28th March 2022 Weekly Analysis
GCMAsia Weekly Report: March 28 – April 1
Market Review (Forex): March 21 – 25
US Dollar
The Dollar Index which traded against a basket of six major currencies received significant bullish momentum last week amid the backdrop of hawkish tone from Federal Reserve. Besides, the rising tensions between Russia and Ukraine prompted investors to shift their capitals toward safe-haven asset, spurred further upward momentum on US Dollar. The Dollar Index has closed its market price at 98.82.
Last week, Federal Reserve Chair Jerome Powell unleashed his hawkish tone, sparking bets of more aggressive interest hikes while prompting investors to shift their portfolio toward US Dollar. Investors are expecting about 60.7% chance of a 50-basis point rate hike during the next monetary policy meeting at May, notched up from about 52% before Powell’s comments. The US 10-year Treasury yield hit 2.28%, the highest since the year of 2019. Besides, Federal Reserve Chair Jerome Powell also reiterated that the US central bank must move quickly to stabilize the spiking number of inflation risks, adding that they could use a more aggressive tightening monetary policy if needed.
On the Russia-Ukraine conflict, according to CNBC, Secretary General Jens Stoltenberg appeared a speak that NATO committed extra troops along its eastern flank. The UK and US rolled out more sanctions against Russian elites and government officials, while the US announced billions more in aid and said it would take up to 100,000 Ukraine refugees. The rising tensions had led to the spike of commodities price such as crude oil and wheat, adding the chances of surging inflation risk. It increased the odds of Federal Reserve to impose an aggressive tightening monetary policy in order to combat inflation risk, dialed up the market optimism toward safe-haven Dollar.
USD/JPY
The pair of USD/JPY surged last week while closing its market price at 122.06. The pairing received bullish momentum amid the backdrop of Federal Reserve Chair Jerome Powell released his hawkish tome on 21 March 2022, which sparked hopes upon faster tightening monetary policy. He also reiterated that US central bank desire to stabilize the soar of inflation risk by taking necessary step upon rate hike, prompting investors to shift their capitals toward US Dollar and selloff Japanese Yen, spurring further upward momentum on the pair.
EUR/USD
The pair of EUR/USD slumped last week while closing its market price at 1.0983. The Euro received bearish momentum amid the backdrop of European Union to mull Russian oil embargo. According to Reuters, European Union governments was consider whether to impose an oil ban on Russia over its invasion of Ukraine as they gather last week with U.S. President Joe Biden for a series of summits designed to harden the West’s response to Moscow. Besides, the EU and allies have already imposed a panoply of measures against Russia, including freezing its central bank’s assets. Nonetheless, the losses of Euro was limited following European Union accepting US commodities. According to Reuters, the European Union and United States are set to unveil a deal on Friday to supply Europe with more U.S. liquefied natural gas (LNG), as the European bloc seeks to quickly curb its reliance on Russian fossil fuels. President Joe Biden, who attended the EU leaders summit in Brussels on 24 March 2022, promised the United States would deliver at least 15 billion cubic metres (bcm) more LNG to Europe this year than planned before.
GBP/USD
The pair of GBP/USD appreciated last week while ending last week session at the price of 1.3182. The overall trend for Pound remained bullish last week following sparking hopes of Bank of England rate hike upon inflation risk. According to Reuters, the Pound could mount a further recovery against US Dollar on Wednesday, and is poised for wild swings as data showing inflation remains red-hot could renew bets on Bank of England rate hikes. Nonetheless, Pound retreated its overnight gains over the backdrop of negative economic prospect as the announcement of fiscal policy from UK Chancellor Rishi Sunak’s failed to impress investors. Chancellor Rishi Sunak had announced the implementation of a fuel duty tax cut on 23 March 2022, a lift to the tax-free earnings threshold, a slight reduction to the tax rate for the bottom bracket and new support for businesses. Investors speculated that such new policies would not do much to improve the weak outlook for the UK economy as the high inflation risk continue to hover in in the market.
