13 September 2021 Weekly Analysis
GCMAsia Weekly Report: September 13 – 17
Market Review (Forex): September 6 – 10
US Dollar
The Dollar index which traded against a basket of six major currency pairs surged with higher U.S. Treasury Yield following the United States released high inflation data. Market participants speculated that the Federal Reserve might start to taper its monetary policy to combat those high inflation risk, which increasing the appeal of the US Dollar. The Dollar Index was closing its price on last Friday session at the price of 92.60.
According to U.S. Bureau of Labor Statistics, U.S. Producer Price Index (PPI) for last month came in at 0.7%, higher than the market expectation at 0.6%. Such high inflation data would be spurring hopes that the Federal Reserve might begin to reduce its asset purchases as well as taper their monetary policy in order to combat the high inflation risk. Besides, the US Dollar extend its gains over the backdrop of bullish job data last week. According to Bureau of Labor Statistics, U.S. JOLTs Job Opening had notched up significantly from the previous reading of 10.185M to 10.934M, better than the market forecast at 10.000M. The upbeat economic data had spurred positive prospect for the U.S. economic growth in future, prompting the US Treasury yield to extend its gains with the expectation of contractionary monetary policy. According to Reuters, Fed officials might start to reduce their $120 billion in monthly bond purchases by the end of the year as a first step in a coming shift to post-pandemic monetary policy. Such policy will decrease the money circulation in the global financial market, which spurring bullish momentum on the US Dollar. In fact, Cleveland Fed President Loretta Mester also claimed on Friday that she would still be likely to support the central bank to tighten their monetary policy this year.
Nonetheless, the overall statement from the Federal Reserve remained vague. Hence, it is crucial for investors to continue to scrutinize the latest economic data as well as the Covid-19 development in order to gauge the likelihood movement for the Dollar Index.
USD/JPY
The pair of USD/JPY received bearish momentum on last week while ending last Friday session at the price of 109.90. The Japanese Yen received significant bullish momentum over the backdrop of bullish economic data. According to Cabinet Office, Japan Gross Domestic Product (GDP) for last quarter notched up significantly from the previous reading of -0.9% to 0.5%, better than the market forecast at 0.4%.
EUR/USD
The pair of EUR/USD slumped throughout the week while ending last week session at the price of 1.1805. The pair of EUR/USD received bearish momentum following the European Central Bank unleashed their dovish tone yesterday. According to the monetary policy statement, the European Central Bank had kept its monetary policy unchanged but opted to slow down the pace of bond buying process under its pandemic emergency purchase program (PEPP). The Monetary Policy Committee voted to maintain their interest rate on main refinancing operations at 0%, on the marginal lending facility at 0.25% and deposit facility at -0.5%. The central bank also reiterated that they would continue to implement their aggressive expansionary monetary policy until the inflation stabilize at 2% over the medium term. On the inflation front, the Euro zone inflation rate had notched a decade high of 3% in August, spurring further worries for the ECB as to the danger of inflation becoming persistent rather than “transitory”. Some analysts speculated that the ECB would announce the reduction of its aggressive stimulus package in December to combat the high inflation risk.
GBP/USD
The pair of GBP/USD had fell last week while closing its market price at 1.3840. The overall bearish momentum for the pair of GBP/USD last week was mainly due to the appreciation of the US Dollar. Besides, Pound Sterling slumped following the United Kingdom unleashed their bearish economic data. According to Office for National Statistics, U.K. Manufacturing Production for last month notched down significantly from the previous reading of 0.2% to 0.0%, missing the market forecast at 0.1%.
Market Review (Commodities): September 6 – 10
GOLD
Gold price slumped last week with the price of $1783.00 per troy ounce following the United States unleashed a string of upbeat economic data last week. Market participants remained positive toward the economic progression in United States, which stoked a shift in sentiment from the safe-haven asset into other riskier asset such as stock market. Besides, high inflation data from the U.S region had also increased hopes for the Federal Reserve to taper their monetary policy. Such policy could be reducing the money circulation in the global financial market while diminishing the inflation risk, dragging down the appeal for the safe-haven gold.
CrudeOIL
The price of crude oil surged significantly last week while closing last Friday session with the price of $69.55. The crude oil price was traded higher last week amid concerns over the U.S. oil supplies following the destruction from Hurricane Ida, along with expectation for higher demand. According to the latest statistics, about three-quarters of U.S. Gulf’s offshore oil production or about 1.4 million barrel per days has remained halted since last August. Nonetheless, the gains experienced by the crude oil price was limited amid bearish inventory data last week. According to Energy Information Administration (EIA), U.S. Crude Oil Inventories came in at -1.529M, missing the market forecast at -4.612M.
Weekly Outlook: September 13 – 17
For the week ahead, investors would continue to focus on crucial economic data such as US Initial Jobless Claims in order to determine further direction. Besides that, the ongoing situation with coronavirus 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 13 – 17
| Time | Market | Event | Actual | Forecast | Previous |
| Monday – 13rd September 2021 | |||||
| N/A | |||||
| Tuesday – 14th September 2021 | |||||
| 14:00 | GBP | Average Earnings Index +Bonus (Jul) | – | 8.20% | 8.80% |
| 14:00 | GBP | Claimant Count Change (Aug) | – | – | -7.8K |
| 20:30 | USD | Core CPI (MoM) (Aug) | – | 0.30% | 0.30% |
| Wednesday – 15th September 2021 | |||||
| 10:00 | CNY | Industrial Production (YoY) (Aug) | – | 5.80% | 6.40% |
| 14:00 | GBP | CPI (YoY) (Aug) | – | 2.90% | 2.00% |
| 20:30 | CAD | Core CPI (MoM) (Aug) | – | – | 0.60% |
| 22:30 | USD | Crude Oil Inventories | – | – | -1.529M |
| Thursday – 16th September 2021 | |||||
| 06:45 | NZD | GDP (QoQ) (Q2) | – | 1.50% | 1.60% |
| 09:30 | AUD | Employment Change (Aug) | – | -70.0K | 2.2K |
| 20:30 | USD | Core Retail Sales (MoM) (Aug) | – | -0.10% | -0.40% |
| 20:30 | USD | Initial Jobless Claims | – | 318K | 310K |
| 20:30 | USD | Philadelphia Fed Manufacturing Index (Sep) | – | 19 | 19.4 |
| 20:30 | USD | Retail Sales (MoM) (Aug) | – | -1.00% | -1.10% |
| Friday – 17th September 2021 | |||||
| 14:00 | GBP | Retail Sales (MoM) (Aug) | – | 0.50% | -2.50% |
| 17:00 | EUR | CPI (YoY) (Aug) | – | 3.00% | 2.20% |