13 July 2020 Weekly Analysis
GCMAsia Weekly Report: July 13 – 17
Market Review (Forex): July 6 – 10
US Dollar
The dollar which traded against a basket of six major currency pairs remains in red for the 3rd consecutive week while ending last week session at the price of 96.53. Following a quiet week of economic data, developments of COVID-19 remain in greater focus while less important data unable to distract the market.
On coronavirus front, the total number of coronavirus cases in the U.S have rose by 399,290 to 3,285,550. The number was higher than the previous week of 338,384. As the daily COVID-19 numbers continued to spike to new heights in the week, the dollar have gained some support from the dire COVID-19 updates. However, the upward momentum was short-lived after news of progress towards a successful treatment drug have manage to divert the momentum to riskier asset. Gilead Sciences said its coronavirus treatment candidate, remdesivir have showed an improvement in clinical recovery and a 62% reduction in the risk of mortality compared with standard care. Added further to the optimism was from BioNTech where its CEO have also told The Wall Street Journal that its company’s coronavirus candidate could be ready for approval by December.
On U.S data front, JOLTS job openings came in at 5.397m, higher than market expectation of 4.996m. More importantly, weekly initial jobless claims also improved with the reading of 1.314m in the week ending 3rd July. The reading was down from previous reading from 1.413m. Despite the stats were in the positive, the appeal of greenback remains low as hopes of vaccine continue to driving up risk appetite for riskier assets, unable to boost any demand for the dollar.
Still, as the coronavirus in the U.S remains dire, investors will continue to eye on the updates and also the progress of development in vaccine which could potentially turning the situation around.
USD/JPY
The pair of USD/JPY have fell throughout the week while ending last week market session lower at the closing price of 106.90. On data front, household spending figures for May delivered more bad news where the results was down by 16.2%. Japan consumers unwilling to loosen their wallet which could be a concern for the government. Still, despite with the negative stats, the Japanese Yen was mostly unfazed and continue to rose due to concerns over COVID-19 and weak greenback.
EUR/USD
Pair of EUR/USD have rose managed to gain in overall and closing last week market higher at the price of 1.1298. It was a busy week on economic data front with the main focus was Germany. From Germany, the stats were skewed to the negative based on forecasts. Both factory orders and industrial production rose by less than forecast. However, Germany’s trade balance rose above forecast which provided some support. On other hand, industrial production figures from France and Italy delivered a boost.
GBP/USD
The pair of GBP/USD have extend its rally throughout the week and ending the session at the price of 1.2617. On data front, UK construction PMI in June have shown rebound with the PMI jumping from 28.9 to 55.3 while house prices also positive with news of an adjustment to stamp duty thresholds. More importantly, it was Brexit that help buoyed the price higher where EU hinted at a willingness to compromise, increasing the hopes of a trade deal.
Market Review (Commodities): July 6 – 10
GOLD
Gold price have break new record last week, hitting a nine-year high above $1800 mark and ending the market with a positive note at the price of $1798.87. Following the chaos of coronavirus and economic trade wards, market continues to flock to the safe-haven commodity which boosted its price tremendously. On the other hand, tensions between the U.S and China were also continue to benefit the safe-haven commodity where investors were also worried that the US decision to sanction Chinese officials over human rights violations may lead to further escalation of Sino-US tensions.
CrudeOIL
The price of crude oil manage to stay afloat to the end of the week and closing the market session higher at the price of $40.55. Despite with the risk of ongoing coronavirus, market sentiment remains solid due to upbeat reports from EIA and IEA. On top of that, OPEC also helped supported the commodity.
According to reports, the US Energy Information Administration (EIA) raised its price outlook for Brent crude to $41 per barrel for the second half of 2020 which is $4 barrel higher than the previous month. IEA also raised its 2020 oil demand forecast and reported that coronavirus’s worst impact on oil demand has passed. Furthermore, the latest oil price trends also confirmed that that the historical output cuts made by OPEC+ are working. OPEC slashed its crude output in June to a three-decade low when it produced 22.31 million bpd, the organization’s lowest output since September 1990. The cut have also managed to achieve high compliance rates and largely responsible for keeping the commodity stable.
