28 December 2020 Weekly Analysis
GCMAsia Weekly Report: December 28 – January 1
Market Review (Forex): December 21 – 25
US Dollar
The dollar index which traded against a basket of six major currency pairs manage to recoup its losses and rebound from its previous losses, but was soon traded lower and depressed in a relatively quiet market till the end of the week, ending last week market at the price of 90.19. Following U.S holiday season, the greenback was mostly taking hints from economic data, coronavirus and U.S stimulus.
From data perspective, it was a busy week with some key data such as GDP, consumer confidence, core durable goods order, and weekly jobless claims figure in focus. Due to concerns over sharp increase in new COVID-19 cases, consumer confidence fell from 96.1 to 88.6. However, on the positive side, initial jobless claims have improved to 805K, lesser than market expectation of 885K. Durable goods orders were also positive, with orders rising by 0.9% in November. U.S GDP for third quarter also rose to 33.4% compared to market expectation of 33.1%. On U.S stimulus front, the ups and down in U.S stimulus development have also weighed on the greenback. Last week, the U.S congress have passed the $900 billion stimulus and awaits signing from Donald Trump. However, Donald Trump threaten to not sign the bill as he deemed the economic stimulus too low and a “disgrace”. Despite that, the greenback was supported by the worsening outbreak of the coronavirus which have caused several countries to impose stricter lockdowns on the holiday week and investors to heading back safe-haven market such as the greenback.
With the holiday season expected to cause the market to remain quiet until the new year, market is expected to remain cautiously optimistic on the greenback unless there is surprising catalyst that could potentially trigger momentum for the dollar.
USD/JPY
The pair of USD/JPY caught some fresh bid at the start of the week and remain traded steady throughout the end of the week while closing at the price of 103.66. On data front, Japan’s Retail Sales have fell to 0.7%, below market expectation of 1.7%. At the same time, Tokyo CPI also fell to -0.9% against market expectation of -0.8%. Besides that, optimism in Brexit deal also help providing support for the pair.
EUR/USD
EUR/USD have given up some of its previous gains and relatively traded lower in overall throughout the week while closing with the price of 1.2180. On data front, the Eurozone Consumer Confidence indicator have improved to -13.9, better than market expectation of -16.8. Meanwhile in Germany, the GfK Consumer Climate also came in better than market expectation with the reading of -7.3% against -8.8 expectation. Still, the positive data have muted impact on the pair as the latest spike in new COVID-19 cases and lockdown measures in EU countries have raised uncertainty and weighing negatively on the pair.
GBP/USD
The pair of GBP/USD have traded higher in overall while ending the market at the price of 1.3532. Despite with the increasing concerns of new coronavirus strain in the U.K, the positive development in Brexit deal have help offset the negative news. Reports of a new coronavirus strain that led to stricter lockdown measures have weighed on the pound sterling in the week. However, a Brexit deal late in the week have supported the return of a bull market to end the week in the green.
Market Review (Commodities): December 21 – 25
GOLD
Gold price remain traded steady throughout the week, but still ending the week with a loss at the price of 1879.18 as the commodity experience a roller coaster ride due to U.S coronavirus stimulus package and dollar unexpected gains in recent days. The gold has been pushed around around since U.S. Congress passed on a $900 billion coronavirus stimulus and $1.4 trillion in federal government funding, but President Donald Trump’s refusal to sign the stimulus have cause these packages remain in a limbo state. On top of that, the strength in U.S dollar also weighing on the commodity which causing the commodity rebound to fell short at the end of the week, resulting in the weekly loss.
CrudeOIL
The price of crude oil has managed to recoup most its losses after experiencing a sharp drop at the start of the week, but still closing the market at a loss with the price of 48.21. The commodity takes hints from Brexit deal, U.S stimulus, causing the overall sentiment to be mixed.
At the earlier half of the week, the commodity has experience huge selling pressure following market reaction on new coronavirus strain that soon lead to stricter lockdown measures and sparked concerns. However, the commodity soon reversed most of its losses at the end of the week after U.K and EU have reached a trade deal and boosting the outlook for fuel demand. On top of that, the demand was further supported by upbeat data by EIA. On data front, the Energy Information Administration (EIA) on Wednesday reported an oil inventory draw of -0.562 million barrels. Although it was a smaller reduction compared to market expectation of a -3.186M decrease, it was completely opposite from API’s report of a 2.7-million-barrel build. However, lingering worries over a new variant of the novel coronavirus have capped the gains of the commodity.
As the market is expected to remain in holiday mood, investors are looking ahead while awaits for more catalyst to gauge further sentiment for the commodity.
Weekly Outlook: December 28 – January 1
For the week ahead, investors would continue to focus on the developments on U.S stimulus, developments and impact of coronavirus as well as economic data such as consumer confidence and weekly jobless claims to determine further direction.
As for oil traders, they will be also 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: December 28 – January 1
| Time | Market | Event | Actual | Forecast | Previous |
| Monday – 28hb December 2020 | |||||
| N/A | |||||
| Tuesday – 29hb December 2020 | |||||
| 23:00 | USD | CB Consumer Confidence (Dec) | – | 97.0 | 96.1 |
| Wednesday – 30hb December 2020 | |||||
| 23:00 | USD | Pending Home Sales (MoM) (Nov) | – | 0.2% | -1.1% |
| 23:30 | USD | Crude Oil Inventories | – | – | -0.562M |
| Thursday – 31hb December 2020 | |||||
| 09:00 | CNY | Manufacturing PMI (Dec) | – | 52.2 | 52.1 |
| 21:30 | USD | Initial Jobless Claims | – | 835K | 803K |
| Friday – 1hb January 2021 | |||||
| N/A | |||||