19 April 2021 Weekly Analysis
GCMAsia Weekly Report: April 19 – April 23
Market Review (Forex): April 12 – 16
The dollar index which traded against a basket of six major currency pairs continue to extend its losses throughout last week and ending the market with the price of 91.47. While most of the key stats were positive, greenback sentiment remains weak following dovish note from Fed.
On data front, the U.S have witnessed a pickup in inflationary pressure as U.S Core CPI exceed market expectation with the reading of 0.3% against 0.2% expectation. U.S Retail Sales also rose significantly to 9.8%, against market expectation of 5.9%. On top of that, weekly jobless claims also improved with 576K, better than market expectation of 700K. However, these positive data unable to lift the sentiment for greenback following dovish statement from Fed Chairman Jerome Powell which have lowered down market confidence.
According to the statement from Jerome Powell last week, he stated that U.S is experiencing a period where the economic recovery intensified and employment increased significantly. Powell noted that before the central bank raising interest rates in the US, the Fed will first confider the process of gradually reducing bond purchase rates. He also noted that any decision to raise interest rates is dependent on current economic conditions. Most Fed members have thought that the central bank won’t considered to increase interest rates before 2024. On top of that, Powell noted that the Fed needs more time to evaluate current situation and monitor the strength of the economic recovery in the US.
Despite with the backdrop of positive data, Powell’s statement has diminished the expectation of earlier than expected rate hike, thus causing a sell-off in the greenback while market continue to wait for further clues to determine future direction.
The pair of USD/JPY have fell throughout last week while ending the market at the price of 108.77. Following a lack in key stats to provide direction, the volatility experience by Japanese Yen last was mostly due increasing weakness in the dollar which provide a boost for the Japanese Yen. On top of that, concerns over fresh spike in COVID-19 cases, geopolitical tension and vaccine side effect concerns also help delivered support for the Yen as a safe-haven market.
EUR/USD have seen its demand surge last week and ending the week with gains at the price of 1.1981. From economic data, it was a mixed bag of numbers. For Germany, Germany ZEW Economic Sentiment fell to 70.7 for April, weaker than market expectation of 79.7 while German CPI remain steady at 0.5% unchanged. However, the data was positive for Eurozone. The bloc’s industrial production improved to –1.0% against -1.1% expectation while CPI also held steady at 0.9%. The pickup in inflationary pressures delivered EUR support in the week. On the other hand, weakness in greenback also provide extra boost for the Euro.
The pair of GBP/USD have soared last week while ending at the price of 1.3840. Despite with mixed results in overall economic data, the surge in the pair was mostly supported by weakness in the greenback. On the data front, U.K GDP slips 0.4% against 0.6% expectation while Manufacturing Production exceed forecast with 1.3% against 0.5% expectations. On top of that, the sentiment for pound also supported by steady vaccination progress and reopening of U.K economy. The UK government is expected to reopen all sectors of the economy by next May if the risk of coronavirus transmission is at a minimum.
Market Review (Commodities): April 12 – 16
Gold price have advanced tremendously throughout last week while ending the market at the price of $1776.41. Following with the depreciation of greenback and various risk factors such as coronavirus and vaccine side effect, the yellow metal which act a safe-haven commodity have seen a huge jump in demand as investors are shifting their portfolio into safe markets. Several countries such as India and Brazil have witnessed a fresh spike in COVID-19 cases while reports of vaccine side effect which may drag down vaccination programs around the world also triggered market concerns.
The price of crude oil has soared throughout last week while ending the market with the price of 63.08 per barrel as positive inventories data followed with upbeat demand forecast from IEA have help lift market sentiment significantly. On data front, EIA reported that crude oil inventories have fell 5.889 million barrels, higher than market expectation of a reduction about 2.889 barrels. On top of that, the International Energy Agency also noted that global crude oil demand and supply are expected to rebalance by the second half of the year. The IEA argues that oil suppliers need to increase supply by 2 million barrels a day in the future to meet the high demand in the market. Additionally, it also expressed that the economic recovery in China and the US also will significantly increase oil demand. According to data, China’s crude oil import has jumped more than 21% after oil refining companies increased their operation.
Weekly Outlook: April 19 – 23
For the week ahead, investors would continue to focus on the vaccine development, COVID-19 situation as well as economic data such Initial Jobless Claims 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: April 19 – 23
|Monday – 19 April 2021|
|Tuesday – 20 April 2021|
|09:30||AUD||RBA Meeting Minutes||–||–||–|
|09:30||CNY||PBoC Loan Prime Rate||–||–||3.85%|
|14:00||GBP||Average Earnings Index +Bonus (Feb)||–||4.8%||4.8%|
|14:00||GBP||Claimant Count Change (Mar)||–||–||86.6K|
|Wednesday – 21 April 2021|
|06:45||NZD||CPI (QoQ) (Q1)||–||0.7%||0.5%|
|09:30||AUD||Retail Sales (MoM)||–||–||-0.8%|
|14:00||GBP||CPI (YoY) (Mar)||–||0.7%||0.4%|
|18:30||GBP||BoE Gov Bailey Speaks||–||–||–|
|20:30||CAD||Core CPI (MoM) (Mar)||–||–||0.3%|
|22:00||CAD||BoC Interest Rate Decision||–||0.25%||0.25%|
|22:30||USD||Crude Oil Inventories||–||–||-5.889M|
|23:00||CAD||BOC Press Conference||–||–||–|
|Thursday – 22 April 2021|
|19:45||EUR||ECB Interest Rate Decision (Apr)||–||0.00%||0.00%|
|20:30||USD||Initial Jobless Claims||–||625K||576K|
|20:30||EUR||ECB Press Conference||–||–||–|
|22:00||USD||Existing Home Sales (Mar)||–||6.18M||6.22M|
|Friday – 23 April 2021|
|14:00||GBP||Retail Sales (MoM) (Mar)||–||1.5%||2.1%|
|1530||EUR||German Manufacturing PMI (Apr)||–||65.9||66.6|
|22:00||USD||New Home Sales||–||885K||775K|