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13 January 2020                     Weekly Analysis

 

GCMAsia Weekly Report: January 13 – 17

Market Review (Forex): January 6 – 10

US Dollar

The dollar index which measured against a basket of six major currency pairs remain on high ground last week while closing last Friday session at the price of 97.02. Despite weaker jobs report released on Friday have exert some pressure towards the greenback, overall market sentiment remains strong as market remains on high expectation of trade deal signing between U.S and China.

 

According to the U.S Bureau of Labor Statistics, U.S have only created 145,000 jobs for the month of December, lesser than market expectation with the reading of 164,000. Unemployment rate remains on 3.5%, however average hourly earnings missed market expectation with the reading of 34.3 against 34.4.  The disappointing data have triggered some selling pressure in the market and provide little reason for the Fed to change its view from the sidelines.

 

However, market sentiment remains positive following the possibility of signing trade deal between U.S and China this week. According to the latest report, White House Economic Advisor Larry Kudlow have stated that everything is in place on the China trade deal. At the same time, US Treasury Secretary Steve Mnuchin also added that there will be talks on the phase-two of the US-China trade deal when the Chinese delegates arrive on January 15.

 

As market continue to speculate the possibility of the ongoing trade war could be over by this week, investors will continue to focus on the ongoing development in trade talk and upcoming economic data to attain further signal for the greenback.


USD/JPY

The pair of USD/JPY have soared last week while ending last Friday session with the price of 109.47. As increasing optimism in geopolitical issues such as Middle East tension and trade deal, the appeal of the Japanese Yen as the safe-haven currency have plummeted, causing investors to shift their portfolio from safe-haven markets to riskier markets.

 

EUR/USD

EUR/USD remain struggling in overall last week but recovers slightly on Friday while closing last week trading session at 1.1116. Following the lack of catalyst from local fundamentals and optimistic on trade deal between U.S and China, the demand for Euro continue to remain weak.

 

GBP/USD

GBP/USD continue to extend its downfall last week while ending the market session with the price of 1.3061. The pair remain on downside risk following policy statement from BoE and the lack of development from Brexit. Last week, BoE Governor Mark Carny and policymaker Silvana Tenreyro have suggest that they will be be inclined to back an interest rate cut in the coming months if growth does not pick up.  Besides that, developments of Brexit offered no surprise at the UK Parliament, therefore causing market to continue react towards the dovish BoE remarks.

 

Market Review (Commodities): January 6 – 10

GOLD

Gold price remains weak and fell last week while ending the market at around $1562.95 a troy ounce. Following the potential signing on trade deal, the appeal of safe-haven gold have fell as the US dollar (USD) managed to lure risk-averse traders. Elsewhere, the receded tension in the Middle East also help further diminished the appeal of the safe-haven commodities.

 

Crude Oil

Crude oil price remain pressured and continue to extend its continuous sell-off last week while ending their price at 57.90 following the de-escalation of the Iran/US conflict last Wednesday.

 

Last week, the commodity price was down 3% after Trump have indicated that there will be no further military action in response towards the Iran missile attack. Adding further the selling pressure is an unexpected rise in US inventories. According to the data released by EIA last week, crude oil inventories unexpectedly rose 1.164m barrel, which is against the expectation of fall of -3.572m.

 

As the commodity are expected to extend its selling pressure, investors will turn their attention towards further catalyst and global headlines that could affect the demand for the commodity to attain further confirmation.

 

Weekly Outlook: January 13 – 17

For the week ahead, investors will continue to focus on upcoming data such as U.S Retail Sales and CPI that will be released this week to attain more market signals. Besides that, investors will also continue to focus on the ongoing development of fundamentals such as signing of trade deal and possible Brexit development.

 

As for oil traders, they will be eyeing on US inventories level reported by API and EIA as well as developments in the Middle East to gauge the strength of crude demand for world’s largest oil consumer.

 

Highlighted economy data and events for the week: January 13 – 17

Monday, January 13  

Data

GBP – GDP (MoM)

GBP – Manufacturing Production (MoM) (Nov)

GBP – Monthly GDP 3M/3M Change

 

Events

N/A

 

Tuesday, January 14  

Data

USD – Core CPI (MoM) (Dec)

 

Events

N/A

 

Wednesday, January 15  

Data

GBP – CPI (YoY) (Dec)

USD – PPI (MoM) (Dec)

CrudeOIL – Crude Oil Inventories

 

Events

GBP – Autumn Budget 

 

 

 

Thursday, January 16

 

Data

USD – Core Retail Sales (MoM) (Dec)

USD – Philadelphia Fed Manufacturing Index (Jan)

USD – Retail Sales (MoM) (Dec)

 

Events

EUR – ECB Publishes Account of Monetary Policy Meeting

 

 

Friday, January 17

 

 

Data

CNY – GDP (YoY) (Q4)

CNY – Industrial Production (YoY) (Dec)

GBP – Retail Sales (MoM)

EUR – CPI (YoY) (Dec)

USD – Building Permits (Dec)

USD – JOLTs Job Openings (Nov)

 

Events

EUR – ECB President Lagarde Speaks