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CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 83% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.

 

18 July 2022                            Weekly Analysis

GCMAsia Weekly Report: July 18 – 22

 

Market Review (Forex): July 11 – 15

US Dollar

The Dollar Index which traded against a basket of six major currencies received bullish momentum throughout the entire last week as the bullish economic data has been unleashed. However, the dovish statement from Federal Reserve had limited the gains of dollar index. As of last Friday, the market closed at 107.77.

According to Bureau of Labor Statistics, the US Nonfarm Payrolls came in at the reading of 372K while higher than the market forecast of 268K. The forceful labor market would likely to bring positive prospects toward economic progression in the US market, which sparkling the appeal of US Dollar. Besides, the Dollar Index extended its gains following the release of inflation data. The US Consumer Price Index (CPI) YoY for June notched up from the previous reading of 8.6% to 9.1%, exceeding the market forecast of 8.8%. In addition, the US Producer Price Index (PPI) MoM for June notched up from the previous reading of 0.9% to 1.1%, exceeding the market forecast of 0.8%. These inflation data which over the market forecast had hinted that the risk of increasing price keep lingering in the US market while the market participants started to ponder a full-percentage point of rate hike from Federal Reserve. According to CME Fedwatch Tool, the possibility of 100 basis point increase used to reach 89% in last week.

Nonetheless, two of the Federal Reserve’s most hawkish policymakers on 14 July said they favored another 75-basis-point interest rate increase at the US central bank’s policy meeting this month, which spurred bearish momentum on the US Dollar. The possibility of 100 basis point increase was notched down from the previous day’s reading of 48.2% to 29.1%. On the other hand, the downbeat labor economic data had dragged down the Dollar Index further. The US Initial Jobless Claims came in at the reading of 244K, higher than the economist expectation of 235K. As of now, investors would continue to scrutinize the latest updates with regards of rate hike decision from Fed in order to gauge the likelihood movement of Dollar Index.

 

USD/JPY

The pair of USD/JPY surged last week while closing its market price at 138.22. The massive bullish momentum has been noticed on the USD/JPY pair over the strengthening of US Dollar. On the other hand, the Japanese Yen experienced big fall as the Bank of Japan maintained its ultra-low interest rates and stressed its resolve to support a fragile economy with massive stimulus, an obvious move that showed a policy divergence with the rest of the world.

 

EUR/USD

The pair of EUR/USD slumped last week while closing its market price at 1.0088. The euro received significant bearish momentum following amid the energy crisis facing by European. The biggest single pipeline carrying Russian gas to Germany began annual maintenance on 11 July, with flows expected to stop for 10 days, but governments, markets and companies are worried the shutdown might be extended because of the war in Ukraine. The energy crisis faced by European would jeopardize its economic outlook, which dialed down the market optimism toward economic progression in Europe. Besides, the downbeat economic data had spurred further bearish momentum on Euro. According to ZEW, Germany ZEW Economic Sentiment notched down significantly from the previous reading of -28.0 to -53.8, missing the market forecast at -38.3. Nonetheless, the losses experienced by Euro was limited following the retracement of US Dollar.

 

GBP/USD

The pair of GBP/USD depreciated last week while ending last week session at the price of 1.1876.  Throughout the past one week, the pair of GBP/USD slumped as the dollar index continues strengthened in the early week. However, the Pound Sterling retreated from its recent low after the GDP has been unleashed. The higher-than-expected reading of GDP data would likely to bring positive prospects toward economic progression in UK region, prompting investors to shift their capitals toward Pound Sterling. As this juncture, investors would continue to focus on crucial economic data such as CPI data.

 

 

Market Review (Commodities): July 11 – 15

GOLD

Gold price depreciated last week while closing its market price at $1708.56 per troy ounce. Gold price received bearish momentum last week following the strengthening US Dollar. Against the backdrop of rate hike cycle, the dollar index continued to soar while the value of the yellow metal slumped. As the US economy is still surrounded by the high inflationary pressure, rate hike is considered as a ‘must’ tool for the Federal Reserve to bring down the overheat economy. Hence, the outlook of the yellow metal remains clouded as of now.

 

CrudeOIL

Crude oil price eased while ending last week’s session at the price of $93.93 per barrel. Over the week, the crude oil price slumped after China reported its first case of the highly-transmissible Omicron subvariant. According to Reuters, hundreds of thousands of people were under lockdown in a small China city on Tuesday after just one case of Covid-19 was detected. As China stands with its zero-Covid policy, the government of China has to implement the lockdown to tamp down the spread of the Covid variant, which led to the diminishing market demand on oil. Besides, crude oil price extend its losses upon the bearish economic data. According to American Petroleum Institute (API), the crude oil inventories notched up from the previous reading of 3.825M to 4.762M, higher than the market forecast -1.933M.

 

Weekly Outlook: July 18 – 22

For the week ahead, investors would continue to focus on crucial economic data such as Interest Rate Decision from ECB this week in order to determine further direction. Besides that, the ongoing situation with Ukraine-Russia war 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: July 18 – 22

Time Market Event Actual Forecast Previous
Monday – 18th July 2022
06:45 NZD CPI (QoQ) (Q2) 1.5% 1.8%
Tuesday – 19th July 2022
09:30 AUD RBA Meeting Minutes
14:00 GBP Average Earnings Index +Bonus (May) 6.9% 6.8%
14:00 GBP Claimant Count Change (Jun) -19.7K
17:00 EUR CPI (YoY) (Jun) 8.6% 8.6%
20:30 USD Building Permits (Jun) 1.650M 1.695M
Wednesday – 20th July 2022
01:45 GBP BoE Gov Bailey Speaks
04:30 USD API Weekly Crude Oil Stock 4.762M
14:00 GBP CPI (YoY) (Jun) 9.2% 9.1%
20:30 CAD Core CPI (MoM) (Jun) 0.8%
22:00 USD Existing Home Sales (Jun) 5.38M 5.41M
22:30 USD Crude Oil Inventories 3.254M -1.933M 8.235M
Thursday – 21st July 2022
11:00 JPY BoJ Outlook Report (YoY)
TBC JPY BoJ Press Conference
11:00 JPY BoJ Interest Rate Decision -0.10% -0.10%
20:15 EUR Deposit Facility Rate (Jul) -0.25% -0.50%
20:15 EUR ECB Marginal Lending Facility 0.25%
20:15 EUR ECB Monetary Policy Statement
20:15 EUR ECB Interest Rate Decision (Jul) 0.25%
20:30 USD Initial Jobless Claims 240K 244K
20:30 USD Philadelphia Fed Manufacturing Index (Jul) -2.5 -3.3
20:45 EUR ECB Press Conference
Friday – 22nd July 2022
14:00 GBP Retail Sales (MoM) (Jun) -0.4% -0.5%
15:30 EUR German Manufacturing PMI (Jul 51.0 52.0
16:30 GBP Composite PMI 53.7
16:30 GBP Manufacturing PMI 52.8
16:30 GBP Services PMI 54.3
20:30 CAD Core Retail Sales (MoM) (May) 0.6% 1.3%

 

Risk Statement:

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