11th April 2022 Weekly Analysis
GCMAsia Weekly Report: April 11 – 15
Market Review (Forex): April 4 – 8
US Dollar
The Dollar Index which traded against a basket of six major currencies received significant bullish momentum last week amid the backdrop of hawkish tone from Federal Reserve. Besides, the gains of US Dollar was extended following the rising tensions of Russia-Ukraine conflict. The Dollar Index has closed its market price at 99.79.
Last week, the US Dollar index extended its gains following the rising US Treasury yields and expectations for more aggressive monetary policy tightening by the Federal Reserve offset safe-haven demand. According to Reuters, Benchmark 10-year Treasury yields rose after Fed Governor Lael Brainard said she expects methodical rate hikes and rapid reductions to the central bank’s balance sheet to bring U.S. monetary policy to a “more neutral position” later this year. Expectations for the Fed to be a bit more aggressive in fighting inflationary pressures are weighing on safe-haven assets such as US Dollar. On the other hand, Federal Reserve have appeared a speech on 7 April 2022, which claimed that the probability of multiple half percentage-point rate hike to combat the inflation rate. According to FOMC meeting minutes, the Fed officials viewed the 50-basis point of rate hike as appropriate during the next monetary policy meeting if the inflation pressures continue to intensify. Besides, the Monetary Policy Committee (MPC) also agreed to reduce the debt in balance sheet by $95 million per month with $60 billion of its Treasury holdings and $35 billion of mortgage-backed securities over the next three months. The rate hike decision from Federal Reserve had dialed up the market optimism toward US Dollar.
Besides, the rising tension of Russia-Ukraine conflict had also spurred further upward momentum on US Dollar. According to Reuters, the United States and Europe were planning new sanctions on 5 April 2022 to punish Moscow over civilian killings in Ukraine, and President Volodymyr Zelenskiy warned more deaths were likely to be uncovered in areas seized from Russian invaders. As the sanction imposed on Russia, it dialed down the market optimism toward risk-appetite assets, prompting investors to shift their capitals toward safe-haven assets such as US Dollar.
USD/JPY
The pair of USD/JPY extended its gains last week while closing its market price at 124.33. The pairing received bullish momentum amid the backdrop of Bank of Japan (BoJ) remained its dovish tone, as it was committed to keeping monetary policy loose, and it had made two offers to buy an unlimited amount of government bonds with maturities of more than five years and up to 10 years. Besides, the rate hike decision from Federal Reserve had brought positive prospects upon US Dollar, prompting investors to selloff Yen and purchase US Dollar which having better prospects, spurring further bullish momentum on the pair.
EUR/USD
The pair of EUR/USD slumped last week while closing its market price at 1.0878. The Euro received bearish momentum following the US and Europe plan Russia sanctions as Ukraine warns of more civilian deaths. According to Reuters, the European Union had claimed on 8 April 2022, which formally adopted new sweeping sanctions against Russia, including bans on the import of coal, wood, chemicals and other products which were estimated to slash at least 10% of total imports from Moscow. Nonetheless, Europe was the one of the dependent on Russia’s commodities. The implementation of sanctions on Russia would likely to bring negative prospects toward economic progression on Europe region, dialed down the market optimism toward Euro. On the other hand, the members of the UN Human Rights Council voted in favor of stripping Russia from the members’ list after the Russian rebels committed war crimes in Bucha, Ukraine. As world nations are isolating Russia from major communities, Russian leader Vladimir Putin could de-escalate progress talks with Ukraine, and the Ukraine crisis may continue to elevate further. The move of Russia would likely to cause another aggressive sanctions on it, spurred further bearish momentum on the pair.
GBP/USD
The pair of GBP/USD depreciated last week while ending last week session at the price of 1.3032. The overall trend for Pound remained bearish last week over the backdrop of strengthening US Dollar. As the Fed officials viewed the 50-basis point of rate hike as appropriate during the next monetary policy meeting, it prompted investors to selloff Pound and shift their capitals toward US Dollar as the US Dollar was having better prospects. However, the losses of Pound was limited following the upbeat economic data. According to The Chartered Institute of Purchasing & Supply and the NTC Economics, UK Services Purchasing Managers Index (PMI) notched up from the previous reading of 60.5 to 62.6, exceeding the market forecast of 61.0. Besides, UK Construction Purchasing Managers Index (PMI) recorded at the reading of 59.1, exceeding the market forecast of 57.8. The upbeat economic data dialed up the market optimism toward economic momentum in UK region, spurring bullish momentum on the pair.
