13 December 2021 Weekly Analysis
GCMAsia Weekly Report: December 13 – 17
Market Review (Forex): December 6 – 11
US Dollar
The dollar index was mostly traded lower against the basket of six major currency pairs last week following recent positive development of Omicron variant which have shifter market sentiment towards riskier asset. However, the losses experienced by the greenback were limited due to ongoing expectation of Fed to tighten monetary policy earlier than expectation which now reinforced by upbeat inflation data from the U.S. The dollar index has ended last week session at price of 95.98.
Following recent developments regarding Omicron, public health officials continue to monitor the spread of the Omicron variant in the U.S. However, preliminary data from South Africa suggest that while the Omicron possess a more transmissive strain, it doesn’t pose any dangerous or severe symptom compared to other variant such as Delta. The concerns were further eased by comments from White House Chief Medical Advisor, Dr Anthony Fauci where he recently stated that more data was needed to understand fully on the Omicron risk profile, but early figures suggest that it may not be as bad as initially feared. He also indicated that possibility of travel bans to be lifted. The positive development in Omicron have manage to provide relief for the market and increasing the risk appetite among investors towards riskier assets, thus causing a shift in portfolio from safe-haven such as dollar to alternate market. However, the sell-off was short-lived and the dollar remain supported in overall due to the release of better-than-expected CPI data which further the cement the view of Fed to tighten their monetary policy and rate hike. On data front, the U.S CPI came in higher expected with the reading of 0.8% against 0.7% expectation. On top of that, other data such as Initial Jobless Claims and Michigan Consumer Sentiment which also came in higher than expectation help strengthen the support further for the greenback.
Nonetheless, investors would need to continue to scrutinize the latest updates with regards of the crucial economic data as well as future Fed’s monetary policy decision to gauge the likelihood movement for the US Dollar.
USD/JPY
The pair of USD/JPY was traded higher in overall during last week and retreated slightly before ending last Friday session with the price of 113.36. The sell-off in Japanese Yen was mostly contributed by the receding fears of Omicron variant which weigh on safe-haven markets. However, recent positive comments from Japan PM help limited the losses in the Japanese Yen. According to reports, Japanese Prime Minister Fumio Kishida stated that the Japanese Government must be mindful of downside risks to the economy from chip shortages and supply constraints and added that the government had no intention of tweaking Japan’s sales tax rate from the current 10%.
EUR/USD
The pair of EUR/USD was largely traded flat last week but remain pressured in overall while ending last week session at the price of 1.3135. The overall bearish momentum for the pair of EUR/USD last week was largely due to the strength in U.S dollar which supported by Fed rate hike expectation. On top of that, concerns over ECB to extend its loose monetary policy also further weigh on the pair. According to Bloomberg, the ECB policymakers are leaning towards a temporary and limited Asset Purchases Program (APP) boost. This further diminished investors’ hope of ECB to tighten its monetary policy and increase rate in near term.
GBP/USD
The pair of GBP/USD was traded higher before ending last week trading session at the price of 1.3265. The bullish momentum in the pair was mostly due to the weakness in the greenback. However, a combination of factors such as weak data from the U.K and diminishing hope of rate hike from BoE are limited the potential upside for the pound sterling. Recently, U.K have announced a fresh Covid-19 restrictions in the U.K after the country recorded surging Omicron variant cases. The move has dented market expectation for an imminent rate hike by the Bank of England in December. On data front, U.K GDP have slumped 0.1%, weaker than market expectation while U.K Manufacturing Production also fell to 0.0% against market expectation of 0.1%.
Market Review (Commodities): December 6 – 11
GOLD
Gold price was traded in a tight range last week but still closing the market session with a loss at the price of 1782.61. The sentiment for the safe-haven metals was weak as rising optimism towards Omicron and expectation of rate hike from Fed which have dented the appeal for safe-haven markets. The markets also slowly shifting towards riskier markets after early data suggest the Omicron variant is less dangerous as the market expected. On the other hand, fears of a faster-than-expected rate hike have amplified after U.S CPI came in higher than expectation and previous reading of November, which is already at 40-years high. The data further strengthen market expectation that the Fed will likely to increase interest rate in order to combat the surging inflation.
