25 March 2019 Weekly Analysis
GCMAsia Weekly Report: March 25 – 29
Market Review (Forex): March 18 – March 22
US Dollar
Dollar index was traded mixed throughout the week while managed to close last week’s market higher at 96.04. Sentiment for the dollar market was mixed last week following dovish Fed and upbeat economic data.
Earlier last week, the greenback underwent a large sell-off following FOMC Statement and their press conference which delivered a very dovish note to the market. With previous downbeat data, the Fed canceled their dot plot plan for interest rate hike this year, removing chances of any rate hike this year. Besides that, the Fed also narrowed the amount of its maturing securities to roll off each month from $4.5 million to $4 million, indicating further slowdown in its economy. Investors reacted quickly by exiting the market and entering into safe-haven assets such as Japanese Yen and gold. However, later that week, dollar was being supported by upbeat Philadelphia Manufacturing Index and Existing Home Sales which was recorded at 13.7 vs 4.6 and 5.51M vs 5.10M respectively.
In conclusion, dollar remained pressured by dovish statement regarding their economy and also the inverted government bond yield which further signal a possible recession in its economy. Investors will now focus on US-Sino trade war developments and key data such as GDP and CB Consumer Confidence to further gauge index movement.
USD/JPY
USD/JPY shifted to downward trend after hitting 3 months high while closing last Friday market at the price of 109.90. The pair of USD/JPY faced a huge sell off following dovish stance from Fed Meeting last Thursday. According to Fed Chairman Jerome Powell, US central bank’s monetary policy stance has been changed from tightening to neutral stance, ruling out the possibility of interest rate hike in year 2019. Such dovish move triggered Investor negative sentiment toward the Dollar market and thus shifted their portfolio to safe haven asset such as Japanese Yen and Gold.
EUR/USD
Overall, Euro was traded lower for last week while closing last Friday’s market at 1.1300. The pair was gaining earlier last week following dovish Fed statement, however shifted its momentum into a bearish stance later that week following prior record low of German Manufacturing PMI. The data signaled dovish economy outlook for the Euro Zone while reaffirming ECB’s plan to delay monetary policy tightening.
GBP/USD
Pound sterling extended its losses throughout last week while closing last Friday’s market at 1.3215. The single currency was being pressured by Brexit uncertainties earlier last week before the 27 EU Leaders Summit, while also weighing on the pound was poor Claimant Count Change with a reading of 27.0K, missing its expectations of 13.1K. However, the pair managed to pair part of its losses following European Union’s decision to allow an extension of Article 50 up to 22nd May if Prime Minister Theresa May is able to pass a last vote on her Brexit deal. However, if a deal is not approved, the extension of Brexit will only be allowed until 12th April where UK will need to decide on a no-deal Brexit or to join in the next European elections for a longer delay. Overall, the movement of the pair varies strongly on the developments of the Brexit which is expected to bring a large impact into the market.
Market Review (Commodities): March 18 – 22
GOLD
Gold price have advanced throughout last week, closing last Friday trading session at the price of 1313.40. Investor demand on gold continues to rise amid unexpected dovish note from Federal Reserve. US central bank decided to leave it cash rates unchanged while cutting its economic growth outlook on US economy due to the concerns of downturn in economy. In addition, pound market remained pressure as the development of Brexit did not went smooth after EU leader rejected the extension of Brexit deadline to mid of June. Thus, it further deteriorating the risk appetite of market participants and boosting the demand for the yellow metal. As of now, Market continue to focus on Brexit and Trade-Sino upcoming developments to gauge the direction of gold.
Crude Oil
Crude oil price managed to hold its ground throughout the entire week while closing the market at $58.93 per barrel. In earlier of the week, crude oil received a huge demand following API weekly data showed that US government has further tighten their local oil inventories level. Besides, EIA crude oil inventories data has also supported the crude oil price and pushed it up higher. The data came in at reduction of 9.589M, as compared to economist forecast of inventory build-up at 0.309M where it implies that the demand of crude oil has been strengthen. Moreover, Iran oil export reports has been also act as a catalyst that further heighten crude oil prices. According to the report, Iran’s oil exports have dropped in March to their lowest daily level this year before US formally requires other importing countries to follow US sanctions by reducing purchases of crude oil. However, crude oil undergo large sell off in later of the week amid bearish outlook over global economic regression and lack of progress in trade talk between two strongest economies, US and China.
In conclusion, investor remain focus on the development of trade issue between US and China and global economic outlook while awaiting further catalyst that could stimulate the crude oil sentiment.
Weekly Outlook: March 25 – 29
For the week ahead, investor’s will shift their attention towards a third Brexit vote and also important economic data such as US GDP and CB Consumer Confidence data.
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: March 25 – 29
| Monday, March 25 |
Data EUR – German Ifo Business Climate Index
Events N/A
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| Tuesday, March 26 |
Data NZD – Trade Balance (MoM) (Feb) USD – Building Permits (Feb) USD – CB Consumer Confidence
Events N/A
|
| Wednesday, March 27 |
Data CrudeOIL – API Weekly Crude Oil Stock NZD – RBNZ Interest Rate Decision CrudeOIL – Crude Oil Inventories
Events NZD – RBNZ Rate Statement NZD – RBNZ Press Conference EUR – ECB President Draghi Speaks
|
| Thursday, March 28 |
Data USD – GDP (QoQ) (Q4) USD – Pending Home Sales (MoM) (Feb) USD – Initial Jobless Claims
Events N/A
|
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Friday, March 29
|
Data EUR – German Unemployment Change GBP – GDP (YoY) (Q4) GBP – GDP (QoQ) (Q4) EUR – CPI (YoY) (Mar) CAD – GDP (MoM) (Jan) USD – New Home Sales (Feb) USD – Michigan Consumer Sentiment CrudeOIL – US Baker Hughes Oil Rig Count
Events NZD – RBNZ Gov Orr Speaks
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