11 October 2021 Weekly Analysis
GCMAsia Weekly Report: October 11 – 15
Market Review (Forex): October 4 – 8
US Dollar
The dollar index which traded against a basket of six major currency pairs surged significantly last week over the backdrop of a string of bullish economic data from United States last week as well as hawkish expectation from the Federal Reserve, which spurring positive prospect toward the economic progression in the United States. The Dollar Index was closing its price on last Friday session at the price of 94.05.
Last week, the overall trend for the US Dollar remained bullish, bolstered by the rising US Treasury yield amid market participants speculated the Federal Reserve would reduce its bond buying program in November while increasing the interest rate next year in order to combat the high inflation risk. Such hawkish tone from the Federal Reserve have increased the probability for the Federal Reserve to start tapering the monetary policy earlier than expected, which increasing the US Treasury yields as well as the appeal for the US Dollar. On the economic data front, most of the crucial economic data from the United States had fared much better-than-expectation. According to Institute for Supply Management, U.S. ISM Non-Manufacturing Purchases Managers Index (PMI) notched up significantly from the previous reading of 61.7 to 61.9, exceeding the market expectation at 60.0. Besides, According to Bureau of Labor Statistics, U.S. Unemployment Rate declined significantly from the previous reading of 5.2% to 4.8%, much better than the market forecast at 5.1%. Nonetheless, the gains experienced by the US Dollar was limited by the downbeat Nonfarm Payroll data last week. U.S. Nonfarm Payrolls notched down significantly from the previous reading of 366K to 194K, missing the market forecast at 500K.
The overall bullish for the US Dollar last week was mainly due to the rising US Treasury yield with the expectation of upbeat economic outlook as well as hawkish tone from the Federal Reserve. Nonetheless, the economic prospect for the United States still remained vague as for now, hence it would be crucial for investor continue to scrutinize the latest updates with regards of further crucial economic data and also monetary policy decision from Fed in order to receive further trading signal.
USD/JPY
The pair of USD/JPY received bullish momentum on last week while ending last Friday session at the price of 112.95. The overall bullish momentum for the pair of USD/JPY last week was mainly due to the appreciation of US Dollar. Besides that, rapid vaccination program around the world had diminished the fears toward the Covid-19 pandemic, which stoked a shift in sentiment toward other riskier asset while dragging down the appeal for the safe-haven Japanese Yen.
EUR/USD
The pair of EUR/USD slumped throughout the week while ending last week session at the price of 1.1570. The overall bearish momentum for the pair of EUR/USD last week was mainly due to the appreciation of the US Dollar. Nonetheless, due to lack of catalyst for the European market, the overall trend for the Euro remained subdued. Investors would continue to scrutinize the latest updates with regards of future economic data to receive further trading signal.
GBP/USD
The pair of GBP/USD had surged last week while closing its market price at 1.3625. The Pound Sterling surged significantly last week over the backdrop of a string of upbeat economic data. According to Markit Economics, U.K. Composite Purchasing Managers’ Index (PMI) increased from the previous reading of 54.8 to 54.9, better than the market forecast at 54.1. Meanwhile, the Chartered Institute of Purchasing & Supply and the NTC economics reported the U.K. Services Purchasing Managers Index (PMI) came in at 55.4, which also exceeding the market forecast at 54.6. Both crucial economic data from U.K. came in at upbeat results, which spurring positive prospect for the economic momentum in the United Kingdom.
Market Review (Commodities): October 4 – 8
GOLD
Gold price have slumped last week with the price of $1755.50 per troy ounce amid rising US Treasury yield with the hawkish expectation from Fed continue to diminish the appeal for the safe-haven gold. The overall momentum for the gold remained weak as market participants speculated the Federal Reserve have higher probability implement contractionary monetary policy in November to combat the high inflation risk in future. Contractionary monetary policy would reduce the money circulation in the global financial market, which diminishing the inflation risk in future. Nonetheless, the overall statement from the Federal Reserve as for now remained vague, hence investors would continue to scrutinize the latest updates with regards of future monetary policy to receive further trading signal.
CrudeOIL
The price of crude oil surged significantly last week while closing last Friday session with the price of $75.65. The oil market maintained its bullish trend, supported by favorable demand outlooks following the rapid Covid-19 vaccination program around the world. Nonetheless, the gains experienced by crude oil was limited over the backdrop of downbeat inventory data. According to Energy Information Administration (EIA), U.S. Crude Oil Inventories came in at 2.346M, worse than the market forecast at -0.418M.
Weekly Outlook: October 11 – 15
For the week ahead, investors would continue to focus on crucial economic data such as the Initial Jobless Claims and CPI 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: October 11 – 15
| Time | Market | Event | Actual | Forecast | Previous |
| Monday – 11st October | |||||
| N/A | |||||
| Tuesday – 12nd October 2021 | |||||
| 14:00 | GBP | Average Earnings Index +Bonus (Aug) | – | 7.00% | 8.30% |
| 14:00 | GBP | Claimant Count Change (Sep) | – | – | -58.6K |
| 17:00 | EUR | German ZEW Economic Sentiment (Oct) | – | 24 | 26.5 |
| 22:00 | USD | JOLTs Job Openings (Aug) | – | 10.925M | 10.934M |
| Wednesday – 13rd October 2021 | |||||
| 14:00 | GBP | GDP (MoM) | – | – | 0.10% |
| 14:00 | GBP | Manufacturing Production (MoM) (Aug) | – | 0.10% | 0.20% |
| 20:30 | USD | Core CPI (MoM) (Sep) | – | 0.30% | 0.10% |
| Thursday – 14th October 2021 | |||||
| 02:00 | USD | FOMC Meeting Minutes | – | – | – |
| 08:30 | AUD | Employment Change (Sep) | – | -120.0K | -146.3K |
| 20:30 | USD | Initial Jobless Claims | – | 328K | 326K |
| 20:30 | USD | PPI (MoM) (Sep) | – | 0.60% | 0.70% |
| 23:00 | USD | Crude Oil Inventories | – | -0.418M | 2.346M |
| Friday – 15th October 2021 | |||||
| 20:30 | USD | Core Retail Sales (MoM) (Sep) | – | 0.50% | 1.80% |
| 20:30 | USD | Retail Sales (MoM) (Sep) | – | -0.20% | 0.70% |