28 February 2022 Weekly Analysis
GCMAsia Weekly Report: February 28 – March 04
Market Review (Forex): February 21 – 25
US Dollar
The dollar index which traded against a basket of six major currencies received significant bullish momentum last week over the backdrop of diminishing risk appetite in the global financial market following the rising tensions between Russia-Ukraine, which prompting investors to shift their portfolio toward the safe-haven asset such as US Dollar. Besides that, the US Dollar extend its gains amid bullish economic data, which increasing the odds for the Federal Reserve to implement contractionary monetary policy to combat high inflation risk. The Dollar Index has ended last week session at the price of 96.50.
Last week, the President of Russia Vladimir Putin recognized two breakaway regions in eastern Ukraine as independent while ordering the Russian army to enter Ukraine, spurring concerns upon the major war between Russia-Ukraine. Explosion rocked the breakaway eastern Ukrainian city of Donestsk and civilian aircraft were warned away as the United States claimed a major attack by Russia on Ukraine was imminent. The United States had announced several sanctions which includes restricting international transaction of 5 major Russian banks, freezing of Russian owned asset as well as halting the process of technological export into Russia for the means of military and industrial upgrades. In addition, Western governments said they would cut off a number of Russian banks from the Swift network, an international payment system. Meanwhile, the United States, European Union, United Kingdom and Canada claimed they would take measures to prevent Russia’s central bank from deploying its foreign reserves to support their currency and economy, according to the Wall Street Journal.
Nonetheless, Russian and Ukrainian officials had prepared to meet for the first time talk since the invasion begin within this week, although it’s unclear to what extent the planned negotiation could end the Russian aggression. Hence, investors as for now would continue to scrutinize the latest updates of the prospect of the relationship between Russia-Ukraine to receive further trading signal. Any rising tensions between the both countries would enhance the appeal for the safe-haven US Dollar.
USD/JPY
The pair of USD/JPY received bearish on last week amid appreciation of Japanese Yen while ending last Friday session at the price of 115.45. The safe-haven Japanese Yen received significant bullish momentum last week following the rising geopolitical tensions between Russia and Ukraine, which diminishing risk appetite in the global financial market while prompting investors to shift their portfolio toward the safe-haven asset.
EUR/USD
The pair of EUR/USD slumped throughout the week while ending last week session at the price of 1.1155. The Euro dived over the backdrop of bearish economic data as well as rising tensions between Russian and Ukraine last week. On the economic data front, Germany Manufacturing Purchasing Managers Index (PMI) notched down from the preliminary reading of 59.8 to 58.5, missing the market forecast at 59.5, according to Markit Economics. On the other hand, the Euro extend its losses amid rising geopolitical tensions around the world had stoked a shift in sentiment toward risk-free asset, which dragging down the appeal for the risky currency such as Euro.
GBP/USD
The pair of GBP/USD depreciated last week while closing its market price at 1.3340. The Pound Sterling received some bearish momentum last week amid diminishing risk appetite in the world economic following Russia unleashed their invasion toward Ukraine. Nonetheless, the losses experienced by the Pound Sterling was limited by the string of upbeat economic data. According to Markit Economics, U.K. Composite Purchasing Manager’s Index (PMI) notched up significantly from the previous reading of 54.2 to 60.2, exceeding the market forecast at 55.0, dialed up the market optimism toward the economic progression in the United Kingdom.
Market Review (Commodities): February 21 – 25
GOLD
Gold price was surged significantly last week with the price of $1905.05 per troy ounce amid risk-off sentiment in the global financial market. Earlier, the rising geopolitical tensions between Russia-Ukraine and spiking number of inflation rate had sent the gold price to 13-month highs in the past two trading session. The Russia and Ukraine showdown unlikely to end anytime soon, which dragging down the appeal for the stock while prompting investors to shift their portfolio toward the safe-haven gold. On the other hand, the US inflation rate is hitting 40 year-high, which also prompting investors to enter the gold market in order to hedge against the inflation risk.
CrudeOIL
The price of crude oil surged last week while closing last Friday session with the price of $97.30 per barrel. The crude oil price hit multi-year highs on last week following Russia unleashed their invasion on Ukraine. Concerns over the supply disruption continue to be spurring further bullish momentum on this black commodity. Nonetheless, market participants speculated that some of the supply disruption fears were overblown. The economists claimed that the latest sanction from the United States does not pose great impact toward the global economy as it only mainly focused on Russia economy, which limiting the gains experienced by the crude oil. As for now, investors would continue to scrutinize the latest updates with regards of the tensions between Russia-Ukraine to receive further trading signal.
Weekly Outlook: February 28 – March 04
For the week ahead, investors would continue to focus on crucial economic data such as the Initial Jobless Claims and inflation data this week in order to determine further direction. Besides that, the ongoing situation with Ukraine-Russia war 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: February 28 – March 04
| Time | Market | Event | Actual | Forecast | Previous |
| Monday – 28th February 2022 | |||||
| 08:30 | AUD | Retail Sales (MoM) (Jan) | – | 0.4% | -4.4% |
| Tuesday – 11st March 2022 | |||||
| 9:45 | CNY | Caixin Manufacturing PMI (Feb) | – | 49.5 | 49.1 |
| 11:30 | AUD | RBA Interest Rate Decision (Mar) | – | 0.10% | 0.10% |
| 11:30 | AUD | RBA Rate Statement | – | – | – |
| 16:55 | EUR | German Manufacturing PMI (Feb) | – | 58.5 | 58.5 |
| 17:30 | GBP | Manufacturing PMI (Feb) | – | 57.3 | 57.3 |
| 21:30 | CAD | GDP (MoM) (Dec) | – | 0.10% | 0.60% |
| 23:00 | USD | ISM Manufacturing PMI (Feb) | – | 58 | 57.6 |
| Wednesday – 2nd March 2022 | |||||
| Tentative | USD | U.S. President Biden Speaks | – | – | – |
| 8:30 | AUD | GDP (QoQ) (Q4) | – | -2.70% | -1.90% |
| 16:55 | EUR | German Unemployment Change (Feb) | – | -23K | -48K |
| 18:00 | EUR | CPI (YoY) (Feb) | – | 5.30% | 5.10% |
| Tentative | GBP | Annual Budget Release | – | – | – |
| 21:15 | USD | ADP Nonfarm Employment Change (Feb) | – | 350K | -301K |
| 23:00 | CAD | BoC Interest Rate Decision | – | 0.50% | 0.25% |
| 23:30 | USD | Crude Oil Inventories | – | – | 4.515M |
| Thursday – 3rd March 2022 | |||||
| 17:30 | GBP | Composite PMI (Feb) | – | 60.2 | 60.2 |
| 17:30 | GBP | Services PMI (Feb) | 7.00% | 60.8 | 60.8 |
| 20:30 | EUR | ECB Publishes Account of Monetary Policy Meeting | – | – | – |
| 21:30 | USD | Initial Jobless Claims | 801K | 226K | 232K |
| 23:00 | USD | Fed Chair Powell Testifies | – | – | – |
| 23:00 | USD | ISM Non-Manufacturing PMI (Feb) | – | 61 | 59.9 |
| Friday – 4th March 2022 | |||||
| 8:30 | AUD | Retail Sales (MoM) | – | – | -4.40% |
| 17:30 | GBP | Construction PMI (Feb) | – | 54.3 | 56.3 |
| 21:30 | USD | Nonfarm Payrolls (Feb) | – | 450K | 467K |
| 21:30 | USD | Unemployment Rate (Feb) | – | 3.90% | 4.00% |
| 23:00 | CAD | Ivey PMI (Feb) | – | – | 50.7 |