15 March 2021 Weekly Analysis
GCMAsia Weekly Report: March 15 – 19
Market Review (Forex): March 8 – 12
US Dollar
The dollar index which traded against a basket of six major currency pairs was traded lower in overall throughout last week, but managed to limit some of its losses at the end of the week before ending the market with the price of 91.61. While most of the key stats provide mixed reading, fluctuation in U.S treasury yield and passing of $1.9 trillion U.S stimulus become the focus for the market.
On data front, most of the key data were mixed. U.S Core CPI for February have eased to 0.1%, lower than market expectation of 0.2. Meanwhile, weekly jobless claims improved by 712k against market expectation of 725K. JOLTS Jobs Opening also improved 6.917M for January, better than forecast of 6.600M. Despite that, greenback was unmoved and was experience a sell-off in overall instead due to decline in U.S treasury yields during the earlier half of the week. While U.S 10-year treasury yield advanced to highest level in a year at 1.626% and reverse some of its losses for greenback on Friday, the treasury yield has retreat from its previous high to around 1.5% before Friday and exert selling pressure for the greenback.
On top of that, final approval of $1.9 trillion U.S stimulus from Congress and House of Representative last week also triggered market volatility. The House passed the bill in a narrow 220 to 211 votes, with all but one Democrat voting in favor and every Republican voting against it. U.S President Joe Biden signed his $1.9 trillion stimulus bill into law and stated that he will work to move U.S closer to normality by July 4. The stimulus package includes up to $1,400 stimulus checks for some Americans, extends pandemic unemployment benefits and will send billions of dollars in aid to states and municipalities. While it is expected to help speeding up U.S economic recovery, concerns on flooding money supply remains due to enormous stimulus budget which also weigh on the sentiment.
On the backdrop of U.S stimulus package, positive economic data, and rising bond yields, market attention now turned to upcoming Fed monetary policy meeting that may be the “wildcard” for U.S treasury yield and direction for greenback.
USD/JPY
The pair of USD/JPY was overall traded steady in a range while ending the market with the price of 109.01. Most of the data was skewed to the negative which exert selling pressure on the Japanese Yen. On data front, Japan’s Household Spending for month on month depreciated by -7.3%, weaker than market expectation of -3-1%. On top of that, Japan’s GDP also fell to 2.8 against market expectation of 3.0% while PPI also fell to 0.4% against market forecast of 0.5%.
EUR/USD
Pair of EUR/USD have recoup most of its previous losses and record gains last week while closing the market at the price of 1.1951. From data perspective, German Trade Balance improved 22.2B against market forecast of 16.4B for January while German CPI also steadied at 0.7% unchanged. While Eurozone GDP came in slightly weaker than expecting with the reading of -0.7% against expectation -0.6%, the data have muted impact on the pair. Supporting the Euro was the main event of ECB. As expected, the ECB left its policy unchanged, but they vowed to ramp up bond purchases in response to rising borrowing cost.
GBP/USD
The pair of GBP/USD still manage to end last week in gains with the price of 1.3917 despite price retreat on last Friday. On data front, U.K GDP improved to -2.9% against expectation of -4.9% while Manufacturing Production fell -2.3% for January, weaker than forecast of -0.8%. While most of the key stats last week came in mixed, the pound sterling was mostly supported by strong vaccination progress and loosening restrictions. As of Sunday, over 20 million people have received their first dose of a vaccine, and almost 800,000 have received both doses. Besides that, UK is set to offer first doses to every adult two months earlier than planned and just in time for all social restrictions to be lifted on June 21.
Market Review (Commodities): March 8 – 12
GOLD
Gold price have soared throughout last week and record its first weekly gains before ending the market with the price of $1726.68. Despite with rising treasury yield that should have pressed on the gold value, buyers remain firm and continue to expect on new era of inflation pressure with President Joe Biden’s $1.9 trillion COVID-19 bill. On top of that, gold price was mostly supported by overall weakness in dollar strength last week as the yellow metal was traded against the greenback.
CrudeOIL
The price of crude oil has retreat from its previous high and posted its weekly losses while closing with the price of $65.61 per barrel. A huge in increase in crude oil inventories have exert pressure on the commodity. On top that, cautious note towards the commodity from OPEC also weigh on the price.
On data front, both API and EIA provided a worse-than-expected result. API reported an increase of 12.792M barrels against expectation of a decrease of -0.833M while EIA also reported an increase of 13.798M against increase of 0.816M. The results were largely expected as U. S crude production output was recovering faster than refining after last month’s storm outage in Texas. Besides that, revision from OPEC also weigh on the sentiment. On last Thursday, the Organization of Petroleum Exporting Countries struck a cautious note and revised down estimates for its output slightly for this year, owing to expectations that the rising oil prices will encourage a modest rise in non-OPEC supply.
Despite that, the outlook for crude oil remains positive and is expected to remain in high volatility on the backdrop of global vaccination progress, receding coronavirus cases and global economic recovery.
Weekly Outlook: March 15 – 19
For the week ahead, investors would continue to focus on the developments on U.S stimulus, coronavirus situation as well as economic data such US Retail Sales and FOMC to determine further direction.
As for oil traders, they will be also 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: March 15 – 19
| Time | Market | Event | Actual | Forecast | Previous |
| Monday – 15 March 2021 | |||||
| N/A | |||||
| Tuesday – 16 March 2021 | |||||
| 8:30 | AUD | RBA Meeting Minutes | – | – | – |
| 18:00 | EUR | German ZEW Economic Sentiment (Mar) | – | 74.0 | 71.2 |
| 20:30 | USD | Core Retail Sales (MoM) (Feb) | – | -0.1% | 5.9% |
| 20:30 | USD | Retail Sales (MoM) (Feb) | – | -0.6% | 5.3% |
| Wednesday – 17 March 2021 | |||||
| 18:00 | EUR | CPI (YoY) (Feb) | – | 0.9% | 0.9% |
| 20:30 | USD | Building Permits (Feb) | – | 1.750M | 1.886M |
| 20:30 | CAD | Core CPI (MoM) (Feb) | – | – | 0.5% |
| 22:30 | USD | Crude Oil Inventories | – | 0.816M | 13.798M |
| Thursday – 18 March 2021 | |||||
| 02:00 | USD | FOMC Economic Projections | – | – | – |
| 02:00 | USD | FOMC Statement | – | – | – |
| 02:00 | USD | Fed Interest Rate Decision | – | 0.25% | 0.25% |
| 02:30 | USD | FOMC Press Conference | – | – | – |
| 05:45 | NZD | GDP (QoQ) (Q4) | – | 0.1% | 14.0% |
| 08:30 | AUD | Employment Change (Feb) | – | 30.0K | 29.1K |
| 20:00 | GBP | BoE Interest Rate Decision (Mar) | – | 0.10% | 0.10% |
| 20:00 | GBP | BoE MPC Meeting Minutes | – | – | – |
| 20:30 | USD | Initial Jobless Claims | – | 705K | 712K |
| 20:30 | USD | Philadelphia Fed Manufacturing Index (Mar) | – | 23.1 | 23.1 |
| Friday – 19 March 2021 | |||||
| 08:30 | AUD | Retail Sales (MoM) | – | – | 0.5% |
| 20:30 | CAD | Core Retail Sales (MoM) (Jan) | – | -2.8% | -4.1% |