Market Review (Commodities): March 21 – 25
GOLD
Gold price rallied last week while closing its market price at $1957.75 per troy ounces. Gold price received bullish momentum last week following the rising tensions between Russia-Ukraine. According to CNBC, Secretary General Jens Stoltenberg appeared a speak that NATO committed extra troops along its eastern flank. The UK and US rolled out more sanctions against Russian elites and government officials, while the US announced billions more in aid and said it would take up to 100,000 Ukraine refugees. Besides, US President Joe Biden sent Russian leader Vladimir Putin a stern warning, saying NATO would respond “in kind” if Russia uses chemical or biological weapons in Ukraine.
CrudeOIL
Crude oil price depreciated while ending last week session at the price of $112.58 per barrel. Crude oil price received downward momentum amid the backdrop of surging cases of Covid-19 in China. According to Bloomberg, China is now in the midst of its worst wave since the initial outbreak in Wuhan, after conquering the pandemic for almost two years with a zero-tolerance approach. Shanghai reported a daily record of 1,609 cases, while almost 80% of the economy has been affected in some way. The soar of Covid-19 cases had caused China government decided to lockdown and suspended its economic activities, causing the dependent of oil to diminish. On the other hand, according to Reuters, the European Union and United States are set to unveil a deal on Friday to supply Europe with more U.S. liquefied natural gas (LNG). President Joe Biden, who attended the EU leaders summit in Brussels on 24 March 2022, promised the United States would deliver at least 15 billion cubic metres (bcm) more LNG to Europe this year than planned before. As the supply of commodities increased, it put pressure on the oil price and leading to the slump of oil price.
Weekly Outlook: March 28 – April 1
For the week ahead, investors would continue to focus on crucial economic data such as the Initial Jobless Claims and Fed monetary policy decision 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: March 28 – April 1
| Time | Market | Event | Actual | Forecast | Previous |
| Monday – 28th March 2022 | |||||
| 19:00 | GBP | BoE Gov Bailey Speaks | – | – | – |
| Tuesday – 29th March 2022 | |||||
| 8:30 | AUD | Retail Sales (MoM) (Feb) | – | 1.00% | 1.80% |
| 22:00 | USD | CB Consumer Confidence (Mar) | – | 107 | 110.5 |
| 22:00 | USD | JOLTs Job Openings (Feb) | – | – | 11.263M |
| Wednesday – 30th March 2022 | |||||
| 20:15 | USD | ADP Nonfarm Employment Change (Mar) | – | 438K | 475K |
| 20:30 | USD | GDP (QoQ) (Q4) | – | 7.10% | 2.30% |
| 22:30 | USD | Crude Oil Inventories | – | – | -2.508M |
| Thursday – 31st Mach 2022 | |||||
| 9:30 | CNY | Manufacturing PMI (Mar) | – | – | 50.2 |
| 14:00 | GBP | GDP (QoQ) (Q4) | – | 1.00% | 1.10% |
| 14:00 | GBP | GDP (YoY) (Q4) | – | 6.50% | 6.50% |
| 15:55 | EUR | German Unemployment Change (Mar) | – | -20K | -33K |
| 20:30 | USD | Initial Jobless Claims | – | 200K | 187K |
| 20:30 | CAD | GDP (MoM) (Jan) | – | 0.20% | 0.00% |
| Friday – 1st April 2022 | |||||
| 7:50 | JPY | Tankan Large Manufacturers Index (Q1) | – | 12 | 18 |
| 7:50 | JPY | Tankan Large Non-Manufacturers Index (Q1) | – | 5 | 9 |
| 9:45 | CNY | Caixin Manufacturing PMI (Mar) | – | – | 50.4 |
| 15:55 | EUR | German Manufacturing PMI (Mar) | – | 57.6 | 58.4 |
| 16:30 | GBP | Manufacturing PMI (Mar) | – | 55.5 | 55.5 |
| 17:00 | EUR | CPI (YoY) (Mar) | – | 6.50% | 5.90% |
| 20:30 | USD | Nonfarm Payrolls (Mar) | – | 475K | 678K |
| 20:30 | USD | Unemployment Rate (Mar) | – | 3.70% | 3.80% |
| 22:00 | USD | ISM Manufacturing PMI (Mar) | – | 58.6 | 58.6 |
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