24 February 2020 Weekly Analysis
GCMAsia Weekly Report: February 24 – 29
Market Review (Forex): February 17 – 22
US Dollar
US dollar pared its gains during last Friday trading while closing the market at around 99.20 against six major currencies. Greenback received significant bearish pressure after recent economic data shows substantial contraction in both manufacturing and services sector.
According to Markit, Manufacturing PMI for the month of February slumped down to 50.8, missing forecast of 51.5. Similarly, Services PMI contracted to 49.4, missing economists forecast of 53.0 for the month of February. Contractions shown by both sectors has raised concerns over US economic momentum which may be jeopardize by external risks such as coronavirus epidemic in China.
However, losses on the US dollar were limited after Existing Home Sales for the month of January notched up to 5.46 million units, slightly higher than forecast of 5.43 million units. Overall, demand on the US dollar remains strong as economic conditions in the United States fared better than other countries such as Eurozone and UK. For the time being, investors will continue to scrutinize upon future data releases from the United States in order to attain more market signals.
USD/JPY
Pair of USD/JPY retraced from its prior high levels and closed last week’s market at around 111.58. The demand for Japanese yen rose late last week as coronavirus cases outside of China continues to rise. According to CNN, the total of confirmed coronavirus cases in Italy has risen from 3 to 132. In the Middle East, Iran’s health ministry confirms that there are currently 43 cases of the virus, including eight deaths. Investors fear that rising cases of coronavirus in numerous countries may further jeopardize global economic growth, thus heightening the demand for safe-haven assets such as the Japanese yen.
EUR/USD
Pair of EUR/USD rebounds from its lower level last Friday while closing the market at 1.0847. Euro received significant bullish support after Eurozone Manufacturing PMI and Services PMI expands to 49.1 and 52.8 respectively, significantly higher than forecast of 47.5 and 51.0. The data shows that Eurozone has shown some signals for an economic rebound despite recent data from Germany suggests otherwise. However, its gains were limited as investors wait for further economic data from the EU in order to gauge its trend direction in the near term.
GBP/USD
Pair of GBP/USD extended its gains while closing last week’s market at 1.2956. Pound sterling received some bullish support after preliminary reading for Manufacturing PMI came in at 51.9, slightly higher than forecast of 49.7. However, gains on pound sterling were limited after preliminary reading for Services PMI in the UK depreciates slightly to 53.3, missing forecast of 53.9. Likewise, investors still remain fixated upon Brexit issues which has yet to be solved in between UK and EU, thus reducing its appeal in the FX market.
Market Review (Commodities): February 17 – 22
GOLD
Gold price extended its gains last week while closing the market at $1,665.12 a troy ounce. Demand for safe-haven continues to rise as coronavirus continues to spread outside of China with high number of cases reported in South Korea, Japan, Italy and Iran. Investors fear that the epidemic may further jeopardize the already fragile global economic momentum and thus led to a selloff of equities while shifting their focus into safe-haven market.
Crude Oil
Crude oil price continues to depreciate while closing last week market at $53.41 per barrel. Oil futures remains under pressure as global economic momentum shows signs of depreciation due to ongoing outbreak of coronavirus outside of China. Investors fear that the outbreak may jeopardize global demand towards crude oil in the long-run while at the same time lowering its prices.
In addition, oil prices received additional bearish pressure following the release of weekly report from Energy Information Administration (EIA) and Baker Hughes. According to EIA, Crude Oil Inventories in the US for last week rose 0.414 million barrels, slightly lower than forecast of 2.494 million barrels. However, the data has notched in its 4th weekly rise which shows depreciating demand in the market. On the other hand, Baker Hughes reported that the number of oil drilling rigs has rose by 1 to 679 so far.
For the time being, investors will continue to monitor upcoming weekly report from both EIA and Baker Hughes in order to attain more market signals. Likewise, they will also place their attention upon OPEC and its allies after Russia reportedly requested for more time to assess the impact of coronavirus upon global oil demand.
Weekly Outlook: February 24 – 29
For the week ahead, investors will place their attention upon major data releases from US, UK and EU in order to attain more market signals.
For the oil market, traders will place their attention upon weekly inventory reports from American Petroleum Institute (API) and Energy Information Administration (EIA) for more signals.
Highlighted economy data and events for the week: February 24 – 29
| Time | Market | Event | Actual | Forecast | Previous |
| Monday – 24 February 2019 | |||||
| 17:00 | EUR | German Ifo Business Climate Index (Feb) | – | 95.3 | 95.9 |
| Tuesday – 25 February 2019 | |||||
| 15:00 | EUR | German GDP (QoQ) (Q4) | – | 0.1% | 0.1% |
| 23:00 | USD | CB Consumer Confidence (Feb) | – | 132.0 | 131.6 |
| Wednesday – 26 February 2020 | |||||
| 05:30 | CrudeOIL | API Weekly Crude Oil Stock | – | – | 4.200M |
| 21:30 | EUR | ECB President Lagarde Speaks | – | – | – |
| 23:00 | USD | New Home Sales (Jan) | – | 715K | 694K |
| 23:30 | USD | Crude Oil Inventories | – | 2.494M | 0.414M |
| Thursday –27 February 2020 | |||||
| 21:30 | USD | Core Durable Goods Orders (MoM) (Jan) | – | 0.2% | -0.1% |
| 21:30 | USD | GDP (QoQ) (Q4) | – | 2.1% | 2.1% |
| 21:30 | USD | Initial Jobless Claims | – | 211K | 210K |
| 23:00 | USD | Pending Home Sales (MoM) (Jan) | – | 2.9% | -4.9% |
| Friday – 28 February 2020 | |||||
| 16:55 | EUR | German Unemployment Change (Feb) | – | 3K | 2K |
| 21:30 | CAD | GDP (MoM) (Dec) | – | 0.2% | 0.1% |
| 23:00 | USD | Michigan Consumer Sentiment (Feb) | – | 100.9 | 100.9 |
| 02:00
(29th) |
CrudeOIL | U.S. Baker Hughes Oil Rig Count | – | – | 679 |