21 February 2022 Weekly Analysis
GCMAsia Weekly Report: February 21 – 25
Market Review (Forex): February 14 – 18
US Dollar
The dollar index which traded against a basket of six major currencies made its advancement, bouncing back after suffered losses from multiple significant past week events. The overall bullish momentum for the US Dollar was mostly bullish amid rising tensions between Russia-Ukraine, which stoked a shift in sentiment toward the safe-haven US Dollar.
Recently, the concerns upon the possible Russian invasion of Ukraine had spurred risk-off sentiment in the global financial market, which prompting investors to purchase risk-free US Treasury bond to hedge against rising geopolitical risk. According to BBC, Antony Blinken said the tensions in eastern Ukraine, as well as the extended drills and Russian troop build-up, indicating Russia was about to invade. The United States estimated Russia has increased up to 190,000 troops around Ukraine. Meanwhile, many countries have urged their citizens to leave Ukraine immediately. Though, the prospect for the war still remained uncertain, investors should continue to scrutinize the latest updates with regards of the tensions between Russia-Ukraine to receive further trading signal.
In the economic data front, the US Dollar extends its gains over the backdrop of upbeat economic data last week. According to Census Bureau, US Core Retail Sales increased from the preliminary reading of -2.8% to 3.3%, exceeding the market forecast at 0.8%. Besides, the US Producer Price Index (PPI) for last month notched up significantly from previous reading of 0.4% to 1.0%, which also fared better than market expectation at 0.5%. Such upbeat economic data had indicated that the US economic remain resilient following the Covid-19 pandemic recovery, which spurring higher odds for the Federal Reserve to implement a more aggressive contractionary monetary policy to combat the high inflation risk. The Dollar Index was ended last week session at the price of 96.05.
USD/JPY
The pair of USD/JPY received bearish on last week amid appreciation of Japanese Yen while ending last Friday session at the price of 114.95. The safe-haven Japanese Yen received significant bullish momentum last week following the rising geopolitical tensions between Russia and Ukraine, which spurring risk-off sentiment in the global financial market while prompting investors to shift their portfolio toward the safe-haven asset.
EUR/USD
The pair of EUR/USD slumped throughout the week while ending last week session at the price of 1.1315. Due to lack of market catalyst in the European market, the overall bearish trend for the pair of EUR/USD was mostly due to the appreciation of US Dollar. As for now, investors would continue to scrutinize the latest updates with regards of the future monetary policy statement as well as the tensions between Ukraine and Russia to gauge the likelihood movement for the pair.
GBP/USD
The pair of GBP/USD appreciated last week while closing its market price at 1.3535. The Pound Sterling surged last week over the backdrop of bullish economic data, which dialed up the market optimism toward the economic progression in United Kingdom. According to Office for National Statistics, UK Average Earning Index + Bonus increased significantly from the previous reading of 4.2% to 4.3%, exceeding the market forecast at 3.8%. Besides, UK Claimant Count Change came in at -31.9K, which also fared better than market expectation at -28.8K. The higher paid increased in United Kingdom was due to persistent signs of tight labour market, combined with face pace of economic recovery following the Covid-19 lockdowns restrictions was eased. Nonetheless, the rising fears upon the Russian invasions of Ukraine had diminished risk appetite in the global financial market, which limiting the gains experienced by the riskier asset such as Pound Sterling.
Market Review (Commodities): February 14 – 18
GOLD
Gold price was surged significantly last week with the price of $1905.05 per troy ounce amid rising tensions between Russia-Ukraine, which stoked a shift in sentiment toward the safe-haven commodity such as gold. Besides that, the spiking inflation rate in the United States had also spurred the appeal of the gold market as investors shift their portfolio into gold in order to hedge against the inflation risk. Earlier, the Federal Reserve’s preferred inflation tool, the Personal Consumption Expenditures Price Index (PCE) had expanded by 5.8% in the year of January. Despite that, the gains experienced by the gold price was limited by the hawkish expectation from Federal Reserve. As for now, investors would continue to scrutinize the crucial event updates with regards of tensions between Russia-Ukraine as well as the monetary policy decision from global central bank to receive further trading signal for gold.
CrudeOIL
The price of crude oil surged last week while closing last Friday session with the price of $91.55 per barrel. The crude oil price surged amid supply disruption concerns following the rising tensions between Russia-Ukraine. The United States has threated Russia, a major oil and gas supplier, with the implementation of new sanctions if it invaded Ukraine. Nonetheless, the gains experienced by the crude oil price was limited amid market participants speculated that the positive prospect of US-Iran nuclear deal would induce United States to remove the trade tariff from Iran, which increasing the oil supply in future.
Weekly Outlook: February 21 – 25
For the week ahead, investors would continue to focus on crucial economic data such as the Initial Jobless Claims and inflation data this week 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: February 21 – 25
| Time | Market | Event | Actual | Forecast | Previous |
| Monday – 21st February 2022 | |||||
| 16:30 | EUR | German Manufacturing PMI (Feb) | – | 59.5 | 59.8 |
| 17:30 | GBP | Manufacturing PMI (Feb) | – | – | 57.3 |
| 17:30 | GBP | Services PMI | – | – | 54.1 |
| Tuesday – 22nd February 2022 | |||||
| 17:00 | EUR | German Ifo Business Climate Index (Feb) | – | 96.5 | 95.7 |
| 23:00 | USD | CB Consumer Confidence (Feb) | – | 109.8 | 113.8 |
| Wednesday – 23rd February 2022 | |||||
| 9:00 | NZD | RBNZ Interest Rate Decision | – | 1.00% | 0.75% |
| 9:00 | NZD | RBNZ Rate Statement | – | – | – |
| 10:00 | NZD | RBNZ Press Conference | – | – | – |
| 17:30 | GBP | Inflation Report Hearings | – | – | – |
| 18:00 | EUR | CPI (YoY) (Jan) | – | 5.10% | 5.00% |
| Thursday – 24th February 2022 | |||||
| 21:15 | GBP | BoE Gov Bailey Speaks | – | – | – |
| 21:30 | USD | GDP (QoQ) (Q4) | – | 7.00% | 6.90% |
| 21:30 | USD | Initial Jobless Claims | – | 235K | 248K |
| 23:00 | USD | New Home Sales (Jan) | – | 807K | 811K |
| Friday – 25th February 2022 | |||||
| 0:00 | USD | Crude Oil Inventories | – | – | 1.121M |
| 15:00 | EUR | German GDP (QoQ) (Q4) | – | -0.70% | -0.70% |
| 19:15 | EUR | ECB President Lagarde Speaks | – | – | – |
| 21:30 | USD | Core Durable Goods Orders (MoM) (Jan) | – | 0.40% | 0.60% |
| 23:00 | USD | Pending Home Sales (MoM) (Jan) | – | 0.50% | -3.80% |