15 August 2022 Weekly Analysis
GCMAsia Weekly Report: August 15 – 19
Market Review (Forex): August 8 – 12
US Dollar
The Dollar Index which traded against a basket of six major currencies extended its losses throughout the past one week as inflation soften. However, the losses of the dollar index was limited by the heightening of geopolitical tensions as it continued act as the safe haven currency for the global investors.
Last Thursday, the dollar index plunged tremendously as the selling pressures were peaked following the US Consumer Price Index (CPI), which used to gauge the inflationary pressures in the US economy surprise to downside in July. According to the Labor Department, the US CPI data came in at 8.5%, lower than both the forecast of 8.7% and also the prior reading of 9.1%. The cooling of headline inflation was mainly contributed to the recent fall in the energy prices, such as the oil price. With the lower inflation figure, investors reckon that the US central bank (Federal Reserve) would implement a less aggressive rate hike plan going forward to get the inflation back down to 2% of long-term target. However, a conclusion of inflation has been peaked could not be made as it might be just short-lived. With that, the investors would continue to put their attention over the upcoming speeches from the Fed officials as well as the other crucial economic data.
On the geopolitical issue front, the ongoing military drills exerted bullish momentum in the greenback market. According to the latest news, China displayed their military strength near the South-China sea, where no sign of easing throughout the past week. China initially scheduled its drills to run from for a few days only, in response to a visit by US House Speaker Nancy Pelosi to Taiwan, but the Chinese military’s Eastern Theater Command later announced continued military drills. The exacerbating tensions between the US and Taiwan as well as China triggered the market risk-off sentiment, where majority of the investors flee to the greenback to avoid risk.
USD/JPY
The pair of USD/JPY dipped last week while closing its market price at 133.50. The pair of USD/JPY slumped significantly as the US inflationary pressures showed some sign of softening in the month of July. With the inflation figures started to fall, investors bet that the Federal Reserve is unlikely to increase the interest rate aggressively in the future.
EUR/USD
The pair of EUR/USD surged last week while closing its market price at 1.0250. The overall trend for Euro was traded higher amid depreciation of US Dollar. Nonetheless, rising tensions between Russia-Ukraine issue continue to limit the gains experienced by Euro as market participants remained concerns toward the economic progression in European region. Nonetheless, the main contribution of the recent rise in the currency pair of EUR/USD was attributed by the dollar’s weakness. The lower-than-expected US CPI data dragged down the value of the greenback, and urged the currency pair climbed higher last week.
GBP/USD
The pair of GBP/USD depreciated last week while ending session at the price of 1.2100. The currency pair of GBP/USD fell as the UK economy closed its second quarter of 2022 in a recession. According to the Office for National Statistics, the UK GDP data came in at -0.1%, far weaker than the prior quarter’s reading of 0.8% growth. The downbeat UK GDP data showed that the UK economy shrank significantly, where it heads toward recession amid the rising of inflationary pressures and political uncertainty heightened. Besides, the Bank of England (BoE) warned that the UK economy is likely fall into recession this year, whereby the recession is expected to last for more than a year. With that, the high possibility of prolonged recession risk suppressed the value of the UK currency, while putting the pound’s outlook in a cloudy state.
Market Review (Commodities): July 25 -29
GOLD
Gold price hovered below the level of $1800 while closing its market price at $1797.00 per troy ounce last Friday. With the backdrop of inflationary pressures started to ease, while the geopolitical tensions heightened, the investors started to withdraw their capital from the greenback’s holdings and move to the other safe haven asset such gold. However, the gains of the gold asset waned as few of the Fed members remained their hawkish tone toward the tightening path of the Federal Reserve, whereby they assume a rate hike of 75 basis point is still on the table.
CrudeOIL
Crude oil price surged while ending last week session at the price of $92.00 per barrel. The crude oil price revived as the positive catalysts such as the capacity of OPEC+ oil production is at maximum level, the heightening of tensions between Russia and Ukraine as well as the drop in US gasoline inventories. With that, the crude oil price jumped sharply throughout the week. However, the oil market edged lower before the market ended the session in the past one week as fears upon the global recession risk continue to weigh down the market demand on this black-commodity.
Weekly Outlook: August 15 – 19
For the week ahead, investors would continue to focus on crucial economic data such as the Initial Jobless Claims and Retail Sales 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: August 15 – 19
| Time | Market | Event | Actual | Forecast | Previous |
| Monday – 15th August 2022 | |||||
| All Day | – | Italy – Assumption Day | – | – | – |
| All Day | – | India – Independence Day | – | – | – |
| All Day | – | South Korea – Liberation Day | – | – | – |
| 7:50 | JPY | GDP (QoQ) (Q2) | 0.50% | 0.60% | -0.10% |
| 10:00 | CNY | Industrial Production (YoY) (Jul) | – | 4.60% | 3.90% |
| Tuesday – 16th August 2022 | |||||
| 9:30 | AUD | RBA Meeting Minutes | – | – | – |
| 14:00 | GBP | Average Earnings Index +Bonus (Jun) | – | 4.50% | 6.20% |
| 14:00 | GBP | Claimant Count Change (Jul) | – | – | -20.0K |
| 17:00 | EUR | German ZEW Economic Sentiment (Aug) | – | -52.7 | -53.8 |
| 20:30 | USD | Building Permits (Jul) | – | 1.640M | 1.696M |
| 20:30 | CAD | Core CPI (MoM) (Jul) | – | – | 0.30% |
| Wednesday –17th August 2022 | |||||
| 10:00 | NZD | RBNZ Interest Rate Decision | – | 3.00% | 2.50% |
| 11:00 | NZD | RBNZ Press Conference | – | – | – |
| 14:00 | GBP | CPI (YoY) (Jul) | – | 9.80% | 9.40% |
| 20:30 | USD | Core Retail Sales (MoM) (Jul) | – | -0.10% | 1.00% |
| 20:30 | USD | Retail Sales (MoM) (Jul) | – | 0.10% | 1.00% |
| 22:30 | USD | Crude Oil Inventories | – | – | 5.458M |
| Thursday – 18th August 2022 | |||||
| 2:00 | USD | FOMC Meeting Minutes | – | ||
| 9:30 | AUD | Employment Change (Jul) | – | 25.0K | 88.4K |
| 17:00 | EUR | CPI (YoY) (Jul) | – | 8.90% | 8.90% |
| 20:30 | USD | Initial Jobless Claims | – | 265K | 262K |
| 20:30 | USD | Philadelphia Fed Manufacturing Index (Aug) | – | -5 | -12.3 |
| 22:00 | USD | Existing Home Sales (Jul) | – | 4.88M | 5.12M |
| Friday – 19th August 2022 | |||||
| 14:00 | GBP | Retail Sales (MoM) (Jul) | – | -0.20% | -0.10% |
| 20:30 | CAD | Core Retail Sales (MoM) (Jun) | – | 0.60% | 1.90% |
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