14 December 2020 Weekly Analysis
GCMAsia Weekly Report: December 14 – 18
Market Review (Forex): December 7 – 11
US Dollar
The dollar index which traded against a basket of six major currency pairs slumped amid risk-on sentiment in the global financial market, which buoyed by positive Covid-19 vaccine news. Such sentiment had prompted investors to selloff safe-haven Dollar while shifting their portfolio toward riskier asset. Besides, US Dollar extend its losses amid investors speculated that the Federal Reserve would continue to expand its quantitative easing program later in this month, which spurring further negative prospect for the US Dollar. The Dollar was closing its price on last Friday session at the price of 90.85.
According to the Guardian, the U.S. Food and Drug Administration has given emergency approval to a coronavirus vaccine developed by Pfizer and BioNTech on last week. The approval marks a turning point in a Covid-19 pandemic that has killed more than 1.5 million lives globally. As for now, the United States will receive an initial allotment of 2.9m doses within days of authorization. In fact, Pfizer will then send out a second 2.9m dose allotment weeks later. Nonetheless, experts continue to warn that the vaccine will not immediately herald a return to normalcy. Initial supplies of vaccine are still extremely constrained. On the economic data front, the crucial economic data from the U.S. region came in at mixed reading. On the positive front, the U.S. JOLTs Job Openings and U.S. Core CPI came in at 6.652M and 0.2%, which both fared better than the market expectation for a reading up to 6.300M and 0.1% respectively. Nonetheless, the U.S. Initial Jobless Claims came in at 853K, worse than the market forecast at 725K.
As for now, the overall trading momentum for the US Dollar remained subdued while investors would continue to scrutinize the latest updates with regards of the Covid-19 vaccine, the global financial market recovery as well as the FOMC meeting during 15th and 16th December 2020 in order to gauge the likelihood movement for the US Dollar.
USD/JPY
The pair of USD/JPY received bearish momentum on last week while ending last Friday session at the price of 103.95. The overall bearish momentum for the pair was mainly due to the depreciation of the US Dollar. Nonetheless, the losses experienced by the USD/JPY was limited amid positive Covid-19 vaccine development had spurred selloff on the safe-haven Japanese Yen, which provided some bullish momentum on the pair of USD/JPY
EUR/USD
The pair of EUR/USD slumped throughout the week while ending last week session at the price of 1.2110. The Euro slumped over the uncertainty with regards of the Brexit issues, which undermining the market optimism toward the economic progression form the European Union while spurring selloff for the Euro. According to Reuters, the German Minister of State for Europe Michael Roth had claimed that both UK and Europe parties had made no substantial progress in Brexit talks, while UK Prime Minister Boris Johnson reiterated that the impasses remained in both parties. Despite that, investors would continue to scrutinize latest updates with regards of Brexit issues in order to receive further trading signal.
GBP/USD
The pair of GBP/USD was edged lower on last week while closing its market price at 1.3210. Pound Sterling received significant bearish momentum on last week amid fears upon the hard-Brexit had continue to spur negative prospect for the Pound Sterling. Investors fears that the UK would be breaking away from the European Union at the end of the month without a trade agreement. According to Reuters, the UK Prime Minister Boris Johnson said on Friday that UK was likely to complete its exit from the EU without a trade deal, diminishing hopes upon the successive trade talk between both parties.
Market Review (Commodities): December 7 – 11
GOLD
Gold price slumped tremendously throughout last week with the price of $1835.00 a troy ounce amid positive development with regards of the Covid-19 vaccine, which spurring risk appetite in the FX market while prompting investors to selloff the safe-haven commodity. According to the Guardians, the FDA had approved Pfizer and BioNTech Covid-19 vaccine for emergency use in U.S. As for now, the federal health authorities wish to vaccinate more than 20 million people before the year is out. Besides that, the Trump administration had issued another indication of support for the Moderna vaccine on last week, while announcing that the U.S. government had purchased an additional 100m doses of the Covid-19 vaccine from Moderna. As for now, investors would remain their focus toward the Covid-19 vaccine development in order to gauge the likelihood movement for the safe-haven commodity.
