15 November 2021 Weekly Analysis
GCMAsia Weekly Report: November 15 – 19
Market Review (Forex): November 8 – 12
US Dollar
The dollar index which traded against a basket of six major currency pairs extend its gains over the backdrop of high inflation data, which insinuating the probability for the Federal Reserve to contract monetary policy and increasing the US Treasury yield. The Dollar Index was closing its price on last Friday session at the price of 93.95.
On the economic data front, U.S. Producer Price Index (PPI) for last month rose by 0.6% from September, align with the market expectation at 0.6%, according to U.S. Bureau of Labor Statistics. Besides, U.S. Core Consumer Price Index (CPI) notched up significantly from the previous reading of 0.2% to 0.6%, exceeding the market forecast at 0.4%. Despite the Federal Reserve last week restated its belief that the current inflation hike would only be transitory, many investors feared that underestimating price increases could prove to be a costly policy mistake. Though, Fed Vice Chariman Richard Clarida claimed that the central bank would continue to focus on the inflation, employment, and gross domestic product to determine the monetary policy in future. If high inflation continues to persist in the global financial market, it would increase the odds for the Fed to be tapering the aggressive monetary policy program. Contractionary monetary policy as well as rising interest rate would decrease the money circulation in the financial market, which increasing the appeal for the US Dollar. Nonetheless, the gains experienced by the US Dollar was limited by the bearish job data. Department of Labor reported that the U.S. Initial Jobless Claims came in at 267K, missing the market forecast at 265K.
As for now, it would be crucial for investors to continue to scrutinize the latest updates with regards of the future monetary policy decision from Fed as well as further economic data in order to gauge the likelihood movement for the US Dollar.
USD/JPY
The pair of USD/JPY received bullish momentum on last week while ending last Friday session at the price of 112.95. The overall bullish momentum for the pair of USD/JPY last week was mainly due to the depreciation of Japanese Yen. Japanese Yen extend its losses in last week over the backdrop of dovish statement from the Bank of Japan despite high inflation risk in future. According to Reuters, BoJ Governor Haruhiko Kuroda claimed that the central bank would continue to implement its expansionary monetary unchanged until the inflation rate hit a 2% target. On the economic data front, Japan Producer Price Index (PPI) came in at 1.2%, exceeding 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 1.1585. The overall momentum for the pair of EUR/USD was remained bearish amid strengthening US Dollar. Besides, Euro extend its losses as market participants speculated the European Central Bank would continue to implement its aggressive expansionary monetary policy to sustain the economic growth. According to Bloomberg, the European Central Bank President Christine Lagarde claimed that the current spike inflation is only transitory and unlikely to last in long-time basis, while vowing to continue aiding the Europe economy as the fallout from the pandemic lingers.
GBP/USD
The pair of GBP/USD had surged last week while closing its market price at 1.3760. Pound Sterling slumped last week over the backdrop of downbeat economic data. According to Office for National Statistics, U.K. Gross Domestic Product (GDP) for last quarter had declined significantly from the previous reading of 5.5% to 1.3%, worse than the market forecast at 1.5%. Besides, U.K. Manufacturing Production decreased from the previous reading of 0.3% to 0.1%, which also fared worse-than-expectation at 0.2%. Staff shortages, supply constraints as well as poorer traded performances due to Brexit issues had continue to weigh down the trade performance in United Kingdom.
Market Review (Commodities): November 8 – 12
GOLD
Gold price have slumped last week with the price of $1755.50 per troy ounce amid the dovish expectation from Fed as well as high inflation risk in future, which prompting investors to shift their portfolio to safe-haven asset such as gold in order to hedge against this risk. Nonetheless, the overall statement from the Federal Reserve as for now remained vague, hence investors would continue to scrutinize the latest updates with regards of latest economic data as well as future monetary policy decision to receive further trading signal.
CrudeOIL
The price of crude oil slumped significantly last week amid fears toward the oversupply while closing last Friday session with the price of $78.95 per barrel as of writing. The oil market slumped as market participants anticipated that US President Joe Biden will order the release of oil from the U.S. Strategic Petroleum Reserve (SPR) to curb the high oil price and inflation risk in future. Nonetheless, the losses experienced by crude oil was limited over the backdrop of bullish inventory data. According to Energy Information Administration (EIA), U.S. Crude Oil Inventories notched down significantly from the previous reading of 3.291M to 1.001M, better than the market forecast at 2.125M.
Weekly Outlook: November 15 – 19
For the week ahead, investors would continue to focus on crucial economic data such as the Core Retail Sales 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: November 15 – 19
Time | Market | Event | Actual | Forecast | Previous |
Monday – 15th November 2021 | |||||
N/A | |||||
Tuesday – 16th November 2021 | |||||
08:30 | AUD | RBA Meeting Minutes | – | – | – |
15:00 | GBP | Average Earnings Index +Bonus (Sep) | – | 5.60% | 7.20% |
15:00 | GBP | Claimant Count Change (Oct) | – | – | -51.1K |
21:30 | USD | Core Retail Sales (MoM) (Oct) | – | 0.80% | 0.80% |
Wednesday – 17th November 2021 | |||||
15:00 | GBP | CPI (YoY) (Oct) | – | 3.90% | 3.10% |
18:00 | EUR | CPI (YoY) (Oct) | – | 4.10% | 4.10% |
21:30 | USD | Building Permits (Oct) | – | 1.630M | 1.586M |
21:30 | CAD | Core CPI (MoM) (Oct) | – | – | 0.30% |
23:30 | USD | Crude Oil Inventories | – | – | 1.001M |
Thursday –18hb November 2021 | |||||
21:30 | USD | Initial Jobless Claims | – | 260K | 267K |
21:30 | USD | Philadelphia Fed Manufacturing Index (Nov) | – | 24 | 23.8 |
Friday – 19hb November 2021 | |||||
15:00 | GBP | Retail Sales (MoM) (Oct) | – | 0.40% | -0.20% |
16:00 | EUR | ECB President Lagarde Speaks | – | – | – |
21:30 | CAD | Core Retail Sales (MoM) (Sep) | – | 2.80% | 2.80% |