28 June 2021 Weekly Analysis
GCMAsia Weekly Report: June 28 – July 2
Market Review (Forex): June 21 – 25
US Dollar
The dollar index which traded against a basket of six major currency pairs have fell over the backdrop of dovish statement from the Federal Reserve. The senior Federal Reserve official claimed that the US economy was still not yet ready for the central bank to tamper the expansionary monetary support, even though the outlook become rosier. The Dollar Index was closing its price on last Friday Session at the price of 91.50.
According to Reuters, member of Federal Reserve John William insisted the Fed should stick to the terms of its aggressive monetary policy framework despite the economy was getting better all the time. Besides, he also reiterated tat the inflation is expected to drop back in long-run basis, claiming that the current surge in consumer prices will be transitory. Besides, Federal Reserve Jerome Powell reaffirmed that the U.S. central bank would continue to implement its quantitative easing program to boost up the jobs market in United States, and not to raise interest rates too soon based only on the fear of coming inflation. Aggressive expansionary monetary policy would increase the money circulation in the market, which spurring higher inflation risk and diminishing the appeal of the US Dollar. Nonetheless, the Monetary Policy Committee (MPC) from the Fed have expressed different views on its monetary policy. The overall sentiment from Fed remained vague. Hence, investors would continue to scrutinize the latest updates with regards of crucial economic data as well as Covid-19 vaccination program in order to gauge the likelihood movement for the currency.
On the economic data front, most of the crucial economic data from the United States came in at bleak reading. According to Census Bureau, U.S. New Home Sales came in at 769K, worse than the market forecast at 870K. Moreover, the U.S. Core Durable Goods Orders for last month and U.S. Initial Jobless Claims came in at 0.3% and 411K, which both fared worse than market expectation at 0.8% and 380K respectively.
USD/JPY
The pair of USD/JPY experience bearish momentum on last week while ending last Friday session at the price of 110.65. The overall bearish momentum for the pair was mainly due to the depreciation of the US Dollar. Besides, spiking number of Covid-19 cases across the Asian region over the weekend had stoked a shift in sentiment toward the safe-haven currencies, such as Japanese Yen. According to Reuters, Indonesia is battling record high cases while a lockdown in Malaysia is set to be extended. Thailand also announced new restrictions in Bangkok and other provinces.
EUR/USD
The pair of EUR/USD surged throughout the week while ending last week session at the price of 1.1940. The overall bullish momentum for the pair of EUR/USD was mainly due to the depreciation of US Dollar. Besides, the Euro extend its gains over the backdrop of bullish economic data last week. According to Markit Economics, Germany Manufacturing Purchasing Managers Index (PMI) notched up significantly from the previous reading of 64.4 to 64.9, exceeding the market forecast at 63.0. Besides, the Eurozone private sector growth in June rose to its highest level since mid-2006 following the lockdown restrictions was eased and public confidence in vaccine program grows, according to HIS Markit. Besides, the Covid-19 infections have been eased to the lowest since last September and are set to be reduced further in July to the lowest since the pandemic began.
GBP/USD
The pair of GBP/USD was slumped on last week while closing its market price at 1.3880. Pound Sterling received bearish momentum last week following the Bank of England maintained their interest rate at 0.1%. Besides the Monetary Policy Committee (MPC) also sets the expansionary monetary policy to achieve 2% inflation target and boost up economic growth and employment rate. On top of that, the Committee also voted unanimously for the Bank of England to maintain the stock of sterling non-financial investment-grade corporate bond purchases and continue with its existing program of UK government bond purchases, maintaining the target for the government bond purchases at £875 billion and total target stock of asset purchases at £895 billion. On the other hand, the Pound Sterling extend its losses amid spiking numbers of Covid-19 cases had dialed down the market optimism toward the economic progression in UK. According to CNBC, the U.K. recorded its most new Covid-19 infections since early February on Saturday. Government data showed that another 18,270 people tested positive for the virus across the U.K., the highest daily number since 5th February. Over the past few weeks, early 100,000 have tested positive, more than 50% increase up on the week before.
Market Review (Commodities): June 21 – 25
GOLD
Gold price was traded within a range throughout last week while closing its price at $1778.50 per troy ounce. In earlier, the safe-haven gold dipped sharply following the Federal Reserve signaled it may increase interest rate sooner than expected. Higher interest rates in the U.S. make investing in Americans bonds more attractive to foreigners, which prompting the Treasury yields rallied significantly while diminishing the appeal of the safe-haven gold. Nonetheless, investors would continue to scrutinize the latest updates with regards of crucial economic data from US region in order to receive further trading signal.
CrudeOIL
The price of crude oil extends its gains last week while closing last Friday session with the price of $71.50 per barrel amid the market participants speculated that the positive development of Covid-19 vaccination program would enhance the prospect of economic as well as the crude oil demand in future. On the data front, the Energy Information Administration (EIA) reported that the U.S Crude Oil inventories notched down significantly from the previous reading of -7.355M to -7.614M, better than the market forecast at -3.942M. As for now, investors would remain their focus the OPEC+ meeting which will be held on 1st July 2021 to gauge the likelihood movement for the commodity.
Weekly Outlook: June 28 – July 2
For the week ahead, investors would continue to focus on crucial economic data such as US Nonfarm Payroll 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: June 28 – July 2
| Time | Market | Event | Actual | Forecast | Previous |
| Monday – 28th June 2021 | |||||
| N/A | |||||
| Tuesday – 29th June 2021 | |||||
| 22:00 | USD | CB Consumer Confidence (Jun) | – | 119.0 | 117.2 |
| Wednesday – 30th June 2021 | |||||
| 09:00 | CNY | Manufacturing PMI (Jun) | – | 50.7 | 51.0 |
| 14:00 | GBP | GDP (QoQ) (Q1) | – | -1.50% | -1.50% |
| 14:00 | GBP | GDP (YoY) (Q1) | – | -6.10% | -6.10% |
| 15:55 | EUR | German Unemployment Change (Jun) | – | -16K | -15K |
| 17:00 | EUR | CPI (YoY) (Jun) | – | 1.90% | 2.00% |
| 20:15 | USD | ADP Nonfarm Employment Change (Jun) | – | 600K | 978K |
| 20:30 | CAD | GDP (MoM) (Apr) | – | -0.90% | 1.10% |
| 22:00 | USD | Pending Home Sales (MoM) (May) | – | -1.00% | -4.40% |
| 22:30 | USD | Crude Oil Inventories | – | – | -7.614M |
| Thursday – 1st July 2021 | |||||
| 07:50 | JPY | Tankan Large Manufacturers Index (Q2) | – | 15 | 5 |
| 07:50 | JPY | Tankan Large Non-Manufacturers Index (Q2) | – | 3 | -1 |
| 09:45 | CNY | Caixin Manufacturing PMI (Jun) | – | 51.8 | 52 |
| 15:55 | EUR | German Manufacturing PMI (Jun) | – | 64.9 | 64.4 |
| 16:30 | GBP | Manufacturing PMI (Jun) | – | 64.2 | 64.2 |
| 20:30 | USD | Initial Jobless Claims | – | 386K | 411K |
| 22:00 | USD | ISM Manufacturing PMI (Jun) | – | 61 | 61.2 |
| Friday – 2nd July 2021 | |||||
| 03:00 | GBP | BoE Gov Bailey Speaks | – | – | – |
| 20:30 | USD | Nonfarm Payrolls (Jun) | – | 675K | 559K |
| 20:30 | USD | Unemployment Rate (Jun) | – | 5.70% | 5.80% |
| 20:30 | EUR | ECB President Lagarde Speaks | – | – | – |