CrudeOIL
The price of crude oil has surged significantly last week while closing last Friday session with the price of $71.77. The oil market manages to post their weekly gains after six weeks of losses due to receding fears of Omicron and rising prospect for crude demand. Global health experts, including top U.S. virologist and White House adviser Dr. Anthony Fauci, say the effects of Omicron appeared to be less severe than initially thought. Pfizer and its partner BioNTech also have also said three doses of their vaccine could neutralize the variant. On data front, EIA reported a decline of 0.240 million barrels in its crude inventory, although it was slightly lesser than market expectation of a decrease about 1.705 million barrels.
Weekly Outlook: December 13 – 17
For the week ahead, investors would continue to focus on crucial economic data such as the U.S Retails Sales and Fed Interest Rate Decision in order to determine further direction. Besides that, the ongoing development 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: December 13 – 17
Masa | Pasaran | Acara | Sebenar | Ramalan | Terdahulu |
Monday – 13hb December 2021 | |||||
7:50 | JPY | Tankan Large Manufacturers Index (Q4) | – | 19 | 18 |
7:50 | JPY | Tankan Large Non-Manufacturers Index (Q4) | – | 6 | 2 |
Tuesday – 14hb December 2021 | |||||
15:00 | GBP | Average Earnings Index +Bonus (Oct) | – | 4.50% | 5.80% |
15:00 | GBP | Claimant Count Change (Nov) | – | – | -14.9K |
21:30 | USD | PPI (MoM) (Nov) | – | 0.60% | 0.60% |
Wednesday – 15hb December 2021 | |||||
10:00 | CNY | Industrial Production (YoY) (Nov) | – | 3.80% | 3.50% |
15:00 | GBP | CPI (YoY) (Nov) | – | 4.70% | 4.20% |
21:30 | USD | Core Retail Sales (MoM) (Nov) | – | 1.00% | 1.70% |
21:30 | USD | Retail Sales (MoM) (Nov) | – | 0.80% | 1.70% |
21:30 | CAD | Core CPI (MoM) (Nov) | – | – | 0.60% |
23:30 | USD | Crude Oil Inventories | – | – | -0.240M |
Thursday –16hb December 2021 | |||||
3:00 | USD | FOMC Economic Projections | – | – | – |
3:00 | USD | FOMC Statement | – | – | – |
3:00 | USD | Fed Interest Rate Decision | – | – | 0.25% |
3:30 | USD | FOMC Press Conference | – | – | – |
5:45 | NZD | GDP (QoQ) (Q3) | – | -4.30% | 2.80% |
8:30 | AUD | Employment Change (Nov) | – | 200.0K | -46.3K |
16:30 | CHF | SNB Interest Rate Decision (Q4) | – | -0.75% | -0.75% |
16:30 | CHF | SNB Monetary Policy Assessment | – | – | – |
16:30 | EUR | German Manufacturing PMI (Dec) | – | 57 | 57.4 |
17:30 | GBP | Composite PMI | – | – | 57.6 |
17:30 | GBP | Manufacturing PMI | – | – | 58.1 |
17:30 | GBP | Services PMI | – | – | 58.5 |
17:30 | CHF | SNB Press Conference | – | – | – |
20:00 | GBP | BoE Interest Rate Decision (Dec) | – | 0.10% | 0.10% |
20:00 | GBP | BoE MPC Meeting Minutes | – | – | – |
20:45 | EUR | Deposit Facility Rate (Dec) | – | -0.50% | -0.50% |
20:45 | EUR | ECB Marginal Lending Facility | – | – | 0.25% |
20:45 | EUR | ECB Interest Rate Decision (Dec) | – | – | – |
21:30 | USD | Building Permits (Nov) | – | 1.660M | 1.653M |
21:30 | USD | Initial Jobless Claims | – | 195K | 184K |
21:30 | USD | Philadelphia Fed Manufacturing Index (Dec) | – | 30 | 39 |
21:30 | EUR | ECB Press Conference | – | – | – |
Friday – 17hb December 2021 | |||||
10:30 | JPY | BoJ Monetary Policy Statement | – | – | – |
10:30 | JPY | BoJ Press Conference | – | – | – |
15:00 | GBP | Retail Sales (MoM) (Nov) | – | 0.50% | 0.80% |
17:00 | EUR | German Ifo Business Climate Index (Dec) | – | 95.4 | 96.5 |
18:00 | EUR | CPI (YoY) (Nov) | – | 4.90% | 4.90% |