20 July 2020 Weekly Analysis
GCMAsia Weekly Report: July 20 – 24
Market Review (Forex): July 13 – 17
US Dollar
Dollar index which gauge its value against a basket of six major currencies failed to revive from its downward trend while ending the last week trading session at 95.90. Following a busy week of economic data, US economy showed little sign of recovery amidst the pandemic’s fallout.
As of now, US economy is still shrouded by the shadow of Coronavirus’s diseases pandemic where the nation is still leading as the top recorded cases in the world. According to the website of Worldometer, the global covid-19 cases showed no sign of ease while US’s nation has recorded total number of cases close to 4 million as of last week. Therefore, Investor started to shift their capital away from greenback market, to traditional safe haven instrument such as gold in order to get the full protection against uncertainty risk. Besides, good news on vaccine’s development has also further extend the losses of greenback. Based on the latest news, Moderna have prompted that their vaccines caused immune response to 45 adults in last experimental result. However, the development of vaccine are still in trial stage, more experiment have to be carried out in order to prove the feasibility of the drug and observe its potential side effect to human body.
On U.S data front, US Core CPI and Core Retail Sales was came in at a positive reading of 0.2% and 7.3%, stronger than the economist forecast at 0.1% and 5.0% respectively. Both positive have successfully limited the losses of dollar index as these data indicated that the underlying inflation pressure start to rebound after US economy activity halted for more than a month. However, increasing in number of Americans who filed for the unemployment insurance claims has mirrored that the US labor market are still remain vulnerable and weak as few of the US states such as California has decided to re-impose movement restriction to combat the virus from spreading across the city.
Still, coronavirus are still the ‘blasting fuse’ of causing US economy downturn, hence investors will continue to eye on the updates and also the progress of development in vaccine which could potentially turning the situation around.
USD/JPY
The pair of USD/JPY was traded flat last week in overall while ending last week market session lower at the closing price of 107.00. On Coronavirus font, with a resurgence of infection turned obvious, investors’s mood toward investing in yen market become sourer as sharp rise of virus cases in Japan showed some signs of pandemic heightened. As of now, investors are still keeping their eyes over the development of coronavirus in Japan in order to gauge the further direction of USD/JPY.
EUR/USD
The Pair of EUR/USD managed to extend its gains while closing its last week market higher at the price of 1.1425. Throughout the entire last week, Investors were only focus on the ECB meeting and the EU leader summit. In the ECB’s meeting, ECB gave neutral tone with regards to the current economy condition and future outlook. ECB’s board of members decided to keep its interest rate unchanged while commenting that they will further ease the unfolding monetary policy in the future if necessary. However, EU leaders meeting in Brussels failed to reach a consensus in launching a post-coronavirus recovery package amid conflict of interest in amount granted to each country.
GBP/USD
The pair of GBP/USD have loss its ground throughout the week and ending the session at the price of 1.2565. UK Brexit is still remains as the major problem to be solved by UK government despite pandemic in UK eased. As of now, deadlock in trade agreement of post Brexit between UK and EU remained as both countries were unwilling to tolerate each other in trade negotiation. Besides, there is a survey also showed that many companies in UK are yet to prepare for no-deal Brexit happened, while UK Prime Minister insist to not further extend the transition period of Brexit.
Market Review (Commodities): July 13 – 17
GOLD
Gold price have successfully to hold its ground while closing the last trading session above the level of $1800.00. Amidst the Novel of Covid-19, uncertainty risk urged the investor to flee into safe have product which is gold market. Besides, heightening tensions between US and China has also lifted the gold price higher last week. Earlier last week, US dispatched two aircraft carriers to the South China Sea to support a free and Open Indo-pacific. Nonetheless, market are still putting their attention over the development of vaccine and US-Sino tensions as it will provide clearer image regards the direction of this yellow metal.
CrudeOIL
The price of crude oil manage to hold its ground last week while ending its last trading session at $40.75 per barrel despite ongoing pandemic’s risk and tensions between US and China spark up the market worries over the prospect of oil demand.
Throughout the entire last week, appeal of this black commodity was haunted by the ongoing pandemic where recent spike in global reported cases faded the future outlook of oil demand. Besides, renewed tensions between US and China with regards to the issue happening in South China Sea has also weaken the outlook of the global economy and oil demand as well. However, upbeat inventories data from US nation managed to support the crude oil price from falling into downward trend. According to the EIA data, US Crude oil inventories came in at -7.493M, recorded a larger drop when comparing to the economist’s forecast at -2.098M, indicating that supply glut eased .
Moreover, IEA reported has also slightly lifted up the attraction of crude oil, where IEA bumped up its 2020 oil demand forecast as easing of lockdown measures in many countries obviously caused a strong rebound in oil’s demand. However, IEA also warned that ongoing pandemic risk still remains as the crucial ‘question mark’ in oil market as heightening of virus condition will likely dragged down the demand of oil products. Still, market are now paying their attention over the development of Covid-19 and upcoming inventory data in order to gauge the direction of oil price.
Weekly Outlook: July 20 – 24
For the week ahead, investors would continue to eye on the U.S development and economic data such as Initial Jobless Claims and housing data to determine further direction of forex market. On top of that, as U.S continue to stand against the coronavirus, market will also continue to paying attention to the latest updates about the coronavirus.
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 20 – 24
| Time | Market | Events | Previous | Forecast | Actual |
| Monday – 20 July 2020 | |||||
| N/A | |||||
| Tuesday – 21 July 2020 | |||||
| 09:30 | AUD | RBA Meeting Minutes | – | – | – |
| 20:30 | CAD | Core Retail Sales (MoM) (May) | 0.1% | – | – |
| Wednesday – 22 July 2020 | |||||
| 04:30 | CrudeOIL | API Weekly Crude Oil Stock | -8.322M | – | – |
| 09:30 | AUD | Retail Sales (MoM) | 16.9% | – | – |
| 20:30 | CAD | Core CPI (MoM) (Jun) | -0.1% | – | – |
| 22:00 | USD | Existing Home Sales (Jun) | 3.91M | 4.86M | – |
| 22:30 | CrudeOIL | EIA Crude Oil Inventories | -7.493M | -2.098M | – |
| Thursday – 23 July 2020 | |||||
| 14:00 | EUR | GfK German Consumer Climate (Aug) | -9.6 | -4.8 | – |
| 20:30 | USD | Initial Jobless Claims | 1,300K | 1,300K | – |
| Friday – 24 July 2020 | |||||
| 14:00 | GBP | Retail Sales (MoM) (Jun) | 12.0% | 8.5% | – |
| 15:30 | EUR | German Manufacturing PMI (Jul) | 45.2 | 48.0 | – |
| 16:30 | GBP | Manufacturing PMI | 50.1 | – | – |
| 16:30 | GBP | Services PMI | 47.1 | – | – |
| 22:00 | USD | New Home Sales | 676K | 700K | – |