20 January 2020 Weekly Analysis
GCMAsia Weekly Report: January 20 – 25
Market Review (Forex): January 13 – 17
US Dollar
Greenback was traded higher last week while closing the market at 97.33 against a basket of six major currencies. US dollar received higher demand last Friday over the backdrop of bullish housing data, spurring speculations that US economy would continue to expand further. According to US Commerce Department, Housing Starts for the month of December rose by 16.9% to 1.61 million units, well above forecast of 1.38 million units. The data has also notched in its biggest gains in 13 years. Strong uptick in housing starts lifts up forecasts for fourth-quarter residential investment while analysts suggests that it is likely to undergo correction for the month of January.
However, gains on the greenback were limited after recent data shows a decline in labor demand and consumer sentiment. According to US Labor Department, Job Openings and Labor Turnover Survey (JOLTs) came in at 6.8 million, well below forecast of 7.23 million. Similarly, University of Michigan’s Consumer Sentiment Index for the month of January notched down to 99.1 from prior seven-months high of 99.3. A decline in both job demands and consumer sentiment spur concerns that US consumer spending may loses its upbeat momentum that could lead to slower growth in inflation. Nonetheless, with the signage of phase 1 trade deal in between US-China, analysts believe that this may help to offset any negative impact in the near future.
For the time being, investors will place their attention upon upcoming data releases as well as current progression of phase 2 trade deal negotiations in between US and China in order to gain more market signals.
USD/JPY
Pair of USD/JPY extended its gains while closing last week’s market at 110.13. Japanese yen received extensive selloff pressure after US and China signed phase 1 trade deal last week. Diminishing trade tension in between both countries has spurred higher demand for risky assets whereby its economy is linked towards China such as Australian dollar. However, gains on the pair is limited at the moment following geopolitical crisis in Libya as well as Brexit issues in the United Kingdom.
EUR/USD
Pair of EUR/USD extended its losses while closing last week’s market at 1.1088. Euro received bearish pressure last Friday after recent data from the United States spurs higher optimism towards its economy and currency. Comparing both countries, US economic progression continues to remain resilient despite trade war risk when being compared to EU zone. However, losses on the euro was limited after the release of meeting minutes from European Central Bank (ECB). According to ECB, they believe that there are “mild indication” that core inflation in the region is rising. The comments came over the backdrop of receding global trade tension after US and China achieved consensus with regards to phase 1 trade deal.
GBP/USD
Pair of GBP/USD was traded lower last week while closing the market at 1.3005. Pound sterling extended its losses after UK Finance Minister Sajid Javid commented that businesses in the UK will be hit by Brexit. His comments came after UK Treasury reaffirms that they would not support manufacturers that favor EU regulations as firms have had three years to prepare for a new trading relationship. For the time being, investors will place their attention upon trade deal negotiation in between UK and EU which will begin after Brexit deadline on 31st January 2020.
Market Review (Commodities): January 13 – 17
GOLD
Gold price remains traded in a tight range while closing last week’s market at $1,557.02 a troy ounce. Earlier last week, gold futures received higher selloff pressure after US and China signed the phase 1 trade deal, which further diminishes trade tension and risks in between both countries. However, losses were limited as ongoing risks in the market continues to linger such as Brexit in UK.
Crude Oil
Crude oil price extended its gains while closing last week’s market at $58.74 per barrel. Oil price extended its recovery from lower level following the signage of phase 1 trade deal in between US and China. Diminishing trade tension in between both countries spurred speculation that global economic momentum may recover its traction which would subsequently lead to higher demand for the commodity. However, gains on crude oil price were limited after recent report from US Baker Hughes shows that the number of oil rig has increased from 659 to 673 last week. Higher rate of oil rig would significantly increase the output from United States and concurrently worsen global oil oversupply issue.
Weekly Outlook: January 20 – 25
For the week ahead, investors will place their attention upon economic data releases from UK, US and EU in order to attain more market signals.
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: January 20 – 25.
| Time | Market | Event | Actual | Forecast | Previous |
| Monday – 20 January 2019 | |||||
| 9:30 | CNY | PBoC Loan Prime Rate | – | – | 4.15% |
| Tuesday – 21 January 2019 | |||||
| 02:30 | EUR | ECB President Lagarde Speaks | – | – | – |
| 11:00 | JPY | BoJ Outlook Report (YoY) | – | – | – |
| 17:30 | GBP | Average Earning Index + Bonus (Nov) | – | 3.1% | 3.2% |
| 17:30 | GBP | Claimant Count Change (Dec) | – | 24.5K | 28.8K |
| 18:00 | EUR | German Zew Economic Sentiment (Jan) | – | 15.0 | 10.7 |
| Wednesday – 22 January 2020 | |||||
| 17:30 | GBP | Retail Sales (MoM) (Dec) | – | 0.5% | -0.6% |
| 21:30 | CAD | Core CPI (MoM) (Dec) | – | – | -0.2% |
| 23:00 | USD | Existing Home Sales (Dec) | – | 5.43M | 5.35M |
| 23:00 | CAD | BoC Monetary Policy Report | – | – | – |
| 23:00 | CAD | BoC Interest Rate Decision | – | 1.75% | 1.75% |
| Thursday – 23 January 2020 | |||||
| 08:30 | AUD | Employment Change (Dec) | – | 15.0K | 39.9K |
| 20:45 | EUR | Deposit Facility Rate (Jan) | – | -0.50% | -0.50% |
| 20:45 | EUR | ECB Marginal Lending Facility | – | – | 0.25% |
| 20:45 | EUR | ECB Monetary Policy Statement | – | – | – |
| 20:45 | EUR | ECB Interest Rate Decision (Jan) | – | 0.00% | 0.00% |
| Friday – 24 January 2020 | |||||
| 00:00 | CrudeOIL | Crude Oil Inventories | – | – | -2.549M |
| 16:30 | EUR | German Manufacturing PMI (Jan) | – | 44.5 | 43.7 |
| 17:00 | EUR | German ifo Business Climate Index (Jan) | – | 95.5 | 96.3 |
| 17:30 | GBP | Composite PMI | v | 50.5 | 49.3 |
| 17:30 | GBP | Manufacturing PMI | – | 47.6 | 47.5 |
| 17:30 | GBP | Services PMI | – | 49.4 | 50.0 |
| 17:30 | EUR | ECB President Lagarde Speaks | – | – | – |
| 21:30 | CAD | Core Retail Sales MoM (Nov) | – | 0.4% | -0.5% |
| Saturday – 25 January 2020 | |||||
| 02:00 | CrudeOIL | U.S. Baker Hughes Oil Rig Count | – | – | 673 |