26 April 2021 Weekly Analysis
GCMAsia Weekly Report: April 26 – 30
Market Review (Forex): April 19 – 23
US Dollar
The dollar index which traded against a basket of six major currency pairs failed to recoup from its losses, while extending its bearish trend toward the lowest level in 7 weeks amid falling in US long term yield as well as the tensions between US and Russia heightened.
Earlier last week, US dollar was being threw off tremendously as US has imposed new sanctions on Russia for alleged malign activity including interfering in last year’s U.S. election, cyber hacking and bullying neighboring Ukraine. The exacerbating of diplomatic relationship between US and Russia has urged the market participants to temporarily avoid from the high uncertainty US market. Prior to that, President Joe Biden said he thought his Russian counterpart Vladimir Putin was a “killer”, which further deteriorate the diplomatic crisis.
On the data front, a series of upbeat economic data from US managed to limit the losses of dollar during last week trading session. According to the Department of Labor, US initial jobless claims data was came in at 547K, significantly lower than the economist forecast at 617K, indicating that the US employment market are remain resilient despite recent spike in Covid-19 cases. Moreover, upbeat housing data also triggered another round of buy-in pressure in US dollar market. According to the Census of Bureau, US New Home Sales data beat the forecast with a reading of 1,021K vs 886K respectively.
Last but not least, the falling of rate hike expectations has dragged down the US 10 years treasury yield to the lowest level since the beginning of March. As of writing, the US 10 -years treasury yield is lingering near the level of 1.5500%. In the recent speech of Fed Chairman Jerome Powell, he reiterated that no hawkish adjustment would be made as of now, rate hike and easing of bond purchase program would be considered only when the inflation and employment market condition reach their targeted sustainable level.
USD/JPY
The pair of USD/JPY plunged throughout last week while ending the market at the price of 107.85. Last week, Makoto Sakurai, a former board member of the Bank of Japan said that the central bank is unlikely to deepen its negative interest rate without seeing a massive economic crisis. Besides, the resurgence of Covid-19 in global has threaten the risk sentiment of market participants, urging large number of investors to rather hold safe haven asset such as Japanese yen.
EUR/USD
The pair of EUR/USD surged throughout the entire week while ending the week with gains at the price of 1.2090. Last week, the pair of EUR/USD received huge bullish momentum as falling of US treasury yield continue weigh on the dollar index. Besides, the hawkish tilted statement from European Central Bank (ECB) Chairman Christine Lagarde has further boosted up the value of the single currency. In the ECB press conference, President of the Bank Christine Lagarde expressed her optimism over the economic recovery of the bloc amid the assistance of ongoing Covid-19 vaccination program.
GBP/USD
The pair of GBP/USD was having mixed pattern last week while ending at the price of 1.3880. Earlier last week, the pound surged significantly amid market optimism over the reopening of economy activity in UK. Recently, most of the UK data have started to rise despite even as the economy is yet to fully reopened. Moreover, the Bank of England also expects a rapid recovery from the worst recession in three centuries while forecasting some upbeat figures could be seen in the upcoming week. However, the downbeat employment data has triggered some bearish momentum on the currency of UK last week. According to Office for National Statistics, U.K. Average Earning Index + Bonus had notched down significantly from the previous reading of 4.8% to 4.5%, missing the market forecast at 4.8%.
Market Review (Commodities): April 19 -23
GOLD
Gold price have advanced tremendously throughout last week while ending the market at the price of $1776.90. Following with the fall of US treasury yield and various risk factors such as coronavirus and vaccine side-effect, the traditional safe-haven asset gold jumped significantly. According to the Worldometer Statistics, the most infected countries such as US, France, Germany, Italy and Brazil are still facing high number of virus confirmed cases. Besides, it is noteworthy to mention that India has become the severely afflicted area as of now. During the weekend, India set a new global record of the most number of COVID-19 infections in a day, as Prime Minister Narendra Modi saying that the “storm” of infections had shaken the country.
CrudeOIL
The price of crude oil has plummeted throughout last week while ending the market with the price of 62.00 per barrel as negative inventories data followed with progressive talk between US and Iran shadowed the outlook of oil market. According to the EIA, US Crude Oil Inventories data came in at 0.594M, missing the economist forecast at -2.975M, the surprise build in US oil inventories tampered the effort of OPEC on oil production cuts. On the other sides, the talks on the Iranian nuclear deal in Vienna hit more positive notes on earlier last week while the negotiator from Tehran and Washington commented that they will continue indirect negotiations in the hope of reviving the 2015 accord. Despite that the U.S. officials say there has been no breakthrough, but they have described that the indirect discussions as “thorough” and “thoughtful.” With the backdrop of high likelihood of reviving the nuclear deal, market participants start to sell-off the oil futures while betting that Biden administration will lift the oil sanction against Iran sooner or later.
Weekly Outlook: April 26 – 30
For the week ahead, investors would continue to focus on the vaccine development, COVID-19 situation as well as Fed’s Meeting to determine the further direction.
As for oil traders, they will be also 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: April 26 – 30
| Time | Market | Event | Actual | Forecast | Previous |
| Monday – 26 April 2021 | |||||
| 16:00 | EUR | German Ifo Business Climate Index (Apr) | – | 97.8 | 96.6 |
| 20:30 | USD | Core Durable Goods Orders (MoM) (Mar) | – | 1.6% | -0.9% |
| Tuesday – 27 April 2021 | |||||
| 11:00 | JPY | BoJ Monetary Policy Statement | – | – | – |
| 11:00 | JPY | BoJ Outlook Report (YoY) | – | – | – |
| Tentative | JPY | BoJ Press Conference | – | – | – |
| 22:00 | USD | CB Consumer Confidence | – | 112.1 | 109.7 |
| Wednesday – 28 April 2021 | |||||
| 09:30 | AUD | CPI (QoQ) (Q1) | – | 0.9% | 0.9% |
| 20:30 | CAD | Core Retail Sales (MoM) (Feb) | – | 3.7% | -1.2% |
| 22:30 | CrudeOIL | Crude Oil Inventories | – | – | 0.594M |
| Thursday – 29April 2021 | |||||
| 02:00 | USD | Fed Interest Rate Decision | – | – | – |
| 02:30 | USD | FOMC Press Conference | – | – | – |
| 02:30 | USD | FOMC Statement | – | – | – |
| 15:55 | EUR | German Unemployment Change (Apr) | – | -10K | -8K |
| 20:30 | USD | GDP (QoQ) (Q1) | – | 6.5% | 4.3% |
| 20:30 | USD | Initial Jobless Claims | – | 560K | 547K |
| 22:00 | USD | Pending Home Sales (MoM) (Mar) | – | 6.0% | -10.6% |
| Friday – 30 April 2021 | |||||
| 09:30 | CNY | Manufacturing PMI (Apr) | – | 51.7 | 51.9 |
| 14:00 | EUR | German GDP (QoQ) (Q1) | – | -1.5% | 0.3% |
| 17:00 | EUR | CPI (YoY) (Apr) | – | 1.6% | 1.3% |
| 20:30 | CAD | GDP (MoM) (Feb) | – | 0.5% | 0.7% |