12 April 2021 Weekly Analysis
GCMAsia Weekly Report: April 12 – 16
Market Review (Forex): April 5 – 9
US Dollar
The dollar index which traded against a basket of six major currency pairs slumped on last week amid dovish tone from the Federal Reserve. According to Reuters, the Federal Reserve (Fed) Chairman Richard Clarida claimed that the US Central bank would continue to remain its aggressive monetary policy stance while reiterating that a near-term spike in inflation would prove only temporary. Besides, spiking numbers of the Covid-19 from the United States had further diminished the market demand on the US Dollar. Dollar Index was closing its price on last Friday session at the price of 92.00.
Last week, the FOMC released its meeting minutes from 16th to 17th March meeting minutes, indicating that the FOMC members agreed to maintain the U.S. Monetary Policy loosened where to maintain their interest rate unchanged and continue to buying at least $120 billion bond in each month. Besides, the meeting summary also indicated that they will not change the ultra-easy policy until “substantial further progress” could be seen in US economy growth. Expansionary monetary policy as well as bond-buying program will be increasing the money circulation, which prompting the US Dollar to depreciate. Nonetheless, the US central bank will maintain their optimistic view toward the economic outlook, having an upbeat GDP projection at 6.5% in the year of 2021. Though, the unprecedented pandemic still remains as the major concerns in the path of economic recovery. On the Covid-19 pandemic front, the US Dollar received further bearish momentum amid the rising numbers of the Covid-19 cases in United States had weighed down the market optimism toward the economic progression in United States. According CNN, for the third straight week, the new Covid-19 cases and hospitalization are increasing in United States. In past week, the U.S. averaged more than 68,000 new Covid-19 cases, increasing more than 20% since the 10th March 2021.
As for now, investors would continue to scrutinize the latest updates with regards of the Covid-19 development, as well as further crucial economic data and movement of US Treasury Yield in order to gauge the likelihood movement for the index.
USD/JPY
The pair of USD/JPY slumped on last week while ending last Friday session at the price of 109.45. The overall bearish momentum for the pair was mainly due to the depreciation of the US Dollar. Besides, the spiking numbers of the Covid-19 cases around the world had diminished risk appetite in the FX market, which prompting investors to shift their portfolio toward the safe-haven Japanese Yen. As for now, more than 135 million coronavirus cases and nearly 3 million deaths from the virus were recorded, according to the Johns Hopkins Coronavirus Research Center. Investors would remain their focus on the Covid-19 vaccine development to receive further trading signal for the safe-haven Yen.
EUR/USD
The pair of EUR/USD surged throughout the week while ending last week session at the price of 1.1885. The overall bullish momentum for the pair of EUR/USD was mainly due to depreciation of the US Dollar. Besides, Euro received further bullish momentum following the European Central Bank unleashed its hawkish tone toward the economic outlook in the European region. According to CNBC, the governor of Austria’s central bank, told CNBC on last week that they believed the European Central Bank might be able to start reducing its bond purchases in the third quarter while expecting that the assessment for the Euro zone seems more positive than a few months back.
GBP/USD
The pair of GBP/USD was edged lower on last week while closing its market price at 1.3685. Pound Sterling slumped over the backdrop of negative prospect for the AstraZeneca’s vaccine, which dialed down the market optimism toward vaccination progress in United Kingdom while spurring bearish momentum on the Pound Sterling. According to BBC, more than 10 people have died from unusual blood clots after getting the Oxford/AstraZeneca vaccine in UK. Market participants concerned that the UK authorities might restrict the usage of AstraZeneca vaccine in future, which could be slowing down the vaccination program in UK.
Market Review (Commodities): April 5 – 9
GOLD
Gold price surged tremendously throughout last week with the price of $1745.00 troy ouns amid spiking numbers of the Covid-19 infections around the world had insinuated market demand for the safe-haven commodity such as gold. Besides, the Europe’s largest economy, Germany could be set to extend a national lockdown as the country also battles a third wave of Covid-19 cases. As much of the EU experiences rising Covid-19 cases, the Covid-19 vaccine rollout remains sluggish and contentious. Meanwhile, countries such as Australia, Philippines, Africa Union had suspended the Oxford/AstraZeneca Covid-19 vaccine following several suspected deaths were reported due to blood clotting following vaccination, dragging down the vaccination program while spurring further negative prospect for the economic momentum in the world.
CrudeOIL
The price of crude oil slumped throughout the week while closing last Friday session with the price of $59.20 per barrel amid the negative Covid-19 vaccine development had spurred market pessimism toward the crude oil demand in future. According to CNBC, major countries such as Australia, Philippines, Africa Union as well as some European countries had suspended the use of AstraZeneca vaccine over concerns about blood clots occurring in vaccinated people. Nonetheless, the losses experienced by the crude oil was limited over the backdrop of upbeat inventory data from EIA last week. According to Energy Information Administration (EIA), the U.S Crude Oil inventories had notched down significantly from the preliminary reading of -0.876M to -3.522M, lower than the market forecast at -1.436M.
Weekly Outlook: April 12 – 16
For the week ahead, investors would continue to focus on crucial economic data such as GDP from the UK region and Covid-19 development in order to determine further direction.
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 12 – 16
| Time | Market | Event | Actual | Forecast | Previous |
| Monday – 12nd April 2021 | |||||
| N/A | |||||
| Tuesday – 13rd April 2021 | |||||
| 14:00 | GBP | GDP (MoM) | – | – | -2.9% |
| 16:30 | GBP | Manufacturing Production (MoM) (Feb) | – | 0.5% | -2.3% |
| 17:00 | EUR | German ZEW Economic Sentiment (Apr) | – | 79.5 | 76.6 |
| 20:30 | USD | Core CPI (MoM) (Mar) | – | 0.2% | 0.1% |
| Wednesday – 14th April 2021 | |||||
| 10:00 | NZD | RBNZ Interest Rate Decision | – | 0.25% | 0.25% |
| 10:00 | NZD | RBNZ Rate Statement | – | – | – |
| 22:30 | CrudeOIL | Crude Oil Inventories | – | – | -3.522M |
| Thursday – 15th April 2021 | |||||
| 09:30 | AUD | Employment Change (Mar) | – | 35.0K | 88.7K |
| 20:30 | USD | Core Retail Sales (MoM) (Mar) | – | 4.8% | -2.7% |
| 20:30 | USD | Initial Jobless Claims | – | 700K | 744K |
| 20:30 | USD | Philadelphia Fed Manufacturing Index (Apr) | – | 43.0 | 51.8 |
| Friday – 16th April 2021 | |||||
| 10:00 | CNY | GDP (YoY) (Q1) | – | 18.8% | 6.5% |
| 10:00 | CNY | Industrial Production (YoY) (Mar) | – | 15.6% | 35.1% |
| 17:00 | EUR | CPI (YoY) (Mar) | – | 1.3% | 1.3% |
| 20:30 | USD | Building Permits (Mar) | – | 1.750M | 1.770M |