17 February 2020 Weekly Analysis
GCMAsia Weekly Report: February 17 – 22
Market Review (Forex): February 10 – 15
US Dollar
Greenback extended its gains during last week as market participants remains optimistic with regards to US economic development. The dollar index closed last week’s market at 98.98 against six major peers. Market sentiment towards the US dollar remains upbeat after US releases better-than-expected Nonfarm Payrolls data last two weeks ago. When compared to other countries, US economy remains resilient with moderate inflation pressure as well as robust hiring in the employment market.
According to US Bureau of Labor Statistics, Core CPI for the month of January rose to 2.3% for year-over-year comparison, significantly higher than forecast of 2.2%. In addition, Initial Jobless Claims for last week came in lower with only 205,000 individuals, fared better than forecast of 210,000 individuals. In terms of consumer spending, Retail Sales and Core Retail Sales came in within expectation with 0.3% respectively. The data was also accompanied by Michigan Consumer Sentiment which has rose to 100.9 for the month of February, slightly higher than forecast of 99.5.
However, gains on the US dollar were capped as market participants continues to place their focus upon coronavirus epidemic in South East Asia. Last week, Hubei local government reported a significant jump in new cases per day by 14,840, spurring concerns over the epidemic as it continues to pose a threat towards global economic momentum. As the coronavirus spreads, investors sold off their holdings in equity while entered into the safe-haven market in order to safe-guard their capital.
USD/JPY
Pair of USD/JPY was traded flat last week while closing the market at around 109.81. Japanese yen remains well supported as market participants flock into safe-haven assets following the outbreak of coronavirus in South East Asia. Many fears that the epidemic may bring significant impact upon China’s economy which could further jeopardize other countries that rely on China as main trading partner. However, the pair continues to be traded within a tight range as US dollar remains well supported due to the release of bullish data from the United States.
EUR/USD
Pair of EUR/USD extended its losses last week while closing the market at 1.0827. Euro received tremendous selling pressure as recent economy data from Germany (the Eurozone largest economy) shows recessive risks. In 4th quarter, Germany’s Gross Domestic Product came in at 0.0%, missing economists forecast of 0.1%. For the time being, investors will place their attention upon future data releases from the region in order to attain more market signals.
GBP/USD
Pair of GBP/USD managed to advance further upwards while closing last week’s market at around 1.3045. Pound sterling received significant buyback after Gross Domestic Product for the fourth quarter came in at 1.1%, significantly higher than forecast of 0.8%. The data shows that UK’s economy remains resilient despite ongoing Brexit issue which continues to surround their future economy outlook. However, gains on the pair remains limited as UK and EU enters into trade negotiation which is required to reach a consensus before Brexit transition deadline on 31st December 2020.
Market Review (Commodities): February 10 – 15
GOLD
Gold price extended its gains last week while closing the market at $1,583.88 a troy ounce. Financial market’s demand for gold continues to rise as coronavirus spreads throughout South East Asia namely China and Singapore. Investors fear that the epidemic may bring significant impact upon China’s economy which could further jeopardize other countries that rely on China as main trading partner. Thus, many investor’s selloff their holdings on equities and enters into the safe-haven market to safeguard their capital.
Crude Oil
Crude oil price managed to extend its recovery from prior low level while closing last week’s market at $52.17 per barrel. Oil futures received higher demand after China announced to take extra fiscal measures in order to support its economy amid coronavirus outbreak in the region. Traders hope that the measure could led to a recovery in oil demand from the world’s largest import country.
However, a report from International Energy Agency (IEA) stated that the virus is set to cause oil demand to slump by 435,000 barrels per day in the first quarter, its largest quarterly drop since financial crisis in 2009. Thus, investors will place their attention upon manufacturing PMI data across several regions in order to gauge how significant the virus is affecting global supply chains and their oil demands.
Subsequently, gains on the oil price were limited after Energy Information Administration reported a significant rise in last week’s inventory. According to EIA, crude oil stock rose by 7.459 million barrels last week, significantly higher than forecast of 2.987 million barrels. In addition, Baker Hughes reported that oil rig count in the US rose by 2 to 678, spurring further pessimism among investors towards crude oil.
Weekly Outlook: February 17 – 22
For the week ahead, investors will place their attention upon FOMC meeting minutes in order to received more market signals with regards to Federal Reserve’s future monetary policy guidance. Likewise, investors will also pay attention upon economic data from US, UK and EU in order to gauge its economy’s momentum.
For the oil market, traders will place their attention upon weekly inventory reports from American Petroleum Institute (API) and Energy Information Administration (EIA) for more signals.
Highlighted economy data and events for the week: February 17 – 22.
| Time | Market | Event | Actual | Forecast | Previous |
| Monday – 17 February 2019 | |||||
| 07:50 | JPY | GDP (QoQ) (Q4) | – | -0.9% | 0.4% |
| Tuesday – 18 February 2019 | |||||
| 08:30 | AUD | RBA Meeting Minutes | – | – | – |
| 17:30 | GBP | Average Earnings Index +Bonus (Dec) | – | 3.0% | 3.2% |
| 17:30 | GBP | Claimant Count Change (Jan) | – | 22.6K | 14.9K |
| 18:00 | EUR | German ZEW Economic Sentiment (Feb) | – | 22.0 | 26.7 |
| 21:30 | USD | NY Empire State Manufacturing Index (Feb) | – | 5.00 | 4.80 |
| Wednesday – 19 February 2020 | |||||
| 17:30 | GBP | CPI (YoY) (Jan) | – | 1.6% | 1.3% |
| 21:30 | USD | Building Permits (Jan) | – | 1.450M | 1.420M |
| 21:30 | USD | PPI (MoM) (Jan) | – | 0.1% | 0.2% |
| 21:30 | CAD | Core CPI (MoM) (Jan) | – | – | -0.4% |
| Thursday –20 February 2020 | |||||
| 03:00 | USD | FOMC Meeting Minutes | – | – | – |
| 05:30 | CrudeOIL | API Weekly Crude Oil Stock | – | – | 6.000M |
| 08:30 | AUD | Employment Change (Jan) | – | 10.0K | 28.9K |
| 09:30 | CNY | PBoC Loan Prime Rate | – | – | 4.15% |
| 17:30 | GBP | Retail Sales (MoM) (Jan) | – | 0.5% | -0.6% |
| 20:30 | EUR | ECB Publishes Account of Monetary Policy Meeting | – | – | – |
| 21:30 | USD | Philadelphia Fed Manufacturing Index (Feb) | – | 12.0 | 17.0 |
| Friday– 21 February 2020 | |||||
| 00:00 | CrudeOIL | Crude Oil Inventories | – | 2.987M | 7.459M |
| 16:30 | EUR | German Manufacturing PMI (Feb) | – | 44.8 | 45.3 |
| 17:30 | GBP | Composite PMI | – | – | 53.3 |
| 17:30 | GBP | Manufacturing PMI | – | – | 50.0 |
| 17:30 | GBP | Services PMI | – | – | 53.9 |
| 18:00 | EUR | CPI (YoY) (Jan) | – | 1.4% | 1.4% |
| 21:30 | CAD | Core Retail Sales (MoM) (Dec) | – | 0.4% | 0.2% |
| 23:00 | USD | Existing Home Sales (Jan) | – | 5.45M | 5.54M |
| Saturday – 22 February 2020 | |||||
| 02:00 | CrudeOIL | U.S. Baker Hughes Oil Rig Count | – | – | 678 |