12 September 2022 Weekly Analysis
GCMAsia Weekly Report: Sept 12 – 16
Market Review (Forex): September 5 – 9
US Dollar
The Dollar Index which traded against a basket of six major currencies retreated after hitting 20 year high last week as investors had started to fully digest the rate hike decision from Federal Reserve, which prompting investors to profit-taking from US Dollar ahead of the released of inflation data from United States. The Dollar Index has closed its market price at 108.70.
Earlier this week, the US Dollar soared to a more than 20-year high following the Federal Reserve unleashed their hawkish tone toward the economic progression in the United States. According to CNBC, Federal Reserve Chair Jerome Powell emphasized the importance of aggressive contractionary monetary policy to tackle the spiking inflation rate. The CME Group’s FedWatch tracker also indicated that around 86% probability of another 75-basis point rate hike during the next monetary policy meeting. Nonetheless, the economists forecasted that the US inflation rate would begin to fall in August while slipping from a 40-year high in July following easing momentum from commodities price. Recently, the depreciation of commodities price could actually prompt the US CPI reading turn negative for the first time since May 2020. The US Government predicted that the US Inflation would likely to show an 8% increase in the overall consumer price index, down from 8.5% in July.
Nonetheless, the overall trend for the US Dollar still remained vague, as for now investors would require to continue scrutinizing the latest updates with regards of further economic data as well as monetary policy decision from Federal Reserve to gauge the likelihood movement for the US Dollar.
USD/JPY
The pair of USD/JPY extended its gains last week while closing its market price at 142.80. The overall trend for the Japanese Yen remained bearish over the backdrop of dovish tone from the Bank of Japan (BoJ). According to Reuters, the Bank of Japan (BoJ) claimed that they will likely to maintain its massive monetary policy stimulus as boost up the economic momentum in Japan until April 2023, adding that such policy was appropriate given Japan’s weak consumption and looming risk of global economic slowdown.
EUR/USD
The pair of EUR/USD appreciated last week while closing its market price at 1.0080. The Euro surged significantly last week following the implementation of contractionary monetary policy to stabilize the inflation rate. According to the latest monetary policy statement, the European Central Bank raised its benchmark interest rates by an unprecedented 75 basis points on Thursday to combat the spiking inflation rate, despite the global recession risks still continuing to linger in the financial market. The ECB lifted its deposit rate to 0.75% from 0% and raised the refinancing rate to 1.25%, the highest since 2011. In the ECB press conference, the chairman of the ECB Christine Lagarde revealed that the tightening path would be remained unchanged, where more rate hikes could be expected in the near-term future in order to cool down the overheating economy.
GBP/USD
The pair of GBP/USD appreciated last week while ending last week session at the price of 1.1615. The Pound Sterling surged on last week following the new UK Prime Minister was announced. According to Reuters, Liz Bruss became UK Prime Minister, vowing to curb the soaring energy prices as well as boosting the UK economy. Investors speculated that the new UK Prime Minister would able to improve the economic momentum as well as reducing the geopolitics risk, which spurring further positive prospect for the Pound Sterling in long-term basis.
Market Review (Commodities): September 5 – 9
GOLD
Gold price depreciated last week while closing its market price at $1715.99 per troy ounces. The overall momentum for the gold price still seesawed nearby the resistance level ahead of crucial CPI data. Though, a series of sharp rate hike decision from Federal Reserve had prompted the US Treasury yield to surged significantly last week, prompting investors to shift their portfolio into US Treasury bond while diminishing the appeal for the safe-haven gold. Though, the commodities price had started to ease from record high earlier this year, prompting the economists forecasted the inflation rate may see more signs of colling in long-term basis. Despite that, the overall trend for the gold still remained vague as investors would continue to scrutinize the latest updates with regards of the CPI data from United States as well as the monetary policy from Federal Reserve to receive further trading signal.