However, as the increasing cases of COVID-19 remain a major threat to the oil markets, investors remain cautious and continue to monitor the development to gauge future demand outlook for the pair. Still, following the hopes of vaccine and the high compliance cuts of OPEC, the commodity is expected to remain steady for the ongoing period.
Weekly Outlook: July 13 – 17
For the week ahead, investors would continue to eye on the U.S development and economic data such as Retail Sales to determine further direction. On top of that, as U.S continue to stand against the coronavirus, market will also continue to paying attention to the latest updates about the coronavirus.
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 13 – 17
| Time | Market | Events | Previous | Forecast | Actual |
| Monday – 13 July 2020 | |||||
| N/A | |||||
| Tuesday – 14 July 2020 | |||||
| 14:00 | GBP | Claimant Count Change (Jun) | – | 400.0K | 528.9K |
| 14:00 | GBP | GDP (MoM) | – | – | -20.4% |
| 14:00 | GBP | Manufacturing Production (MoM) (May) | – | 8.0% | -24.3% |
| 19:00 | CrudeOIL | OPEC Monthly Report | – | – | – |
| 20:30 | USD | Core CPI (MoM) (Jun) | – | 0.1% | -0.1% |
| Wednesday – 15 July 2020 | |||||
| 11:00 | JPY | BoJ Outlook Report (YoY) | – | – | – |
| 14:00 | GBP | CPI (YoY) (Jun) | – | 0.5% | 0.5% |
| 20:30 | CAD | Core CPI (MoM) (Jun) | – | – | -0.1% |
| 22:00 | CAD | BoC Monetary Policy Report | – | – | – |
| 22:00 | CAD | BoC Rate Statement | – | – | – |
| 22:00 | CAD | BoC Interest Rate Decision | – | 0.25% | 0.25% |
| 22:30 | CrudeOIL | EIA Crude Oil Inventories | – | -3.114M | 5.654M |
| Thursday – 16 July 2020 | |||||
| 06:45 | NZD | CPI (QoQ) (Q2) | – | 0.4% | 0.8% |
| 09:30 | AUD | Employment Change (Jun) | – | 112.5K | -227.7K |
| 10:00 | CNY | GDP (YoY) (Q2) | – | 2.1% | -6.8% |
| 10:00 | CNY | Industrial Production (YoY) (Jun) | – | 4.7% | 4.4% |
| 14:00 | GBP | Average Earnings Index +Bonus (May) | – | -0.4% | 1.0% |
| 14:00 | GBP | Claimant Count Change (Jun) | – | 250.0K | 528.9K |
| 19:45 | EUR | ECB Interest Rate Decision (Jul) | – | 0.00% | 0.00% |
| 19:45 | EUR | ECB Monetary Policy Statement | – | – | – |
| 20:30 | USD | Initial Jobless Claims | – | 1,250K | 1,314K |
| 20:30 | USD | Philadelphia Fed Manufacturing Index (Jul) | – | 20.0 | 27.5 |
| 20:30 | USD | Core Retail Sales (MoM) (Jun) | – | 5.0% | 12.4% |
| 20:30 | EUR | ECB Press Conference | – | – | – |
| Friday – 17 July 2020 | |||||
| 14:00 | GBP | Retail Sales (MoM) (Jun) | – | – | 12.0% |
| 17:00 | EUR | CPI (YoY) (Jun) | – | 0.3% | 0.3% |
| 20:30 | USD | Building Permits (Jun) | – | 1.280M | 1.216M |
| 22:00 | USD | Michigan Consumer Sentiment (Jul) | – | 79.0 | 78.1 |