13 February 2023 Weekly Analysis
GCMAsia Weekly Report: February 13 – 17
Market Review (Forex): February 6 – 10
US Dollar
The Dollar Index which traded against a basket of six major currencies extended its gains throughout the past one week following the upbeat employment data had dialed up the market optimism toward economic progression in the US. The Dollar Index has closed its market price at 103.41.
Last week, the dollar index received significant bullish momentum over the optimism about the US job market continues to linger in the market. The upbeat NFP and unemployment rate has surprised the market participants that the labor market in the US was remaining resilience and hot even the prior aggressive rate hike move by Fed. With that, it might stoke a shift of stance from the Fed, whereby the hefty rate hike process would likely to be continued as well as sparked the appeal of US Dollar. On the other hand, the gains experienced by Dollar Index was extended amid the positive speech from the US government and Fed members. According to Reuters, the US Treasury Secretary Janet Yellen claimed on last Monday that the US economy would likely to avoid recession with the strong labor market and the easing inflation risk. Besides, the Federal Reserve Governor Christopher Waller and New York Federal Reserve President John Williams were supporting the US central bank to increase its interest rate further, as the path for bring down the sky-high inflation would be a ‘long journey’.
However, the gains experienced by Dollar Index was limited following the downbeat economic data has been released. Prior to that, the US Initial Jobless Claims has raised and it was exceeding the consensus forecast. With the rising of data figures, it mean the current labor market in the US was turning fragile, as well as bringing negative prospects toward economic progression in the US. Furthermore, the value of US Dollar was hit by the speech of Fed’s member upon a slowing economy in the US. Richmond Fed President Thomas Barkin claimed on last week that the contractionary monetary which implemented by Fed was curbing the US economy, whereas allowing Fed to reexamine the rate hike moves in the future path. At this juncture, the attentions of investors would be highly gathered on the announcement of CPI data which scheduled on tomorrow in order to gauge the future movement of FX market.
USD/JPY
The pair of USD/JPY was traded lower last week while closing its market price at 131.47. The Japanese Yen received significant bullish momentum after a new governor of Bank of Japan (BoJ) Kazuo Ueda was appointed. With that, the market participants was anticipating a possible end of ultra-loosen monetary policy, which sparked the appeal of Japanese Yen. Nonetheless, the losses of USDJPY was limited after Kazuo Ueda claimed that the monetary easing policy should be maintained, even the inflation has come to 4%, the highest since 1981.
EUR/USD
The pair of EUR/USD depreciated last week while closing its market price at 1.0672. The EURUSD received significant bearish momentum following the inflationary risk in the Eurozone country weakened. According to Federal Statistical Office Germany, the Germany Consumer Price Index (CPI) YoY for January posted at the reading of 8.7%, which is lower than the market expectation of 8.9%. With such backdrop, the Eurozone inflation would likely to drop, which decreasing the odds of aggressive rate hike from European Central Bank (ECB). Though, the losses experienced by Euro was limited amid the hawkish statement from ECB member. The Europe Central Bank (ECB) council member Martins Kazaks claimed that the euro inflation is still tilted on the upside and should raise the rate significantly to curb the sky-high inflation.
GBP/USD
The pair of GBP/USD edged down last week while ending last week session at the price of 1.2038. The GBPUSD received significant bearish momentum on last week over the easing inflation rate expectation from Bank of England (BoE). According to CNBC, the BoE Governor Andrew Bailey was speculating that the inflation rate will drop from 10.5% to 4% by the end of 2023. Thus, investors increased their expectation that the upcoming UK monetary policy rate decision will be more dovish. Besides that, the negative prospects from IMF toward UK economy has keep pressing the value of Pound Sterling. According to a prior statement from IMF, the UK economy will enter into contraction by -0.6% in 2023, this has also led to investors expecting a more dovish stance from BoE. However, the losses of Pound Sterling was limited after the UK Manufacturing Production MoM has increased in December, which showing a sign of recovery in manufacturing sector.
