23 August 2021 Weekly Analysis
GCMAsia Weekly Report: August 23 – 27
Market Review (Forex): August 16 – 20
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 upbeat economic data from the United States last week. The Dollar Index was closing its price on last Friday session at the price of 93.45.
According to Reuters, most of the Federal Reserve policymakers believe that it could be appropriate for the Federal Reserve to start reducing bond buying program this year following the economic had started to recover significantly. Earlier, the Fed has set a threshold of “substantial further progress” to start scaling back bond purchases. Since the July meeting, the labor market from the United States had improved following the economy generated more than 943,000 jobs last month, according to Bureau of Labor Statistics. While the pace of inflation, which the chair of Federal Reserve Jerome Powell had previously claimed that it is likely to be transitory, appears to be reaching a peak according to earlier inflation data. Besides that, the US Dollar extend its gains amid upbeat job data in last week, which spurring further positive prospect toward the economic momentum in the United States. According to Department of Labor, U.S. Initial Jobless Claims notched down from the previous reading of 377K to 348K, exceeding the market forecast at 363K.
As for now, investors would continue to scrutinize the latest updates from the Federal Reserve during the Fed’s central bank conference in Jackson Hole, Wyoming in the coming week to receive further trading signal.
USD/JPY
The pair of USD/JPY received bearish momentum on last week while ending last Friday session at the price of 109.75. The overall bearish momentum for the pair of USD/JPY was mainly due to the decrease of risk appetite in the global financial market, which spurring the bullish momentum on the safe-haven Japanese Yen. The spiking numbers of the Delta variant around the world insinuated fears upon the economic recovery in future.
EUR/USD
The pair of EUR/USD slumped throughout the week while ending last week session at the price of 1.1755. The overall trend for the EUR/USD remained bearish amid the appreciation of the US Dollar. Nonetheless, due to lack of crucial catalyst from the European region, the movement for the Euro remained subdued. As for now, investors would continue to scrutinize the latest updates with regards of crucial economic data in order to gauge the likelihood movement for the pair of EUR/USD.
GBP/USD
The pair of GBP/USD had slumped last week while closing its market price at 1.3625. The overall bearish momentum for the pair of GBP/USD last week was mainly due to the appreciation of the US Dollar. Besides, the Pound Sterling extend its losses amid rising concerns over the Brexit immigration rules in U.K. According to reports from the Financial Times, businesses were forced to reduce the scale of operations due to the newly revised immigration conditions that have resulted business in staff shortages. In addition, hundreds of banking staff have returned to the EU following the enforcement of immigration requirements since early last year. Investors fear that the stricter rules would be changing the fundamental situation in the UK while dialing down the market optimism toward the economic progression in United Kingdom.
Market Review (Commodities): August 16 – 20
GOLD
Gold price was traded flat last week with the price of $1781.15 per troy ounce amid mixed market sentiment for the safe-haven gold. Earlier, the gold market received bullish momentum following the Afghanistan government collapsed, which increasing the geopolitical risk while stoked a shift in sentiment toward the safe-haven asset. According to the New York Times, the Taliban had effectively sealed their control of Afghanistan on last Sunday, increasing the chaos and fears in the city with tens of thousand of people trying to escape. Afghan president had fled into other country while the United States military raced to evacuate diplomats and civilians from an increasing panicked city. Nonetheless, the gains experienced by the gold market was limited amid market participants speculated that the Federal Reserve might start to taper its monetary policy earlier than expected. Contractional monetary policy would decrease the money circulation in the financial market and lower the inflation risk in future, which dragging down the appeal of the safe-haven gold.
CrudeOIL
The price of crude oil slumped significantly last week while closing last Friday session with the price of $67.35. The crude oil price was traded nearly three-month lows last week amid the signal that the U.S. energy firms are looking to increase output, spurring concerns about a possible glut in crude supply as the Delta variant continue to weigh down the demand outlook. The Oilfield services firm Baker Hughes reported its weekly U.S. rig count rose by 8 to 405. Besides, the spiking numbers of Covid-19 Delta variant had prompted the policymakers in some countries to tighten its movement control, which spurring further negative prospect for the crude oil demand. Nonetheless, the losses experienced by the crude oil commodity was limited over the backdrop of upbeat inventory data last week. According to Energy Information Administration (EIA), U.S. Crude Oil Inventories came in at -3.234M, better than the market forecast at -1.055M.
Weekly Outlook: August 23 – 27
For the week ahead, investors would continue to focus on crucial economic data such as US Initial Jobless Claims 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: August 23 – 27
| Time | Market | Event | Actual | Forecast | Previous |
| Monday – 23rd August 2021 | |||||
| 15:30 | EUR | German Manufacturing PMI (Aug) | – | 65 | 65.9 |
| 16:30 | GBP | Composite PMI (Aug) | – | – | 59.2 |
| 16:30 | GBP | Manufacturing PMI (Aug) | – | – | 60.4 |
| 16:30 | GBP | Services PMI (Aug) | – | – | 59.6 |
| 22:00 | USD | Existing Home Sales (Jul) | – | 5.81M | 5.86M |
| Tuesday – 24th August 2021 | |||||
| 14:00 | EUR | German GDP (QoQ) (Q2) | – | 1.50% | 1.50% |
| 22:00 | USD | New Home Sales (Jul) | – | 690K | 676K |
| Wednesday – 25th August 2021 | |||||
| 16:00 | EUR | German Ifo Business Climate Index (Aug) | – | 100.4 | 100.8 |
| 20:30 | USD | Core Durable Goods Orders (MoM) (Jul) | – | 0.50% | 0.50% |
| 22:30 | USD | Crude Oil Inventories | – | -1.055M | -3.234M |
| Thursday – 26th August 2021 | |||||
| 19:30 | EUR | ECB Publishes Account of Monetary Policy Meeting | – | – | – |
| 20:30 | USD | GDP (QoQ) (Q2) | – | 6.70% | 6.50% |
| 20:30 | USD | Initial Jobless Claims | – | 350K | 348K |
| Friday – 27th August 2021 | |||||
| 09:30 | AUD | Retail Sales (MoM) (Jul) | – | -2.90% | -1.80% |