26 July 2021 Weekly Analysis
GCMAsia Weekly Report: July 26 – 30
Market Review (Forex): July 19 – 23
US Dollar
The dollar index which traded against a basket of six major currency pairs slumped over the backdrop of string of negative economic data from the region of United States last week, which diminishing market optimism toward the economic progression in United States. Nonetheless, the losses experienced by the US Dollar was limited amid optimism toward the new infrastructure spending bill from US President Joe Biden. The Dollar Index was closing its price on last Friday session at the price of 92.80.
On the economic data front, the Census Bureau reported that U.S. Building Permits had notched down significantly from the previous reading of 1.683M to 1.598M, missing the market forecast at 1.700M. Besides, the U.S. Initial Jobless claims and U.S. Existing Home Sales came in at 419K and 5.86M, which both fared worse than market expectation at 350K and 5.90M respectively. As most of the crucial economic data were fared worse-than-expectation, which insinuating hopes that the Federal Reserve might continue their expansionary monetary policy to boost up the economic momentum in the United States. Aggressive monetary policy would increase the money circulation in the financial market, which dragged down the appeal of the US Dollar. Though, the positive outlook for the new infrastructure spending had limited the losses experienced by the US Dollar. US Senate, Democratic Senator Joe Manchin claimed that the US administration are very close to achieve on the bipartisan infrastructure plan. Analysts speculated that such infrastructure plan would able to enhance the economic growth in the United States.
As for now, investors would continue to scrutinize the latest updates with regards of the FOMC meeting, crucial economic data as well as Covid-19 development in this week 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 110.55. The overall bullish momentum for the pair of USD/JPY was mainly due to the depreciation of the Japanese Yen. The safe-haven currency Japanese Yen received significant bearish momentum following the global stock market stabilized as investors remained optimism toward the economic outlook in global economy, which prompting investors to shift their portfolio from risk-free asset into another risky asset.
EUR/USD
The pair of EUR/USD slumped throughout the week while ending last week session at the price of 1.1800. The Euro received bearish momentum following European Central Bank unleashed their dovish stance last week. As expected, the ECB maintained its interest rates and monetary policy settings unchanged. However, the ECB has announced new guidelines for monetary policy by allowing inflation to however above the 2% target in longer-term basis. The action was taken after the ECB expect the rise in inflation was temporary and they wanted to ensure that all aspects of economy had recovered significantly before tightening its monetary policy.
GBP/USD
The pair of GBP/USD was traded flat last week while closing its market price at 1.3735. Pound Sterling was traded flat on last Friday over the backdrop of mixed economic data from the United Kingdom. According to Office for National Statistics, U.K. Retail Sales MoM had notched up significantly from the previous reading of -1.3% to 0.5%, exceeding the market forecast at 0.4%, which indicating that the economic momentum had started to improve slowly following the lockdown restriction was eased. Nonetheless, the gains experienced by the Pound Sterling was limited following the negative PMI data was released. Markit Economics reported that the U.K. Composite Purchasing Managers’ Index (PMI) declined significantly from the preliminary reading of 62.2 to 57.7, missing the market forecast at 61.9. Meanwhile, U.K. Manufacturing Purchasing Managers Index (PMI) and U.K. Services Purchasing Managers Index (PMI) both came in at 60.4 and 57.8, which also worse than market expectation at 62.7 and 62.0 respectively
Market Review (Commodities): July 19 – 23
GOLD
Gold price slumped tremendously last week with the price of $1806.35 per troy ounce amid the risk-on sentiment in the FX market following the global stock market rebounded significantly amid positive prospect for the global Covid-19 vaccination program. Investors had shifted their portfolio from the risk-free asset such as gold into other riskier equity market. Nonetheless, before the FOMC released its report, the overall movement for the gold market remained subdued. As for now, investors would continue to scrutinize the latest updates with regards of Covid-19 development and FOMC updates to gauge the likelihood movement for this safe-have commodity.
CrudeOIL
The price of crude oil surged significantly last week while closing last Friday session with the price of $71.65. The crude oil price received bullish momentum amid technical correction following it suffered huge drop in the earlier this week. Market participants remained optimism that the rapid process of the vaccination would able to enhance the oil demand in future. Nonetheless, the gains experienced by the crude oil was limited over the backdrop of bearish inventory data. According to Energy Information Administration, the U.S. Crude Oil Inventories came in at 2.108M, worse than the market forecast at -4.466M.
Weekly Outlook: July 26 – 30
For the week ahead, investors would continue to focus on crucial economic data such as USD GDP 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: July 26– 30
| Time | Market | Event | Actual | Forecast | Previous |
| Monday – 26th July 2021 | |||||
| 16:00 | EUR | German Ifo Business Climate Index (Jul) | – | 102.1 | 101.8 |
| 22:00 | USD | New Home Sales (Jun) | – | 800K | 769K |
| Tuesday – 27th July 2021 | |||||
| 20:30 | USD | Core Durable Goods Orders (MoM) (Jun) | – | 0.80% | 0.30% |
| 22:00 | USD | CB Consumer Confidence (Jul) | – | 124.1 | 127.3 |
| Wednesday – 28th July 2021 | |||||
| 09:30 | AUD | CPI (QoQ) (Q2) | – | 0.70% | 0.60% |
| 20:30 | CAD | Core CPI (MoM) (Jun) | – | 0.40% | 0.40% |
| 22:30 | USD | Crude Oil Inventories | – | – | 2.108M |
| Thursday – 29th July 2021 | |||||
| 02:00 | USD | FOMC Statement | – | – | – |
| 02:00 | USD | Fed Interest Rate Decision | – | – | 0.25% |
| 02:30 | USD | FOMC Press Conference | – | – | – |
| 15:55 | EUR | German Unemployment Change (Jul) | – | -25K | -38K |
| 20:30 | USD | GDP (QoQ) (Q2) | – | 8.60% | 6.40% |
| 20:30 | USD | Initial Jobless Claims | – | – | 419K |
| 22:00 | USD | Pending Home Sales (MoM) (Jun) | – | 0.50% | 8.00% |
| Friday – 30th July 2021 | |||||
| 14:00 | EUR | German GDP (QoQ) (Q2) | – | 2.00% | -1.80% |
| 17:00 | EUR | CPI (YoY) (Jul) | – | 2.00% | 1.90% |
| 20:30 | CAD | GDP (MoM) (May) | – | -0.30% | -0.30% |