Market Review (Commodities): February 6 – 10
GOLD
Gold prices recorded some losses while closing its market price at $1862.44 per troy ounces. Fresh concerns about inflation had risen following the upbeat employment data, which showing 517,000 job creation in January and a dip in unemployment to 3.4%, a 53-year low. Thus, it sparked hopes that aggressive rate hike plan might be continued, which causing the price yellow metal to slip. However, the gold price reversed some losses following the initial jobless claims report has come out with a downbeat result, which prompting investors to shift their capitals toward safe-haven gold.
CrudeOIL
Crude oil prices slipped while ending last week session at the price of $79.46 per barrel. The oil price was supported by significant bullish momentum on last week following the decreasing crude oil inventories. According to API, the US API Weekly Crude Oil Stock has decreased by -2.184M barrels, while the market anticipation was at 2.150M barrels. Besides that, the crude oil price has extended its gains amid the background of earthquake happened in Turkey. Last week, the Turkey’s Ceyhan oil port was disrupted by the earthquake disaster, as well as the delivering of oil from Turkey has been paused. On the other hand, Russia planned to cut its oil production on March in order to response to Western price caps, which also led the oil price to fly higher. According to Reuters, the Deputy Prime Minister Alexander Novak claimed on last Friday that Russia plans to reduce its March oil production by 500,000 barrels a day, the equivalent of about 5% of January’s output.
Weekly Outlook: February 13 – 17
For the week ahead, investors would continue to focus on crucial economic data such as 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: February 13 – 17
| Time | Market | Event | Actual | Forecast | Previous |
| Monday – 13th February 2023 | |||||
| N/A | |||||
| Tuesday – 14th February 2023 | |||||
| 07:50 | JPY | GDP (QoQ) (Q4) | – | 0.5% | -0.2% |
| 15:00 | GBP | Average Earnings Index +Bonus (Dec) | – | 6.2% | 6.4% |
| 15:00 | GBP | Claimant Count Change (Jan) | – | 17.9K | 19.7K |
| 20:00 | CrudeOIL | OPEC Monthly Report | – | – | – |
| 21:30 | USD | Core CPI (MoM) (Jan) | – | 0.4% | 0.4% |
| 21:30 | USD | CPI (YoY) (Jan) | – | 6.2% | 6.5% |
| Wednesday – 15th February 2023 | |||||
| 05:30 | CrudeOIL | API Weekly Crude Oil Stock | – | – | -2.184M |
| 15:00 | GBP | CPI (YoY) (Jan) | – | 10.2% | 10.5% |
| 17:00 | CrudeOIL | IEA Monthly Report | – | – | – |
| 21:30 | USD | Core Retail Sales (MoM) (Jan) | – | 0.7% | -1.1% |
| 21:30 | USD | Retail Sales (MoM) (Jan) | – | 1.6% | -1.1% |
| 22:00 | EUR | ECB President Lagarde Speaks | – | – | – |
| 23:30 | CrudeOIL | Crude Oil Inventories | – | – | 2.423M |
| Thursday – 16th February 2023 | |||||
| 08:30 | AUD | Employment Change (Jan) | – | 20.0K | -14.6K |
| 17:00 | EUR | ECB Economic Bulletin | – | – | – |
| 21:30 | USD | Building Permits (Jan) | – | 1.353M | 1.337M |
| 21:30 | USD | Initial Jobless Claims | – | 200K | 196K |
| 21:30 | USD | Philadelphia Fed Manufacturing Index (Feb) | – | -7.2 | -8.9 |
| 21:30 | USD | PPI (MoM) (Jan) | – | 0.4% | -0.5% |
| Friday – 17th February 2023 | |||||
| 15:00 | GBP | Retail Sales (MoM) (Jan) | – | -0.5% | -1.0% |
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