CrudeOIL
Crude oil price surged while ending last week session at the price of $86.00 per barrel. The crude oil price rebounded from its lower level as new nuclear deal between Iran and western countries tumbled, spurring further supply constraints for this black-commodity. Major European countries such as France, Britain and Germany claimed that they had “serious abouts” about Iran’s intentions to revive a nuclear deal. Earlier this month, Iran sent its latest responses to European Union’s proposed text to restore the 2015 agreement under which Tehran had restrained its nuclear programmed in exchange for relief from US, EU and UN economic sanctions. Though, Iran’s stock of uranium enriched to up to 60%, close to weapons-grade, has grown to enough, if enriched further it could be used to build a nuclear bomb, a report by the United Nations nuclear watchdog showed on Wednesday. Besides, U.S. Department of Energy official said the White House was not considering new releases from the U.S. Strategic Petroleum Reserve (SPR) at this time beyond the 180 million barrels that President Joe Biden announced months ago. Earlier, Energy Secretary Jennifer Granholm told Reuters the administration was weighing the need for further SPR releases.
Weekly Outlook: September 12 – 16
For the week ahead, investors would continue to focus on crucial economic data such as the US CPI data 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: September 12 – 16
| Time | Market | Event | Actual | Forecast | Previous |
| Monday – 12th September 2022 | |||||
| All Day | CNY | China – Mid-Autumn Moon Festival | – | – | – |
| All Day | CNY | China – Mid-Autumn Moon Festival | – | – | – |
| 14:00 | GBP | GDP (MoM) | – | 0.30% | -0.60% |
| 14:00 | GBP | Manufacturing Production (MoM) (Jul) | – | 0.40% | -1.60% |
| Tuesday – 13th September 2022 | |||||
| 14:00 | GBP | Average Earnings Index +Bonus (Jul) | – | 5.20% | 5.10% |
| 14:00 | GBP | Claimant Count Change (Aug) | – | -13.2K | -10.5K |
| 16:00 | GBP | BoE Gov Bailey Speaks | – | – | – |
| 17:00 | EUR | German ZEW Economic Sentiment (Sep) | – | -60 | -55.3 |
| 20:30 | USD | Core CPI (MoM) (Aug) | – | 0.30% | 0.30% |
| 20:30 | USD | CPI (YoY) (Aug) | – | 8.10% | 8.50% |
| 20:30 | USD | CPI (MoM) (Aug) | – | -0.10% | 0.00% |
| Wednesday – 14th September 2022 | |||||
| 14:00 | GBP | CPI (YoY) (Aug) | – | 10.20% | 10.10% |
| 20:30 | USD | PPI (MoM) (Aug) | – | -0.10% | -0.50% |
| 22:30 | USD | Crude Oil Inventories | – | – | 8.844M |
| Thursday – 15th September 2022 | |||||
| 6:45 | NZD | GDP (QoQ) (Q2) | – | 0.80% | -0.20% |
| 9:30 | AUD | Employment Change (Aug) | – | 50.0K | -40.9K |
| 19:00 | GBP | BoE MPC Meeting Minutes | – | – | – |
| 20:30 | USD | Core Retail Sales (MoM) (Aug) | – | 0.20% | 0.40% |
| 20:30 | USD | Initial Jobless Claims | – | 225K | 222K |
| 20:30 | USD | Philadelphia Fed Manufacturing Index (Sep) | – | 3.5 | 6.2 |
| 20:30 | USD | Retail Sales (MoM) (Aug) | – | 0.20% | 0.00% |
| Friday – 16th September 2022 | |||||
| 10:00 | CNY | Industrial Production (YoY) (Aug) | – | 4.00% | 3.80% |
| 14:00 | GBP | Retail Sales (MoM) (Aug) | – | -0.60% | 0.30% |
| 17:00 | EUR | CPI (YoY) (Aug) | – | 9.10% | 9.10% |
| 18:30 | RUB | Interest Rate Decision (Sep) | – | 7.50% | 8.00% |