13 March 2023 Weekly Analysis
GCMAsia Weekly Report: March 13 – 17
Market Review (Forex): March 6 – 10
US Dollar
The Dollar Index which traded against a basket of six major currencies seesawed throughout the past week as the mixed economic data disrupted and confused the market sentiment. The dollar index closed its market at 103.45.
Earlier in the week, the dollar index managed to regain its luster after the Fed Chairman signaled further aggressive rate hike might be implemented. According to Reuters, Federal Reserve Chair Jerome Powell appeared a speech on his testimony which scheduled on Tuesday, that the terminal rate would likely to be raised over the market expectation to bring down inflation to long-term 2%. He claimed that the Fed’s decade-old 2% inflation target was the key factor for keeping a lower price pressures in the nation, as well as the officials should all-in their efforts to make it come true. With that, the US central banks have prepared to take a larger step to reach the goal. Besides that, Jerome Powell reiterated that rate hike path might be continued if the incoming data presented a strong economy condition. Thus, investors have started to anticipate a 50-basis point increase in the March meeting. Besides, the better-than-expected Initial Jobless Claims data also triggered further buying momentum in the US dollar market.
Despite, the table has flipped over last Friday. According to Bureau of Labor Statistics, the US Nonfarm Payrolls posted at the reading of 311K, which is better than the consensus forecast of 205K. However, the US Dollar received significant bearish momentum after the unemployment rate has unexpectedly increased in February. The US Unemployment Rate has notched up from the previous reading of 3.4% to 3.6%, which signaling the recent labor market in the US had become fragile. Following to that, the anticipation of 50 basis point rate hike has been reduced. According to CME FedWatch Tool, the likelihood of half-percentage rate increase has dropped from the prior 40.2% to 39.5%.
Nonetheless, the market participants are eyeing on the upcoming crucial data, such as the CPI data to gauge the further direction of the dollar index.
USD/JPY
The pair of USD/JPY failed to extend its gains last week while closing its market price at 134.60. The pairing hammered as the downbeat unemployment rate sparked market worries over the risk of recession. Prior to that, the Japanese Yen plummeted significantly after the Bank of Japan (BoJ) decided to hold its interest rate at the negative territory unchanged at -0.10%. In the early meeting, the board of members agreed to maintain its ultra-easing monetary policy while vowing to purchase the necessary amount of Japanese Government Bonds (JGBs) to support the economy.
EUR/USD
The pair of EUR/USD seesawed last week while closing its market price at 1.0635. The movement of the pairing was wholly affected by the US dollar in the past week. Earlier last week, the EUR/USD plunged as Fed Chairman Jerome Powell vowed that the terminal rate might be higher than anticipated. However, the losses were vanished during the last Friday trading session as the US unemployment rate came in at 3.6%, higher than the consensus forecast at 3.4%, showing that the US labor market is weakening with the backdrop of rising interest rate.
GBP/USD
The pair of GBP/USD posted some gains last week while ending last week’s session at the price of 1.2030. Similarly, the gains of the pairing were found from the weakness of dollar index, especially after the nation reported its weaker-than-expected labor data last Friday. However, it is noteworthy to mention that the UK GDP data, which came in at 0.3%, also boosted the value of GBP to a higher-level last week. The upbeat GDP data surprised the market participants as they expected the nation economy might continue to struggle in the recessionary trap for an extended period.
Market Review (Commodities): March 6 – 10
GOLD
The gold price skyrocketed throughout the past week while closing its market price at $1866.65 per troy ounce. The rally of the gold price was extended sharply after the downbeat economic data has been released. According to Bureau of Labor Statistics, the US Nonfarm Payrolls posted at the reading of 311K, which is better than the consensus forecast of 205K. However, the US Dollar received significant bearish momentum after the unemployment rate has unexpectedly increased in February. The US Unemployment Rate has notched up from the previous reading of 3.4% to 3.6%, which signaling the recent labor market in the US had become fragile. With that, it diminished the market worries over the chances of further rising interest rate. Besides, the shutdown of SVB Financial Group, Signature Bank and Silvergate Bank also triggered the market risk-off sentiment, whereby the market participants rushed into the safe haven asset to avoid uncertainty.
CrudeOIL
Crude oil prices plummeted throughout the week while ended last week at $76.65 a barrel. Earlier last week, the crude oil prices plunged after the US dollar strengthened, where it prompted investors temporarily ran out from the oil market amid expensive dollars. However, the losses of the oil price were limited by the sharp drop in US dollar market last Friday. Besides, the investors confidence toward the oil prospect remains strong as the Russian oil production cut and the reopening of China economy are still playing out in the market, supporting the oil demand in overall.
Weekly Outlook: March 13 – 17
For the week ahead, investors would continue to focus on crucial economic data such as the US CPI 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: Mac 13 -17
| Time | Market | Event | Actual | Forecast | Previous |
| Monday – 13th March 2023 | |||||
| N/A | |||||
| Tuesday –14th March 2023 | |||||
| 15:00 | GBP | Average Earnings Index +Bonus (Jan) | – | 5.70% | 5.90% |
| 15:00 | GBP | Claimant Count Change (Feb) | – | -12.4K | -12.9K |
| 20:30 | USD | Core CPI (MoM) (Feb) | – | 0.40% | 0.40% |
| 20:30 | USD | CPI (MoM) (Feb) | – | 0.40% | 0.50% |
| 20:30 | USD | CPI (YoY) (Feb) | – | 6.00% | 6.40% |
|
Wednesday –15th March 2023 |
|||||
| 4:30 | USD | API Weekly Crude Oil Stock | – | – | -3.835M |
| 10:00 | CNY | Industrial Production (YoY) (Feb) | – | 2.60% | 1.30% |
| 17:00 | USD | IEA Monthly Report | – | – | – |
| 18:00 | GBP | Spring Forecast Statement | – | – | – |
| 20:30 | USD | Core Retail Sales (MoM) (Feb) | – | 0.20% | 2.30% |
| 20:30 | USD | PPI (MoM) (Feb) | – | 0.30% | 0.70% |
| 20:30 | USD | Retail Sales (MoM) (Feb) | – | -0.30% | 3.00% |
| 22:30 | USD | Crude Oil Inventories | – | – | -1.694M |
| Thursday –16th March 2023 | |||||
| 5:45 | NZD | GDP (QoQ) (Q4) | – | -0.20% | 2.00% |
| 8:30 | AUD | Employment Change (Feb) | – | 48.5K | -11.5K |
| 20:30 | USD | Building Permits (Feb) | – | 1.328M | 1.339M |
| 20:30 | USD | Initial Jobless Claims | – | 205K | 211K |
| 20:30 | USD | Philadelphia Fed Manufacturing Index (Mar) | – | -14.5 | -24.3 |
| 21:15 | EUR | Deposit Facility Rate (Mar) | – | 3.00% | 2.50% |
| 21:15 | EUR | ECB Marginal Lending Facility | – | – | 3.25% |
| 21:15 | EUR | ECB Monetary Policy Statement | – | – | – |
| 21:15 | EUR | ECB Interest Rate Decision (Mar) | – | 3.50% | 3.00% |
| 21:45 | EUR | ECB Press Conference | – | – | – |
| 23:15 | EUR | ECB President Lagarde Speaks | – | – | – |
| Friday –17th March 2023 | |||||
| 18:00 | EUR | CPI (YoY) (Feb) | – | 8.50% | 8.50% |
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