20 September 2021 Weekly Analysis
GCMAsia Weekly Report: September 20 – 24
Market Review (Forex): September 13 – 17
US Dollar
The dollar index which traded against a basket of six major currency pairs surged significantly last week over the backdrop of the hawkish statement from Federal Reserve as well as the bullish economic data from the United States last week. The Dollar Index was closing its price on last Friday session at the price of 93.25.
Last week, the overall trend for the US Dollar remained bullish, bolstered by the hawkish expectation that the Federal Reserve might start to reduce its bond buying program by the end of the year despite a surged in Covid-19 cases. According to Reuters, Philadelphia Fed President Patrick Harker official claimed that he supports the US Central Bank to start tapering this year. Besides, others Federal Reserve members such as Cleveland Fed President Loretta Mester also expressed the importance of tightening monetary policy in order to combat the high inflation risk in future. Reduction in bond buying program means a step toward tighter monetary policy, which would reduce the money circulation in the market while increasing the appeal for the US Dollar. On the economic data front, the US Dollar extend its gains over the backdrop of a string of upbeat economic data. According to Federal Reserve Bank of Philadelphia, U.S. Philadelphia Fed Manufacturing Index notched up significantly from the previous reading of 19.4 to 30.7, exceeding the market forecast at 18.8. Meanwhile, Census Bureau reported that the U.S. Retail Sales for last month increased from the previous reading of -1.8% to 0.7%, which also fared much better than market expectation at -0.8%. As both crucial data were fared better- than-expectation, which easing some concerns about a sharp slowdown in economic growth while spurring positive prospect for the economic momentum in the United States.
Despite most of the Fed’s member recently had unleashed their hawkish stance, though in earlier, Fed Chairman Powell struck a cautious tone in his speech during the highly anticipated Jackson Hole that was held recently. Hence, the overall statement from the Federal Reserve remained vague. Investors would be suggested to continue to scrutinize the latest updates with regards of the FOMC meeting this week in order to gauge the likelihood movement for the Dollar Index.
USD/JPY
The pair of USD/JPY received bullish momentum on last week while ending last Friday session at the price of 109.90. The overall bullish momentum for the pair of USD/JPY was mainly due to the appreciation of US Dollar. Besides, the Japanese Yen slumped amid bearish economic data last week. According to Minister of Finance, Japan exports had slumped significantly from the previous reading of 37.0% to $26.2, missing the market forecast at 34.0%.
EUR/USD
The pair of EUR/USD slumped throughout the week while ending last week session at the price of 1.1710. The overall bearish momentum for the pair of EUR/USD last week was mainly due to the appreciation of the US Dollar. Nonetheless, due to lack of catalyst for the European market, the overall trend for the Euro remained subdued. Investors would continue to scrutinize the latest updates with regards of future economic data to receive further trading signal.
GBP/USD
The pair of GBP/USD had slumped last week while closing its market price at 1.3625. Pound Sterling slumped significantly on last Friday over the backdrop of bearish economic data from the United Kingdom region. The U.K. Retail Sales unexpectedly fell again last month in what is now a record streak of monthly declines, which dialed down the market optimism toward the economic progression in the United Kingdom. According to Office for National Statistics, U.K. Retail Sales for last month came in at -0.9%, missing the market forecast at 0.5%. Many retailers have been struggling to keep their items fully stocked due to supply chain bottlenecks, caused by a mix of global shortages. Such negative economic data would be spurring hopes for the Bank of England to maintain their expansionary monetary policy plan in longer-term basis in order to boost up the economic momentum. Though, most economist do not expect the BoE to begin to tighten until late next year, financial markets put the probability of a first rate rise in February at nearly 60%, according to Reuters.
Market Review (Commodities): September 13 – 17
GOLD
Gold price slumped significantly last week with the price of $1750.00 per troy ounce amid market participants speculated that the Federal Reserve might unleash their hawkish tone during the FOMC meeting this week following the economic data had fared better-than-expectation reading recently. Investors would continue to remain their focus on FOMC meeting for clues on how soon the central bank will start to taper its earlier aggressive monetary stimulus. A reduction in bond purchases typically tends to lift bond yields, which spurring bullish momentum toward the US Dollar while dragging down the appeal for the non-interest safe-haven gold.
CrudeOIL
The price of crude oil surged significantly last week while closing last Friday session with the price of $71.80. The oil market edged higher over the backdrop of upbeat inventory data last week. According to Energy Information Administration (EIA), U.S. Crude Oil Inventories notched down significantly from the previous reading of -6.422M to -3.544M, better than the market forecast at -3.544MM. Besides, the oil market extends its gains amid concerns over the U.S. oil supply following the destruction from Hurricane Ida, along with expectation of higher demand amid positive prospect for the rapid process of the Covid-19 vaccination program around the world.
Weekly Outlook: September 20 – 24
For the week ahead, investors would continue to focus on crucial economic data such as the FOMC meeting in order to determine further direction. Besides that, the ongoing situation with coronavirus 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: September 20 – 24
| Time | Market | Event | Actual | Forecast | Previous |
| Monday – 20th September 2021 | |||||
| N/A | |||||
| Tuesday – 21st September 2021 | |||||
| 09:30 | AUD | RBA Meeting Minutes | – | – | – |
| 20:30 | USD | Building Permits (Aug) | – | 1.600M | 1.630M |
| Wednesday – 22nd September 2021 | |||||
| 10:00 | JPY | BoJ Monetary Policy Statement | – | – | – |
| 11:00 | JPY | BoJ Press Conference | – | – | – |
| 22:00 | USD | Existing Home Sales (Aug) | – | 5.88M | 5.99M |
| 22:30 | USD | Crude Oil Inventories | – | – | -6.422M |
| Thursday – 23rd September 2021 | |||||
| 02:00 | USD | FOMC Economic Projections | – | – | – |
| 02:00 | USD | FOMC Statement | – | – | – |
| 02:00 | USD | Fed Interest Rate Decision | – | – | 0.25% |
| 02:30 | USD | FOMC Press Conference | – | – | – |
| 15:30 | CHF | SNB Interest Rate Decision (Q3) | – | – | -0.75% |
| 15:30 | CHF | SNB Monetary Policy Assessment | – | – | – |
| 15:30 | EUR | German Manufacturing PMI (Sep) | – | 61.5 | 62.6 |
| 16:30 | GBP | Composite PMI | – | – | 54.8 |
| 16:30 | GBP | Manufacturing PMI | – | 59 | 60.3 |
| 16:30 | GBP | Services PMI | – | – | 55 |
| 19:00 | GBP | BoE Interest Rate Decision (Sep) | – | 0.10% | 0.10% |
| 20:30 | USD | Initial Jobless Claims | – | 320K | 332K |
| 20:30 | CAD | Core Retail Sales (MoM) (Jul) | – | -1.70% | 4.70% |
| Friday– 24th September 2021 | |||||
| 16:00 | EUR | German Ifo Business Climate Index (Sep) | – | 98.9 | 99.4 |
| 22:00 | USD | Fed Chair Powell Speaks | – | – | – |
| 22:00 | USD | New Home Sales (Aug) | – | 713K | 708K |