12 July 2021 Weekly Analysis
GCMAsia Weekly Report: July 12 – July 16
Market Review (Forex): July 5 – 9
US Dollar
The dollar index which traded against a basket of six major currency pairs have fell over the backdrop of the string of bleak economic data last week. Besides, rising tensions between U.S. and China had also spurred further bearish momentum toward the US Dollar. Nonetheless, the losses experienced by US Dollar was limited amid hawkish statement from the Federal Reserve. The Dollar Index was closing its price on last Friday Session at the price of 92.00.
According to Reuters, the U.S. Department of Commerce claimed that they had added another 14 Chinese companies and other entities to its economic blacklist, saying they have been implicated in human rights violations, which dialed down the market optimism toward the US-China relationship while spurring concerns over the economic momentum in the United States. On the economic data front, most of the crucial economic data from the United States came in at bleak reading. According to Department of Labor, U.S. initial Jobless Claims had notched down from the previous reading of 371K to 373K, worse than the market forecast at 350K, which indicating that the labor market recovery from the Covid-19 pandemic continues to be subdued. Nonetheless, the losses experienced by the US Dollar was limited from the earlier hawkish tilt from Federal Reserve. A Reuters poll predicted that the Fed would announce a strategy to taper its asset purchases in August or September, while most analysts predicted that the first reduction to its bond-buying program will resume early next year.
As conclusion, the overall movement of the US Dollar last week remained stable due to the mixed market sentiment. Nonetheless, investors should continue to scrutinize the latest updates with regards of further crucial economic data, US-China trade relationship as well as Covid-19 development in order to receive further trading signal for the US Dollar.
USD/JPY
The pair of USD/JPY experience bearish momentum on last week while ending last Friday session at the price of 110.65. The overall bearish momentum for the pair was mainly due to the depreciation of the US Dollar. Besides, spiking number of Covid-19 cases across the Asian region over the weekend had stoked a shift in sentiment toward the safe-haven currencies, such as Japanese Yen. According to Reuters, Indonesia is battling record high cases while a lockdown in Malaysia is set to be extended. In addition, rising tensions between US-China relationship had also diminished risk appetite in the FX market, which increasing the appeal for the Japanese Yen.
EUR/USD
The pair of EUR/USD surged throughout the week while ending last week session at the price of 1.1940. The overall bullish momentum for the pair of EUR/USD was mainly due to the depreciation of US Dollar. Nonetheless, due to lack of market catalyst, the overall movement for the Euro remained subdued. Investors would continue to remain their focus on further crucial economic data as well as Covid-19 development in European region to gauge the likelihood movement for the currency.
GBP/USD
The pair of GBP/USD was appreciated on last week while closing its market price at 1.3905. Pound Sterling surged amid the upbeat economic data from the UK region last week, which dialed up the market optimism toward the economic progression in United Kingdom. According to Markit Economics, U.K. Composite Purchasing Managers’ Index (PMI) came in at 62.2, exceeding the market forecast at 61.7. Meanwhile, U.K. Service Purchasing Managers Index (PMI) came in at 62.4, which also better than market expectation at 61.7. Nonetheless, the gains experienced by the Pound Sterling was limited as spiking numbers of the Covid-19 had diminished hopes toward the easing lockdown restrictions. According to latest data, U.K. reported another 36,362 new daily cases of Covid-19, its second highest daily total since the end of January. Despite that, the hospitalizations and deaths remaining relatively low, investors and government are confident that the easing of lockdown restrictions later this month will go ahead. Investors would continue to scrutinize the latest updates with regards of latest lock-down restrictions as well as further economic data to gauge the likelihood movement for the Pound Sterling
Market Review (Commodities): July 5 – 9
GOLD
Gold price was traded within a range throughout last week while closing its price at $1813.05 per troy ounce. In earlier, the safe-haven gold was traded higher last week due to the depreciation of US Dollar. Market analysts speculated that the depreciation of the US Dollar was mainly due to profit-taking ahead of key U.S. Inflation data for June due next week. Besides, rising inflation risk in the U.S region following the earlier aggressive stimulus plans had also insinuated the appeal of the safe-haven gold, as investors would normally enter the gold market in order to hedge against the inflation risk. Despite that, the overall movement for the gold remained subdued amid investors are still waiting for the crucial inflation data this week before entering the market.
CrudeOIL
The price of crude oil extends its gains last week while closing last Friday session with the price of $74.00 per barrel following the meeting between OPEC and its oil-producing allies were postponed indefinitely, with the group failing to reach an agreement on production policy. Investors speculated that such sentiment would delay the oil output in the market, which spurring bullish momentum on the crude oil price. On the data front, the Energy Information Administration (EIA) reported that the U.S Crude Oil inventories came in at -6.866M better than the market forecast at -4.033M.
Weekly Outlook: July 12 – 16
For the week ahead, investors would continue to focus on crucial economic data such as US Core CPI 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: July 12 – 16
| Time | Market | Event | Actual | Forecast | Previous |
| Monday – 12nd July 2021 | |||||
| N/A | |||||
| Tuesday – 13rd July 2021 | |||||
| 20:30 | USD | Core CPI (MoM) (Jun) | – | 0.4% | 0.7% |
| Wednesday – 14th July 2021 | |||||
| 10:00 | NZD | RBNZ Interest Rate Decision | – | 0.25% | 0.25% |
| 10:00 | NZD | RBNZ Rate Statement | – | – | – |
| 14:00 | GBP | CPI (YoY) (Jun) | – | 2.20% | 2.10% |
| 20:30 | USD | PPI (MoM) (Jun) | – | 0.50% | 0.80% |
| 22:00 | CAD | BoC Monetary Policy Report | – | – | – |
| 22:00 | CAD | BoC Interest Rate Decision | – | 0.25% | 0.25% |
| 22:30 | USD | Crude Oil Inventories | – | – | -6.866M |
| Tentative | CAD | BOC Press Conference | – | – | – |
| Thursday – 15th July 2021 | |||||
| 09:30 | AUD | Employment Change (Jun) | – | 30.0K | 115.2K |
| 10:00 | CNY | GDP (YoY) (Q2) | – | 8.10% | 18.30% |
| 10:00 | CNY | Industrial Production (YoY) (Jun) | – | 7.90% | 8.80% |
| 14:00 | GBP | Average Earnings Index +Bonus (May) | – | 7.20% | 5.60% |
| 14:00 | GBP | Claimant Count Change (Jun) | – | – | -92.6K |
| 20:30 | USD | Initial Jobless Claims | – | 360K | 373K |
| 20:30 | USD | Philadelphia Fed Manufacturing Index (Jul) | – | 28.3 | 30.7 |
| Friday – 16th July 2021 | |||||
| 06:45 | NZD | CPI (QoQ) (Q2) | – | 0.70% | 0.80% |
| 11:00 | JPY | BoJ Monetary Policy Statement | – | – | – |
| 11:00 | JPY | BoJ Outlook Report (YoY) | – | – | – |
| 11:00 | JPY | BoJ Press Conference | – | – | – |
| 17:00 | EUR | CPI (YoY) (Jun) | – | 1.90% | 1.90% |
| 20:30 | USD | Core Retail Sales (MoM) (Jun) | – | 0.50% | -0.70% |
| 20:30 | USD | Retail Sales (MoM) (Jun) | – | -0.40% | -1.30% |