11 February 2019 Weekly Analysis
GCMAsia Weekly Report: February 11 – February 15
Market Review (Forex): February 4 – February 8
US Dollar
US dollar continue to gain its momentum against a basket of major currencies while closing last week’s market at the price of 96.36.
Last week, US dollar continues to appreciate following a fresh round of progress in the ongoing US-Sino trade war. According to reports, U.S trade negotiators will pressure China on longstanding demands for a reformation on how it treats U.S companies intellectual property in order for a trade deal that could happen that prevent rising tariffs on Chinese imported goods this week. Besides that, U.S President Donald Trump also vowed that the nation will increase its tariffs on Chinese imports worth $200 billion from 10% to 25% if both sides could not reach a trade agreement by March 1, adding further pressure to China. Despite U.S Federal Reserve expressed its dovish note recently, dollar strength remains intact following the ongoing progress on US-China trade war that could benefit U.S economy further with the increased tariffs if a trade deal could not be made at the end.
In conclusion, the trade tension between the world’s two largest economic powerhouses continues to be a major driver for market sentiment over the past year as recent progress remains in favor towards the U.S, causing investors to piling into the safety of the greenback following the fears of global growth slowdown. Meanwhile, market investors will focus on U.S economic data and also following the progress in U.S – China trade talks as officials from two nations will held a trade meeting this week.
USD/JPY
USD/JPY remains steady throughout the week while closing the market at the price of 109.76 last Friday session. Following the recent economic outlook, Japanese Yen remains in demand by market investors as a safe aversion asset due to increasing global slowdown fears and trade war tensions between two largest economies. Besides that, the safe-haven currency Yen also supported by weak U.S stock markets and equities which also dragged by trade tension uncertainties.
EUR/USD
Last week, EUR/USD fell sharply and closing the Friday market at 1.1318 amid negative economic outlook on the Eurozone which verified by its economic data. According to data, economic slowdown in Europe continue to spread as its economic data such as Eurozone Retail Sales and German Services PMI came under market expectations. Moreover, the European Commission also sharply downgraded euro zone growth outlook for this year which worsen the market sentiment for the Euro. Following the deteriorating prospects and falling economic numbers in Eurozone especially in Germany, it may hamper any expectations of rate hike from ECB for a long period.
GBP/USD
Pound sterling extend its losses to previous low levels while closing last Friday’s market at 1.2938 following the ongoing uncertainty surrounding Brexit. According to reports, U.K Prime Minister Theresa May have rejected opposition’s offer for a compromise Brexit plan which allowing UK to be in a customs union, shutting off yet another potential route to a Brexit deal. Business groups in the UK also warned that the nation is in process of entering the “emergency zone” with only less than 50 days towards the end date of scheduled Brexit. Head of Confederation of British Industry (CBI), Carolyn Fairbairn have stated that the “emergency zone” could affect jobs, investment and also UK status as a long-term business destination.
Market Review (Commodities): February 4 – February 8
GOLD
Gold price remains strong in overall, closing the market at the price of $1313.83 a troy ounce last Friday. Gold as safe haven asset remains intact as global growth fears and the ongoing uncertainty in trade war causing investors to continue to seek protection in safe haven asset. Besides that the cancellation of trade meeting last week between U.S President Donald Trump and China’s Premier Xi Jinping to sign a trade deal before March 1 continues to support the market sentiment of the yellow metal as safe haven asset.
Crude Oil
Crude oil price retrace from its high while ending last Friday trading session at the price of 52.67 following the increased rig numbers which indicate a rising crude oil production and fears of global growth slowdown. According to the data released by Bakers Hughes, energy firms have increased the drilling rigs, adding seven oil rigs to the total number of 854 from previous 847, indicating a further increment in crude oil production which already stands at a record of 11.9 million barrels per day.
Besides that, the ongoing trade tension between US and China also currently affecting the current outlook for the black commodity. As U.S and China are the world’s two largest oil consuming nations, the ongoing dispute between the two economic powerhouses may dragged down global growth and erode energy demand.
Weekly Outlook: February 11 – February 15
For the week ahead, investor’s will focus their attention on trade talk progress and various economic data such as Retail Sales to gauge market sentiment and outlook.
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: February 11 – February 15
| Monday, February 11 |
Data GBP – GDP (QoQ)(Y4) GBP – Manufacturing Production (MoM)(Dec) GBP – Monthly GDP 3M/3M Change
Events N/A
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| Tuesday, February 12 |
Data USD – Jolts Job Opening (Dec)
Events GBP – BoE Gov Carney Speaks
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| Wednesday, February 13 |
Data CrudeOIL – API Weekly Crude Oil Stock NZD – RBNZ Interest Rate Decision GBP – CPI (YoY) (Jan) USD – Building Permits USD – Core CPI (MoM)(Jan) CrudeOIL – Crude Oil Inventories
Events USD – Fed Chair Powell Speaks NZD – RBNZ Rate Statement NZD – RBNZ Press Conference
|
| Thursday, February 14 |
Data JPY – GDP (QoQ) (Q4) EUR – German GDP (QoQ) (Q4) USD – Core Retail Sales (MoM) (Dec) USD – PPI (MoM) (Jan) USD – Retail Sales (MoM) (Dec)
Events NZD – RBNZ Gov Orr Speaks
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Friday, February 15
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Data GBP – Retail Sales (MoM) (Jan) USD – Core Retail Sales (MoM) (Dec) USD – Retail Sales (MoM) (Dec) CrudeOIL – U.S. Baker Hughes Oil Rig Count
Events N/A
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