CrudeOIL
The price of crude oil surged throughout the week while closing last Friday session with the price of $46.55 per barrel amid the positive Covid-19 vaccine development had spurred market optimism toward the crude oil demand in future. Nonetheless, the gains experienced by the crude oil price was limited over the backdrop of the downbeat inventory data last week. According to American Petroleum Institute, the U.S. Crude oil Inventories rose by 1.14-million-barrel last week, exceeding the market forecast at -1.514M. Meanwhile, the Energy Information Administration (EIA) also reported that the U.S. Crude oil inventories notched up significantly from the preliminary reading of -0.679M to 15.189M, more than the market forecast at -1.424M.
Weekly Outlook: December 14 – 18
For the week ahead, investors would continue to focus on the ongoing developments such as FOMC meeting and also Brexit development 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: December 14 – 18
| Time | Market | Event | Actual | Forecast | Previous |
| Monday – 14th December 2020 | |||||
| N/A | |||||
| Tuesday – 15th December 2020 | |||||
| 08:30 | AUD | RBA Meeting Minutes | – | – | – |
| 10:00 | CNY | Industrial Production (YoY) | – | 7.0% | 6.9% |
| 15:00 | GBP | Average Earnings Index +Bonus (Oct) | – | 2.3% | 1.3% |
| 15:00 | GBP | Claimant Count Change (Nov) | – | 50.0K | -29.8K |
| Wednesday – 16th Disember 2020 | |||||
| 15:00 | GBP | CPI (YoY) (Nov) | – | 0.6% | 0.7% |
| 16:30 | EUR | German Manufacturing PMI (Dec) | – | 56.5 | 57.8 |
| 17:30 | GBP | Services PMI | – | – | 47.6 |
| 17:30 | GBP | Manufacturing PMI | – | – | 55.6 |
| 21:30 | USD | Core Retail Sales (MoM) (Nov) | – | 0.1% | 0.2% |
| 21:30 | CAD | Core CPI (MoM) (Nov) | – | – | 0.4% |
| 23:30 | USD | Crude Oil Inventories | – | -1.424M | 15.189M |
| Thursday – 17th December 2020 | |||||
| 03:00 | USD | FOMC Economic Projections | – | – | – |
| 03:00 | USD | FOMC Statement | – | – | – |
| 03:00 | USD | Fed Interest Rate Decision | – | 0.25% | 0.25% |
| 03:30 | USD | FOMC Press Conference | – | – | – |
| 05:45 | NZD | GDP (QoQ) (Q3) | – | 13.3% | -12.2% |
| 08:30 | AUD | Employment Change (Nov) | – | 50.0K | 178.8K |
| 16:30 | CHF | SNB Interest Rate Decision | – | -0.75% | -0.75% |
| 16:30 | CHF | SNB Monetary Policy Assessment | – | – | – |
| 17:00 | CHF | SNB Press Conference | – | – | – |
| 18:00 | EUR | CPI (YoY) (Nov) | – | -0.3% | -0.3% |
| 20:00 | GBP | BoE Interest Rate Decision (Dec) | – | 0.10% | 0.10% |
| 21:30 | USD | Building Permits (Nov) | – | 1.550M | 1.544M |
| 21:30 | USD | Initial Jobless Claims | – | 800K | 853K |
| 21:30 | USD | Philadelphia Fed Manufacturing Index (Dec) | – | 19.0 | 26.3 |
| Friday – 18th December 2020 | |||||
| Tentative | JPY | BoJ Monetary Policy Statement | – | – | – |
| Tentative | JPY | BoJ Press Conference | – | – | – |
| 15:00 | GBP | Retail Sales (MoM) (Nov) | – | -4.2% | 1.2% |
| 17:00 | EUR | German Ifo Business Climate Index (Dec) | – | 90.5 | 90.7 |
| 21:30 | CAD | Core Retail Sales (MoM) (Oct) | – | 0.3% | 1.0% |