15 February 2021 Weekly Analysis
GCMAsia Weekly Report: February 15 – 19
Market Review (Forex): February 8 – 12
US Dollar
The dollar index which traded against a basket of six major currency pairs slumped over the backdrop of downbeat crucial economic data from the U.S. region, which dialed down the market optimism toward the economic progression in the United States. Besides, hopes upon the aggressive stimulus plans as well as continuing expansionary monetary policy from Federal Reserve had further dragged down the appeal of the US Dollar. Dollar Index was closing its price on last Friday session at the price of 90.25.
On the economic data front, the U.S. Bureau of Labor Statistics reported that the U.S. Core Consumer Index (CPI) for last month had notched down significantly from the preliminary reading of 0.1% to 0.0%, missing the economist forecast at 0.2%. Besides, the U.S. Initial Jobless Claims came in at 793K, worse than the economist forecast at 757K, according to Department of Labor. Such negative data had created concern that the U.S. Federal Reserve would continue to maintain its ultra-easing monetary policy until the economic inflation and unemployment rate make a substantial gain. In addition, the US Dollar received further bearish momentum amid positive development of the US aggressive stimulus plan. Last week, U.S. Senate had approved a budget resolution with voting of 51-50 that will allow for a fast tracking of the $1.9 trillion coronavirus stimulus plan proposed by Biden administration to be approved without Republican support. With backdrop of massive fiscal relief plan, a large amount of dollar will be injected into the market, increasing the supply of US Dollar in the financial market while diminishing the value of the US Dollar.
Nonetheless, since the US economic stimulus plan talks still in implementation, investors would continue to scrutinize the latest updates with regards of the US economic stimulus plan in order to receive further trading signal. Besides, it is worth to mention that the latest coronavirus vaccine development and the latest US economic data should not be ignored as unforeseen evolution of these events will affect the U.S. economy in some of the degree.
USD/JPY
The pair of USD/JPY received bearish momentum on last week while ending last Friday session at the price of 105.00. The overall bearish momentum for the pair was mainly due to the depreciation of the US Dollar. Nonetheless, USDJPY had limited its losses following the upbeat economic data from Japan region was released, which spurring bullish momentum on the Japanese Yen. According to Cabinet Office, the Japan Gross Domestic Product (GDP) for last quarter came in at 3.0%, much better than the market expectation at 2.3%.
EUR/USD
The pair of EUR/USD surged throughout the week while ending last week session at the price of 1.2130. The overall bullish momentum for the pair of EUR/USD was mainly due to depreciation of the US Dollar. Nonetheless, due to the lack of crucial economic data from the European region within a short-term period, investors would continue to wait for more catalyst before entering the market for Euro.
GBP/USD
The pair of GBP/USD was edged higher on last week while closing its market price at 1.3505. Pound Sterling received significant bullish momentum amid the hopes upon the resolution of the Covid-19 pandemic from the UK region. According to CNBC, the R number has fallen below 1.0 in the UK region, which means that coronavirus infections are now falling. Besides, as for now, at least 15 million people in UK have received at least one dose of a Covid-19 vaccine. With the backdrop of UK government getting near its target of vaccination, the number of hospitalization and infections fall significantly, thus lockdown measure is planned to be removed soon where school reopening would remained as their priority, which scheduled to be take into effect on 8th March, which spurring further positive prospect for the Pound Sterling.
Market Review (Commodities): February 8 – 12
GOLD
Gold price slumped tremendously throughout last week with the price of $1814.00 troy ouns amid the falling cases of the global Covid-19 infections had spurred risk-on sentiment in the FX market, which prompting investors shift their portfolio from the safe-haven commodity such as gold toward other riskier asset. According to the latest data, the WHO said the 3.1 million new COVID cases were reported around the globe last week, a 17% drop from the previous week, the fourth straight week new cases numbers have gone down. That’s the lowest number of new cases in 15 weeks, since the week of 26th October 2020. Though, the losses experienced by the gold was limited amid the positive development of the US aggressive economic stimulus plan. Aggressive economic stimulus plan would be increasing the money supply in circulation, which spurring inflation risk in future while insinuating market demand on the safe-haven gold. Nonetheless, as of now investors would continue to scrutinize the latest updates with regards of the Covid-19 development as well as latest updates with regards of the US economic stimulus plan 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 $60.20 per barrel amid the positive Covid-19 vaccine development had spurred market optimism toward the crude oil demand in future. Besides, the crude oil price extends its gains over the backdrop of upbeat inventory data from EIA last week. According to Energy Information Administration (EIA), the U.S Crude Oil inventories had reduced significantly from the preliminary reading of -0.944M to -6.644M, much lesser than the market forecast at 0.985M.
Weekly Outlook: February 15 – 19
For the week ahead, investors would continue to focus on crucial economic data such as Initial Jobless Claims from the US region and also Covid-19 development in order to determine further direction.
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: February 15 – 19
| Time | Market | Event | Actual | Forecast | Previous |
| Monday – 15th February 2021 | |||||
| 07:50 | JPY | GDP (QoQ) (Q4) | – | 2.3% | 5.3% |
| Tuesday – 16th February 2021 | |||||
| 08:30 | AUD | RBA Meeting Minutes | – | – | – |
| 18:00 | EUR | German ZEW Economic Sentiment (Feb) | – | 59.5 | 61.8 |
| Wednesday – 17th February 2021 | |||||
| 15:00 | GBP | CPI (YoY) (Jan) | – | 0.5% | 0.6% |
| 16:00 | EUR | ECB Monetary Policy Statement | – | – | – |
| 21:30 | USD | Core Retail Sales (MoM) (Jan) | – | 1.0% | -1.4% |
| 21:30 | USD | PPI (MoM) (Jan) | – | 0.4% | 0.3% |
| 21:30 | CAD | Core CPI (MoM) (Jan) | – | – | -0.4% |
| Thursday – 18th February 2021 | |||||
| 03:00 | USD | FOMC Meeting Minutes | – | – | – |
| 08:30 | AUD | Employment Change (Jan) | – | 40.0K | 50.0K |
| 20:30 | EUR | ECB Publishes Account of Monetary Policy Meeting | – | – | – |
| 21:30 | USD | Building Permits (Jan) | – | 1.680M | 1.704M |
| 21:30 | USD | Initial Jobless Claims | – | 775K | 793K |
| 21:30 | USD | Philadelphia Fed Manufacturing Index (Feb) | – | 20.0 | 26.5 |
| Friday – 19th February 2021 | |||||
| 00:00 | USD | Crude Oil Inventories | – | – | -6.644M |
| 08:30 | AUD | Retail Sales (MoM) (Jan) | – | -4.2% | -4.2% |
| 15:00 | GBP | Retail Sales (MoM) (Jan) | – | -1.6% | 0.3% |
| 16:30 | EUR | German Manufacturing PMI (Feb) | – | 56.5 | 57.1 |
| 17:30 | GBP | Manufacturing PMI | – | – | 54.1 |
| 17:30 | GBP | Services PMI | – | – | 39.5 |
| 21:30 | CAD | Core Retail Sales (MoM) (Dec) | – | 0.3% | 2.1% |
| 23:00 | USD | Existing Home Sales (Jan) | – | 6.60M | 6.76M |