GDP 3M/3M Change (Feb) | – | – | 0.00% |
| 14:00 | EUR | German CPI (MoM) (Mar) | – | 0.80% | 0.80% |
| 20:30 | USD | Initial Jobless Claims | – | 205K | 228K |
| 20:30 | USD | PPI (MoM) (Mar) | – | 0.10% | -0.10% |
| Friday – 14th April 2023 | |||||
| 20:30 | USD | Core Retail Sales (MoM) (Mar) | – | -0.30% | -0.10% |
| 20:30 | USD | Retail Sales (MoM) (Mar) | – | -0.40% | -0.40% |
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