27 July 2020                Weekly Analysis

GCMAsia Weekly Report: July 27 – Aug 01

Market Review (Forex): July 20 – 25

US Dollar

The dollar index which traded against a basket of six major currency pairs slumped last week amid accelerating trade tensions between US and China as well as the resurgence of the coronavirus in the United Stated, spurring negative prospect toward the U.S. economy recovery while prompting investors to sell off significantly the investment in United Stated. The dollar index was closing its price on last Friday session at the price of 94.25.

 

On the economic front, most of the economic data from United States region were dominated by negative data on last week. According to Department of Labour, the U.S. Initial Jobless Claims had notched up from the previous reading of 1,307K to 1,416K, worse than the forecast at 1,300K. Similarly, the U.S. Existing Home Sales came in at only 4.72M, worse than the market forecast at 4.78M. As both of the economic data were fared worse than expectation, which dialing down the market optimisms toward the economic progression from the Unites States while providing bearish momentum on the US Dollar.

 

Besides that, US Dollar extend its losses following tit-for-tat consulate closures in China and United States. According to Reuters, the Staff of the U.S. consulate in Chengdu were making final efforts to clear out ahead of a Monday deadline to shut the outpost in response to the U.S. ordering China’s Houston consulate to close amid allegation of data stealing. Hence, such sentiment had provided negative prospect for the United States while diminishing demand for the US Dollar. Moreover, the resurgence of the coronavirus from the United States after several economic sector re-opening had prompted investors to doubt toward the efficiency of the economic recovery from the United States. According to Worldometer.com, the WHO has reported the largest single-day increase in coronavirus cases by its count, at more than 220,000 people at 24 hours. United Stated led the way with 56,130 cases increment while the while the virus had killed more than 1000 people in single day in the United States. Nonetheless, as for now investors would continue to scrutinize the latest updates with regards of the vaccine development for the coronavirus as well as the relationship between United States and China in order to gauge the likelihood movement for the pair.

 

USD/JPY

Pair of USD/JPY was traded lower last week while ending last Friday session at the price of 105.85. The safe-haven Japanese Yen received significant bullish momentum on last week amid the spiked of the coronavirus from the global condition as well as the worsening trade relationship between United States and China, which stoked a shift in sentiment toward safe-haven currency while insinuating demand for the Japanese Yen.

 

EUR/USD

Pair of EUR/USD slumped on last week while closing last Friday’s trading session with the price of 1.1650. The overall bullish momentum of the pair was mostly due to the weakening in the rival currencies, especially in US Dollar. Besides, the Euro extend its gains following the European Union countries had achieved the consensus on the 750 billion-euro recovery fund in order to revive the economies that have been damaged significantly by the coronavirus pandemics. Such sentiment had boost up the market confidence toward the economic recovery from the European region, while sparkling the demand on the Euro.

 

GBP/USD

The pair of GBP/USD slumped on last week while closing its market at 1.2795. The overall bullish momentum for the pair was mainly due to the depreciation of the US Dollar. Besides, the Pound Sterling received further bullish momentum over the backdrop of the string of positive economic data from the UK region. According to the Office for National Statistics, the U.K. Retail Sales for last month had notched up from the previous reading of 12.35 to 13.9%, exceeding the market forecast at 8.0%. In fact, the Markit Economics reported that the U.K. Composite Purchasing Managers’ Index (PMI) had increased from the previous reading of 47.7 to 57.1, which also much better than the market forecast at 51.1. Nonetheless, the lack of the progress over the Brexit talks had left scant hope on soft-Brexit, while limiting the gains experienced by the Pound Sterling. Hence, investors would be eyed on the Brexit development in order to receive further trading signal for the Pound Sterling.

 

Market Review (Commodities): July 20 – 25

GOLD

Gold price was traded higher in overall last week while closing its market on Friday at $1913.55 per troy ounce. The gold market hit an all-time high on Monday amid the worsening relationship between the both largest economic U.S. and China, which boosting the appeal of the save-haven commodities. According to Reuters, the Washington had ordered China’s consulate in Houston to close, prompting Beijing to react in kind of tit-for-tat by closing the U.S. consulate in Chengdu today. Besides, the hope of a quick U.S. economic recovery is fading as coronavirus infections had spiked up unstoppable in the United States, which spurring further demand on the safe-haven commodity.

 

CrudeOIL

The crude oil price slumped on last week while closing last Friday session with $40.75 per barrels. The oil market was traded lower amid spiked up of the coronavirus infections and negative crude oil inventory, dimming the demand outlook for this black-commodity. According to Energy Information Administration (EIA), the U.S. Crude oil inventories increased significantly from the previous reading of -7.493M to 4.892M, exceeding the economist forecast at -2.088M. In fact, the U.S. Oil Rig Count rose last week for the first week, indicating the supply for the crude oil might be increasing in future. Meanwhile, investors worried that the record rise in global coronavirus cases as well as the trade tensions between United States and China could continually weigh the market demand on this black-commodity market. Hence, due to uncertainty with regards of the coronavirus outlook as well as trade tensions between US and China, investors would continue to focus on ongoing news to receive further trading signals for the direction.

 

Weekly Outlook: July 27 – Aug 01

For the week ahead, investors would have to scrutinize the latest developments with regards of the outbreak of the coronavirus, trade tensions between U.S. and China and also crucial economic data such as Canada GDP in order to receive further trading signals.

 

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 27 – 31

Time Market Event Actual Expectation Previous
Monday – 27th July 2020
16:00 EUR German Ifo Business Climate Index (Jul) 89.3 86.2
20:30 USD Core Durable Goods Orders (MoM) (Jun) 3.5% 3.7%
Tuesday –28th July 2020
22:00 USD CB Consumer Confience (Jul) 94.5 98.1
Wednesday – 29th July 2020
09:30 AUD CPI (QoQ) (Q2) -2.0% 0.3%
22:00 USD Pending Home Sales (MoM) (Jun) 15.3% 44.3%
22:30 CrudeOIL EIA Crude Oil Inventories -2.088M 4.892M
Thursday – 30th July 2020
02:00 USD FOMC Statement
02:00 USD Fed Interest Rate Decision 0.25% 0.25%
02:30 USD FOMC Press Conference
15:55 EUR German Unemployment Change (Jul) 45K 69K
16:00 EUR German GDP (QoQ) (Q2) -9.0% -2.2%
20:30 USD GDP (QoQ) (Q2) -34.0% -5.0%
20:30 USD Initial Jobless Claims 1,400K 1,416K
Friday – 31th July 2020
09:00 CNY Manufacturing PMI (Jul) 51.0 50.9
17:00 EUR CPI (YoY) (Jul) 0.2% 0.3%
20:30 CAD GDP (MoM) (May) 3.5% -11.6%