Market Review (Commodities): April 4 – 8
GOLD
Gold price rallied last week while closing its market price at $1948.40 per troy ounces. Gold price received bullish momentum last week following the rising tension between Russia-Ukraine. According to Reuters, Kremlin spokesperson Dmitry Peskov said on 7 April 2022 that if Finland and Sweden joined NATO then Russia would have to “rebalance the situation” with its own measures. The speech from Dmitry Peskov hinted the tension between Russia-Ukraine would not end soon enough. It prompted investors to shift their capitals toward safe-haven assets such as gold in order to avoid the depreciation of their capitals.
CrudeOIL
Crude oil price depreciated while ending last week session at the price of $97.84 per barrel. Crude oil price received bearish momentum amid the backdrop of surging cases of Covid-19 in China. According to Reuters, Chinese authorities on 5 April 2022 extended a lockdown in Shanghai to cover all of the financial centre’s 26 million people, despite growing anger over quarantine rules in the city, where latest results show only 268 symptomatic daily COVID-19 cases. In a major test of China’s zero-tolerance strategy to eliminate the novel coronavirus, the government widened the lockdown to eastern parts of the city and extended until further notice restrictions in western districts, which had been due to expire on 5 April 2022. Lockdown in China would lead to the restriction of economic activities, causing the demand of oil to reduce. Besides, consuming countries’ planned release of 240 million barrels from emergency stocks offset some concerns over reduced supplies from Russia because of western sanctions, according to Reuters. It had put further pressure on the oil price.
Weekly Outlook: April 11 – 15
For the week ahead, investors would continue to focus on crucial economic data such as the Initial Jobless Claims and Fed monetary policy decision this week in order to determine further direction. Besides that, the ongoing situation with Ukraine-Russia war 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 11 – 15
| Time | Market | Event | Actual | Forecast | Previous |
| Monday – 11th April 2022 | |||||
| 14:00 | GBP | GDP (YoY) | – | – | 6.60% |
| 14:00 | GBP | GDP (MoM) | – | – | 0.80% |
| 14:00 | GBP | Manufacturing Production (MoM) (Feb) | – | 0.30% | 0.80% |
| 14:00 | GBP | Monthly GDP 3M/3M Change | – | – | 1.10% |
| Tuesday – 12th April 2022 | |||||
| 14:00 | GBP | Average Earnings Index +Bonus (Feb) | – | 5.40% | 4.80% |
| 14:00 | GBP | Claimant Count Change (Mar) | – | – | -48.1K |
| 17:00 | EUR | German ZEW Economic Sentiment (Apr) | – | -48 | -39.3 |
| 20:30 | USD | Core CPI (MoM) (Mar) | – | 0.50% | 0.50% |
| Wednesday – 13th April 2022 | |||||
| 9:00 | NZD | RBNZ Interest Rate Decision | – | 1.25% | 1.00% |
| 10:00 | NZD | RBNZ Rate Statement | – | – | – |
| 14:00 | GBP | CPI (YoY) (Mar) | – | 6.70% | 6.20% |
| 20:30 | USD | PPI (MoM) (Mar) | – | 1.10% | 0.80% |
| 22:00 | CAD | BoC Monetary Policy Report | – | – | – |
| 22:00 | CAD | BoC Interest Rate Decision | – | 1.00% | 0.50% |
| 22:30 | USD | Crude Oil Inventories | – | – | 2.421M |
| 23:00 | CAD | BOC Press Conference | – | – | – |
| Thursday – 14th April 2022 | |||||
| 9:30 | AUD | Employment Change (Mar) | – | 40.0K | 77.4K |
| 19:45 | EUR | Deposit Facility Rate (Apr) | – | -0.50% | -0.50% |
| 19:45 | EUR | ECB Marginal Lending Facility | – | – | 0.25% |
| 19:45 | EUR | ECB Interest Rate Decision (Apr) | – | 0.00% | 0.00% |
| 20:30 | USD | Core Retail Sales (MoM) (Mar) | – | 0.90% | 0.20% |
| 20:30 | USD | Initial Jobless Claims | – | 173K | 166K |
| 20:30 | USD | Retail Sales (MoM) (Mar) | – | 0.60% | 0.30% |
| 20:30 | EUR | ECB Press Conference | – | – | – |
| Friday – 15th April 2022 | |||||
| N/A | |||||
Risk Statement:
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