22 November 2021 Weekly Analysis
GCMAsia Weekly Report: November 22 – 26
Market Review (Forex): November 15 – 19
US Dollar
The dollar index which traded against a basket of six major currency pairs extend its gains over the backdrop of upbeat economic data, which indicating higher consumer spending driven by soaring inflation pressure. This had fueled market speculation that Fed to contract its monetary policy hence spurred a positive tone toward US dollar. The Dollar Index was closing its price on last Friday session at the price of 96.00.
On the economic data front, both U.S. Core Retail Sales and Retail Sales for last month had ticked up to 1.7%, from the previous reading of 0.7% and 0.8% respectively. Such upbeat economic data had increased the odds for the Federal Reserve to implement contractionary monetary policy in order to stabilize the US economic. In addition, U.S. Philadelphia Fed Manufacturing Index notched up significantly from the previous reading of 23.8 to 39.0. Nonetheless, US Initial Jobless Claims for previous week came at the reading of 268K, exceeding market forecast at 260K.
As for now, it would be crucial for investors to continue to scrutinize the latest updates with regards of the future monetary policy decision from Fed as well as further economic data in order to gauge the likelihood movement for the US Dollar.
USD/JPY
The pair of USD/JPY received bullish momentum on last week while ending last Friday session at the price of 113.90. The overall bullish momentum for the pair of USD/JPY last week was mainly due to the depreciation of Japanese Yen. Japanese Yen extend its losses in last week over the backdrop of decision from Bank of Japan (BoJ) to initiate its accommodative monetary policy. According to Nikkei business daily, Bank of Japan (BoJ) was reported to initiate its economic stimulus package through fiscal expenditure worth $350 billion to boost the Japan economy. On the economic data front, Japan Gross Domestic Product (GDP) in third quarter eased lower from the previous reading of 1.5% to -3.0%, worse than the forecasted reading of -0.8%.
EUR/USD
The pair of EUR/USD slumped throughout the week while ending last week session at the price of 1.1280. The overall momentum for the pair of EUR/USD was remained bearish amid European Central Bank (ECB) unleashed their dovish tone toward the economic progression in the Europe region. According to Reuters, European Central Bank President Christine Lagarde claimed that the current high inflation rate will only transitory, signaling that the contractionary monetary policy from the ECB is unlikely to be met next year. On the economic data front, Eurozone Consumer Price Index (CPI) came at the reading of 4.1%, matching with the market forecast. The continuing accommodative monetary policy and increasing inflation risk have spurred negative prospect toward Euro.
GBP/USD
The pair of GBP/USD was traded flat last week while closing its market price at 1.3760. Pound Sterling flattened was mostly traded flat last week despite with the backdrop of upbeat economic data. According to Office for National Statistics, U.K. Average Earnings Index in September came at the reading of 5.8%, exceeding the forecast reading of 5.6%. The rising wage level in UK was expected to boost the inflation pressure due to the increasing consumer spending. In addition, U.K. Consumer Price Index (CPI) in October came at the reading of 4.2%, exceeding forecasted reading of 3.9%. Not only that, U.K. Retail Sales in October came at the reading of 0.8%, better than the forecasted reading of 0.5%. Both data suggested a soaring inflation pressure in the region hence prompted market speculation that Bank of England will announce its contractionary monetary policy during its next meeting which is scheduled at the mid of December. Nonetheless, the BoE highlighted that it would like to find more clue from further labor data to gauge its economic condition.
Market Review (Commodities): November 15 – 19
GOLD
Gold price have slumped last week with the price of $1857.30 per troy ounce amid the strengthening US dollar. The release of recent upbeat US economic data has indicated that US was encountering soaring inflation pressure while spurring market speculation that Fed will initiate its rate hike earlier. As for now, investors would continue to scrutinize the latest updates with regards of latest economic data as well as future monetary policy decision from Fed to receive further trading signal.
CrudeOIL
The price of crude oil slumped significantly last week amid fears of supply boost while closing last Friday session with the price of $75.65 per barrel as of writing.
The oil market slumped as United States was reported for asking major oil consumers like China and Japan to consider a coordinated release of oil reserves to curb the high oil price and inflation risk in future. In addition, US energy firms have added their oil rigs by 6 in total while the soaring oil have prompted some oil drillers to increase their production. Apart of that, the spiking numbers of the Covid-19 cases in the European region had continue to prompt the government to consider re-imposing lockdowns, which dialing down the market optimism toward the demand for oil. Nonetheless, the losses experienced by crude oil was limited over the backdrop of bullish inventory data. According to Energy Information Administration (EIA), U.S. Crude Oil Inventories notched down significantly from the previous reading of 1.001M to -2.101M, better than the market forecast at 1.398M.
Weekly Outlook: November 22 – 26
For the week ahead, investors would continue to focus on crucial economic data such as the FOMC 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: November 15 – 19
| Time | Market | Event | Actual | Forecast | Previous |
| Monday – 22th November 2021 | |||||
| 16:30 | GBP | Composite PMI (Oct) | 54.1 | 54.1 | |
| 23:00 | USD | Existing Home Sales (Oct) | 6.20M | 6.29M | |
| Tuesday – 23th November 2021 | |||||
| 15:00 | EUR | German GDP (QoQ) (Q3) | – | – | 1.8% |
| 16:30 | GBP | Manufacturing PMI (Oct) | – | 56.3 | 56.3 |
| 16:30 | GBP | Services PMI (Oct) | – | 54.6 | 54.6 |
| 16:30 | EUR | German Manufacturing PMI (Nov) | – | 56.7 | 57.8 |
| Wednesday – 24th November 2021 | |||||
| 9:00 | NZD | RBNZ Interest Rate Decision | – | 0.75% | 0.50% |
| 9:00 | NZD | RBNZ Rate Statement | – | – | – |
| 10:00 | NZD | RBNZ Press Conference | – | – | – |
| 17:00 | EUR | German Ifo Business Climate Index (Nov) | – | 96.7 | 97.7 |
| 21:30 | USD | Core Durable Goods Orders (MoM) (Oct) | – | 0.50% | 0.50% |
| 21:30 | USD | GDP (QoQ) (Q3) | – | 2.10% | 2.00% |
| 21:30 | USD | Initial Jobless Claims | – | 264K | 268K |
| 23:00 | USD | New Home Sales (Oct) | – | 800K | 800K |
| 23:30 | USD | Crude Oil Inventories | – | 1.398M | -2.101M |
| Thursday –25th November 2021 | |||||
| 3:00 | USD | FOMC Meeting Minutes | – | – | – |
| 15:00 | EUR | German GDP (QoQ) (Q3) | – | 1.50% | 1.80% |
| 21:30 | EUR | ECB President Lagarde Speaks | – | – | – |
| Friday – 26th November 2021 | |||||
| 1:00 | GBP | BoE Gov Bailey Speaks | – | – | – |
| 8:30 | AUD | Retail Sales (MoM) (Oct) | – | 2.50% | 1.30% |
| 16:00 | EUR | ECB President Lagarde Speaks | – | – | – |