GCMAsia Weekly Report: April 27 – May 1
Market Review (Forex): April 20 – 24
US Dollar
The dollar index which measured its value against a basket of six major currency pairs giving up some of its previous gains and retreat while closing last Friday trading session at the price of 100.21 amid mixed sentiment of disappointing data and coronavirus that contributed to the slump of greenback.
The sentiment of the greenback was mostly negative due to a slew of weak economic data. From data perspective, U.S Markit Manufacturing PMI have fell to 36.9 from 48.5. Markit Service PMI data also slide to 27.0, lower than previous reading of 40.9. Besides that, market hopes of positive jobs data last week were also dashed after initial jobless claims in the week ending 17th April have increase by another 4.427m, weaker than market expectation of only 4.2m. Homes sales also slips by 0.627m which is lesser than economist forecast of 0.645m while durable goods order tumbled by 14.4% in February. On top of that, increasing cases of coronavirus also exert pressure for the dollar. The total number of cases in the U. S have rose from 709,201 to a staggering 963,472 almost reach 1 million in a week. The death toll also surged to 54,357. However, greenback have found some support after U.S passes new stimulus to help families and business. According to recent reports, U.S Congress have approved a new stimulus package that worth $483 billion to back small business on the brink of bankruptcy and also hospitals. The package will also have combined on top of a $2.2 trillion package that have been passed in late March.
Still, as the coronavirus are expected to surge further and threaten the U.S and global economy, investors will continue to concern and focus on the ongoing development in the U.S and also data to determine the condition of U.S economy.
USD/JPY
Pair of USD/JPY remains steady last week and edge lower while ending last Friday session at the price of 107.46. Due to the broad weakness of the greenback, the demand for the safe-haven Yen remain solid as market investors fear of worsening condition in the U.S and remain in risk-aversion mode while awaiting further directional signal.
EUR/USD
Pair of EUR/USD fell in overall last week, but recoup some of the losses on Friday while closing last week session at the price of 1.0822. The selling pressure for Euro last week was mostly due to negative data in the EU. Germany’s GfK Consumer Climate and IFO Business Climate Index both fell to record lows. On top of that, EU ministers also failed to agreed once again to deliver a long-term aid package, which exert further pressure for the pair.
GBP/USD
The pair of GBP/USD also weak in overall throughout the entire week while closing its market at 1.2364. Due to disappointing data in the U.K last week, the pound sterling was mostly sold by investors. Service sector activity came to a standstill in April, with the PMI tumbling from 34.5 to 12.3. Manufacturing sector activity also fell from 47.8 to 32.9. Besides that, the upward trend in new coronavirus cases also weighed on the pound sterling where the total coronavirus cases in U.K now stands at 148,377.
Market Review (Commodities): April 20 – 24
GOLD
The price of gold remains steady and traded higher in overall last week, closing its market with the price of $1728.25 a troy ounce. Following risk-off mood in the market coupled with increasing risk of coronavirus in the U.S, the demand for the safe-haven gold remain high and market continue to shifting their assets into safe-haven markets, especially in gold. Besides that, India, one of the largest gold consumers in the world is expected to purchase more gold following Akshaya Tritiya 2020. Other central banks like Turkey, Russia, Mongolia have also been adding gold to their reserves which help drive the price higher.
CrudeOIL
The crude oil price has stabilized last week and rebound from its lows while closing last Friday session with $17.05 per barrel following positive news such as deeper output cuts. Besides that, the renewed tension between U.S and Iran last week also help the commodity to caught some bid last week.
Earlier last week, some producers like Kuwait said they would move to cut output swiftly to try to counter the evaporation in global demand for fuels caused by the coronavirus pandemic. Kuwait’s state news agency KUNA also stated on Thursday that the producer will begin cutting supplies to international markets without waiting for the official start of the OPEC+ deal. The Organization of the Petroleum Exporting Countries and other oil producing nations, a grouping known as OPEC+, also previously agreed to cut output by a record 9.7 million bpd, around 10% of global supply. Renewed tension between Iran and U.S have also help assist in comeback for the commodity. According to recent reports, U.S. President Donald Trump have stated that he had instructed the U.S. Navy to fire on any Iranian ships that harass it in the Gulf. The head of Iran’s Revolutionary Guards also stated that Tehran will destroy U.S. warships if its security is threatened in the Gulf.
However, due to the ongoing coronavirus that continue to destroy the demand for the commodity, the upside potential remains capped as investors are now focus on further development and inventories level to determine the direction for the commodity in the future.
Weekly Outlook: April 27 – May 1
For the week ahead, investors would continue to monitor the latest developments with regards of the outbreak of the coronavirus and important economic data such as U.S GDP and Fed interest rate decision from Fed to gauge further sentiment.
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. On top of that, investors will also be starting to focus on the tension between U.S and Iran.
Highlighted economy data and events for the week: April 27 – May 1
| Time | Market | Event | Actual | Forecast | Previous |
| Tuesday –28 April 2020 | |||||
| 11.00 | JPY | BoJ Monetary Policy Statement | – | – | – |
| 11.00 | JPY | BoJ Outlook Report (YoY) | – | – | – |
| 15.00 | JPY | BoJ Press Conference | – | – | – |
| 22.00 | USD | CB Consumer Confidence (Apr) | – | 88.0 | 120.0 |
| Wednesday – 29 April 2020 | |||||
| 06.45 | NZD | Employment Change (QoQ) (Q1) | – | 0.3% | 0.2% |
| 09.30 | AUD | CPI (QoQ) (Q1) | – | 0.2% | 0.7% |
| 20.30 | USD | GDP (QoQ) (Q1) | – | -4.0% | 2.1% |
| 22.00 | USD | Pending Home Sales (MoM) (Mar) | – | -10.0% | 2.4% |
| 22.30 | CrudeOIL | Crude Oil Inventories | – | 15.150M | 15.022M |
| Thursday – 30 April 2020 | |||||
| 02.00 | USD | FOMC Statement | – | – | – |
| 02.00 | USD | Fed Interest Rate Decision | – | 0.25% | 0.25% |
| 10.00 | USD | FOMC Press Conference | – | – | – |
| 09.00 | CNY | Manufacturing PMI (Apr) | – | 51.0 | 52.0 |
| 15.55 | EUR | German Unemployment Change (Apr) | – | 75K | 1K |
| 17.00 | EUR | CPI (YoY) (Apr) | – | 0.1% | 0.7% |
| 19.45 | EUR | Deposit Facility Rate (Apr) | – | -0.50% | -0.50% |
| 19.45 | EUR | ECB Marginal Lending Facility | – | – | 0.25% |
| 19.45 | EUR | ECB Monetary Policy Statement | – | – | – |
| 19.45 | EUR | ECB Interest Rate Decision (Apr) | – | – | 0.00% |
| 20.30 | USD | Initial Jobless Claims | – | 3500K | 4427K |
| 20.30 | CAD | GDP (MoM) (Feb) | – | 0.1% | 0.1% |
| 20.30 | EUR | ECB Press Conference | – | – | – |
| Friday– 1 May 2020 | |||||
| 16.30 | GBP | Industrial Production (YoY) (Mar) | – | 32.8 | 32.9 |
| 22.00 | USD | CPI (YoY) (Mar) | – | 36.7 | 49.1 |