22 June 2020               Weekly Analysis

GCMAsia Weekly Report: June 22 – 27

Market Review (Forex): June 15 – 20

US Dollar

The dollar index which traded against a basket of six major currency pairs extent its gains last week amid diminishing hopes upon the resolution of the coronavirus, which stoked a shift in sentiment toward safe-haven asset while insinuating demand for the safe-haven US Dollar. However, the gains experienced by the dollar index was limited over the backdrop of bleak data from the United States region. The dollar index was closing its price on last Friday session at the price of 97.50.

For last week, most of the economic data from United States region were dominated by negative data despite some of the data were fared better than expectation. According to Census Bureau, the U.S. Building Permits came in at only 1.220M, missing the market forecast at 1.228M. Similarly, the U.S. Initial Jobless Claims came in at 1,508K, worse than the economic forecast at 1,300K, which spurring fears on a second wave of layoffs as companies battle weak demand and fractured supply chains, supporting views that the global economy would be facing a long and difficult recovery from the recession. Nonetheless, the U.S. Core Retail Sales for last month notched up from the previous reading of -15.2% to 12.4%, confounding market forecast for a reading up to 5.5%. Besides, the US Dollar received some bearish momentum on last Monday following Federal Reserve announced it would buy individual corporate bonds in the secondary market, spurring risk-on sentiment in the financial market while spurring some selloff for the safe-haven dollar.

On the coronavirus front, the World Health Organization was reporting a record increase in global cases on last Sunday, especially in the Americas, while Apple Inc decided to closing 11 U.S. stores last week as coronavirus cases continue to rise in southern and western states, spurring further fears upon the second wave of the coronavirus cases. According to Aljazeera, the WHO has reported the largest single-day increase in coronavirus cases by its count, at more than 183,000 new cases in the latest 24 hours. The Brazil led the way with 54,771 cases increment while the coronavirus infections had spiked up 36,617 new cases in the United States. Nonetheless, at this time investors would still continue to scrutinize the latest development of the coronavirus cases as well as the U.S. new economic stimulus plan in order to gauge the likelihood movement for the currency.

 

USD/JPY

Pair of USD/JPY was traded lower last week while ending last Friday session at the price of 106.86.  The safe-haven Japanese Yen received significant bullish momentum on last week amid the fears of a new pandemic wave. With the recent surge in the coronavirus cases from the United States, the Florida marked an notched up to 3.7% in coronavirus cases versus a previous seven-day average of 3.5%, which diminishing risk appetite in the FX market while insinuating demand for the safe-haven Japanese Yen.

 

EUR/USD

Pair of EUR/USD slumped on last week while closing last Friday’s trading session with the price of 1.1175. The overall bearish momentum of the pair was mostly due to the strengthening in the rival currencies, especially in US Dollar. Besides, the euro received further bearish momentum as investors doubted against whether the European Union would be able to pass a new economic stimulus plan which proposed by the European Commission within this week. Headlines about the progress toward the deal may boost demand for the euro while reports about failure to agree with the consensus would further weigh on the common currency.  Hence, as for now the investors would need to scrutinize the latest updates with regards of the latest economic plan from the European region in order to receive further trading signals.

 

GBP/USD

The pair of GBP/USD slumped on last week while closing its market at 1.2344. The overall bearish momentum for the pair was mainly due to the appreciation of the US Dollar. The Pound Sterling was suffering from its worse week since mid-May following the data on last Friday showed that the UK government debt had hit record highs since 1963 while the fears upon the coronavirus pandemic continue to weigh on the risky currency. Besides, the lack of development with regards of the post-Brexit deal had further spurred significant selloff for the Pound Sterling.

 

Market Review (Commodities): June 15 – 20

GOLD

Gold price was traded higher in overall last week while closing its market on Friday at $1749.10 per troy ounce. The safe-have gold surged over the worries upon the second wave of the global coronavirus pandemic. In last week, the U.S. had reported more than 30,000 new cases while Florida has the highest number of new infections among all the states. Besides, the new cluster of the virus has been detected in country such as China and Germany, spurring further fears of a resurgence of the virus in these countries. Such negative sentiment had prompted investors to shift their portfolio toward the safe-haven commodity while spurring further demand for the gold market.

 

CrudeOIL

The crude oil price surged on last week while closing last Friday session with $39.80 per barrels. The oil market was traded higher on last week following the OPEC and its allies including Russia agreed to extend record oil production cuts until the end of July. Besides, Iraq and Kazakhstan pledged to comply better with oil production cuts during an OPEC+ meeting last Thursday, which providing further bullish momentum for the commodity. Nonetheless, the gains experienced by the crude oil was limited following the oil inventory data was released. According to Energy Information Administration (EIA), the U.S. Crude Oil Inventories came in at 1.215M, worse than the market forecast at -0.152M. Besides, the concerns that a record rise in global coronavirus cases could continually to weigh the market demand on this black-commodity market. Hence, due to uncertainty with regards of the coronavirus outlook, investors would continue to focus on ongoing news to receive further trading signals for the direction.

 

Weekly Outlook: June 22 – 27

For the week ahead, investors would have to scrutinize the latest developments with regards of the outbreak of the coronavirus, trade tensions between U.S. and China and also crucial economic data such as U.S. GDP and U.S. Initial Jobless Claims in order to receive further trading signals.

 

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: June 22 – 27

Time Market Event Actual Expectation Previous
Monday – 22nd June 2020
22:00 USD Existing Home Sales (May) 4.10M 4.33M
Tuesday – 23rd June 2020
15:30 EUR German Manufacturing PMI (Jun) 41.5 36.6
16:30 GBP Manufacturing PMI 40.7
16:30 GBP Services PMI 29.0
22:00 USD New Home Sales (May) 640K 623K
Wednesday – 24th June 2020
10:00 NZD RBNZ Interest Rate Decision 0.25% 0.25%
10:00 NZD RBNZ Rate Statement
11:00 NZD RBNZ Press Conference
16:00 EUR German Ifo Business Climate Index (Jun) 85.0 79.5
22:30 CrudeOIL Crude Oil Inventories -0.152M 1.215M
Thursday – 25th June 2020
20:30 USD Core Durable Goods Orders (MoM) (May) 2.1% -7.7%
20:30 USD GDP (QoQ) (Q1) -5.0% -5.0%
20:30 USD Initial Jobless Claims 1,300K 1,508K
Friday– 26th Jun 2020
20:30 USD Core PCE Price Index (MoM) (May) 0.2% -0.4%
22:00 USD Michigan Consumer Sentiment (Jun) 78.9 78.9
01:00

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CrudeOIL US Baker Hughes Oil Rig Count 189