27 September 2021 Weekly Analysis
GCMAsia Weekly Report: September 27 – October 1
Market Review (Forex): September 20 – 24
US Dollar
The dollar index which traded against a basket of six major currency pairs surged significantly last week over the backdrop of bullish economic data from United States last week, dialed up the market optimism toward the economic progression in the United States. The Dollar Index was closing its price on last Friday session at the price of 93.20.
Last week, the overall trend for the US Dollar remained bullish, bolstered by the upbeat economic data as well as hawkish expectation that the Federal Reserve might start to reduce its bond buying program by the end of the year. According to Census Bureau, U.S. Building Permits notched up significantly from the previous reading of 1.630M to 1.728M, exceeding the market forecast at 1.600M. In addition, Census Bureau reported that the U.S. New Home Sales notched up from the previous reading of 729K to 740K, better than the market forecast at 714K, which spurring positive prospect toward the economic momentum in the United States. Besides, the US Dollar extend tis gains following the Fed’s member unleashed their hawkish tone toward the economic progression in the United States. According to Reuters, Kansas City Fed President Esther George claimed that the U.S. labor market has already met the central bank’s target to taper its monthly bond purchases. Besides,
Cleveland Fed President Loretta Mester also reiterated that the central bank could start increasing the interest rates by the end of next year if the job market continues to improve significantly. On the other hand, the safe-haven US Dollar received further bullish momentum following the diminishing risk appetite in the FX market amid the debt crisis at China’s biggest property developer, Evergrande, which prompting investors to shift their portfolio from other risky asset into safe-haven asset such as US Dollar.
Nonetheless, since the earlier statement from the Federal Reserve remained vague, investors would be suggested to continue to scrutinize the latest updates with regards of the crucial economic data as well as future Fed’s monetary policy decision 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 109.90. The overall bullish momentum for the pair of USD/JPY last week was mainly due to the appreciation of US Dollar. Nonetheless, the gains experienced by the USD/JPY was limited by the appreciation of Japanese Yen due to risk-off sentiment. The safe-haven Japanese Yen received significant bullish momentum following troubles at property group China Evergrande had spurred concerns over the spillover effect into the global economy, which stoked a shift in sentiment from the riskier asset into other safe-haven asset such as Japanese Yen and Swiss Franc. Besides, market participants speculated the Federal Reserve might be unleashing their hawkish tone during the FOMC meeting. Higher interest rate expectation tends to negatively affect earnings and the company intrinsic value, which weighing down the global stock market while increase the appeal of the safe-haven Japanese Yen.
EUR/USD
The pair of EUR/USD slumped throughout the week while ending last week session at the price of 1.1710. The overall bearish momentum for the pair of EUR/USD last week was mainly due to the appreciation of the US Dollar. Nonetheless, due to lack of catalyst for the European market, the overall trend for the Euro remained subdued. Investors would continue to scrutinize the latest updates with regards of future economic data to receive further trading signal.
GBP/USD
The pair of GBP/USD had surged last week while closing its market price at 1.3680. Pound Sterling surged following the Bank of England unleashed their hawkish tone last week. The Bank of England continue to set their monetary policy to meet the 2% inflation target, and in a way to boost economic growth and employment rate. The Monetary Policy Committee (MPC) voted unanimously to maintain the interest rate at 0.1% while continuing with its existing program of UK government bond purchases. On the inflation front, the BoE warned that the consumer prices were likely to climb to “slightly above” 4% this year, double its target level, which increasing hopes for the BoE to be tightening its monetary policy to combat the high inflation risk in future. Nonetheless, the gains experienced by the Pound Sterling was limited by the bearish economic data. According to Markit Economics, U.K. Manufacturing Purchasing Managers’ Index (PMI) notched down from the previous reading of 60.3 to 56.3, missing the market forecast at 59.0.
Market Review (Commodities): September 20 – 24
GOLD
Gold price have surged significantly last week with the price of $1760.00 per troy ounce amid the risk-off sentiment in the global financial market following troubles at property group China Evergrande had spurred concerns over the spillover effect into the global economy, which stoked a shift in sentiment from the riskier asset into other safe-haven asset such as gold. According to Reuters, China Evergrande Group, the second largest property company in China has more than $300 billion in liabilities, and reports suggest the company unable to repay its interest payment deadline on its offshore bonds. Failure of debt repayments could force the company into bankruptcy, sparking a wider liquidity crisis in real estate sector.
CrudeOIL
The price of crude oil surged significantly last week while closing last Friday session with the price of $71.80. The oil market maintained its bullish trend, supported by favorable demand outlooks following the rapid Covid-19 vaccination program around the world. Besides, the crude oil price extends its gains over the backdrop of upbeat inventory data last week. According to Energy Information Administration (EIA), U.S. Crude Oil Inventories came in at -3.481M, better than the market forecast at -2.440M.
Weekly Outlook: September 27 – October 1
For the week ahead, investors would continue to focus on crucial economic data such as the US Initial Jobless Claims 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: September 27 – October 1
| Time | Market | Event | Actual | Forecast | Previous |
| Monday – 27th September 2021 | |||||
| 19:45 | EUR | ECB President Lagarde Speaks | – | ||
| 20:30 | USD | Core Durable Goods Orders (MoM) (Aug) | – | 0.50% | 0.80% |
| Tuesday – 28th September 2021 | |||||
| 02:00 | GBP | BoE Gov Bailey Speaks | – | – | – |
| 09:30 | AUD | Retail Sales (MoM) (Aug) | – | -2.50% | -2.79% |
| 20:00 | EUR | ECB President Lagarde Speaks | – | – | – |
| 22:00 | USD | CB Consumer Confidence (Sep) | – | 114.5 | 113.8 |
| 22:00 | USD | Fed Chair Powell Testifies | – | – | – |
| Wednesday – 29th September 2021 | |||||
| 22:00 | USD | Pending Home Sales (MoM) (Aug) | – | 1.30% | -1.80% |
| 22:30 | USD | Crude Oil Inventories | – | – | -3.481M |
| 23:45 | GBP | BoE Gov Bailey Speaks | – | – | – |
| 23:45 | USD | Fed Chair Powell Speaks | – | – | – |
| 23:45 | EUR | ECB President Lagarde Speaks | – | – | – |
| Thursday – 30th September 2021 | |||||
| 09:00 | CNY | Manufacturing PMI (Sep) | – | 50.2 | 50.1 |
| 09:45 | CNY | Caixin Manufacturing PMI (Sep) | – | 49.6 | 49.2 |
| 14:00 | GBP | GDP (QoQ) (Q2) | – | 4.80% | 4.80% |
| 15:55 | EUR | German Unemployment Change (Sep) | – | -35K | -53K |
| 20:30 | USD | GDP (QoQ) (Q2) | – | 6.60% | 6.60% |
| 20:30 | USD | Initial Jobless Claims | – | 328K | 351K |
| Friday – 1st October 2021 | |||||
| 07:50 | JPY | Tankan Large Manufacturers Index (Q3) | – | 13 | 14 |
| 07:50 | JPY | Tankan Large Non-Manufacturers Index (Q3) | – | 3 | 1 |
| 15:55 | EUR | German Manufacturing PMI (Sep) | – | 58.5 | 58.5 |
| 16:30 | GBP | Manufacturing PMI (Sep) | – | 56.3 | 56.3 |
| 17:00 | EUR | CPI (YoY) (Sep) | – | 3.30% | 3.00% |
| 20:30 | CAD | GDP (MoM) (Jul) | – | -0.20% | 0.70% |
| 22:00 | USD | ISM Manufacturing PMI (Sep) | – | 59.5 | 59.9 |