29 November 2021 Weekly Analysis
GCMAsia Weekly Report: November 29 – December 03
Market Review (Forex): November 22 – 26
US Dollar
The dollar index which traded against a basket of six major currency pairs edged higher last week amid hawkish tone from Fed. The dollar index was closing its price on last Friday session at the price of 96.05.
Last week, Jerome Powell was nominated to extend his service as Chair of Fed by President Joe Biden. The nomination of Powell by Biden to continue his service as Chair of Fed has fueled up market optimism toward US dollar as the investors believe that Powell is ready to stick to his initiate plan by tapering monetary policy due to the current US inflation pressure fulfill his consideration for hiking the lending rate earlier. Moreover, Fed members have expressed their concerns that inflation would continue to rise during their last meeting. While drafting the framework of monetary policy, the Federal Reserve Committee is ready to coordinate the reduction of the bond purchase plan and raise the interest rate target when the inflation level reaches a high level for a longer period of time. According to the Fed Rate Monitor Tool, it shows that investors expect the bank to raise interest rates at least three times in 2022.
USD/JPY
The pair of USD/JPY received bullish momentum on last week while ending last Friday session at the price of 113.50. The overall bullish momentum for the pair of USD/JPY last week was mainly due to the depreciation of Japanese Yen. Japanese Yen slumped on last week over the backdrop of downbeat data from Japan region. According to Statistics Bureau, Japan Tokyo Core Consumer Price Index (CPI) came at the reading of 0.3%, lower than market forecast at 0.4%. While according to Ministry of Economy, Trade and Industry, Japan Retail Sales data came at the reading of 0.9%, lower than the market forecast at 1.1%.
EUR/USD
The pair of EUR/USD slumped throughout the week while ending last week session at the price of 1.1325. The overall momentum for the Euro remained bearish amid growing anxiety over rising Covid-19 infections in Europe. Due to surging Covid-19 cases, Austria becomes the first country in Western Europe to reimpose a full COVID-19 lockdown from Monday. On top of that, the increase in coronavirus cases in Germany has prompted the central government to ban individuals who have not received any vaccines into public places. On the other hand, dovish comments from ECB president Christine Lagarde also triggered further pressure for the pair. She emphasized that the current economic conditions are still not enough for the central to consider raising interest rates as she concerned that it could jeopardize economic growth in the region.
GBP/USD
The pair of GBP/USD had slumped last week while closing its market price at 1.3360. Pound Sterling slumped last week amid lack of positive progress in Brexit. Following latest development, U.K government spokesperson stated that the UK PM had told the Irish PM that he was concerned about a substantial gap that remained between the UK and EU on the implementation of the Northern Ireland Protocol. On the other hand, the French Fishing Association Body stated that they still haven’t get the licensed they want, therefore the association said that French fishermen would be taking action on Friday to block French ports and the Channel tunnel. The blockades will disrupt the trade between UK and EU trade and are likely to exacerbate the supply chain disruptions that already plaguing the UK economy.
Market Review (Commodities): November 22 – 26
GOLD
Gold price had slumped last week with the price of $1791.80 per troy ounce amid the hawkish expectation from Fed. The nomination of Jerome Powell to extend his service as chair of Fed coupled with hawkish tone from FOMC meeting have fueled up market speculation that Fed will increase its interest rate earlier. Such rate hike would reduce the money circulation in the global financial market, which could eliminate the inflation risk in future while dragging down the appeal for the safe-haven gold. As for now, investors would like to scrutinize on latest development of Covid-19 to gauge the demand of gold for risk hedging.
CrudeOIL
The price of crude oil slumped significantly last week while closing last Friday session with the price of $68.20. The oil market extended its losses amid concerns of oversupply in first quarter of next year. U.S. President Joe Biden’s administration recently announced its plan to release millions of barrels of oil from strategic reserves in coordination with other large consuming nations, including China, India and Japan in effort to cooling down price. Several OPEC sources stated that the release is likely to inflate supply in the coming months. In addition, oil market extended its loss amid bearish oil inventory data. According to Energy Information Administration, U.S. Crude Oil Inventories came at the reading of 1.017M, worse than the market forecast at -0.481M.
Weekly Outlook: November 29 – December 03
For the week ahead, investors would continue to focus on crucial economic data such as the US NonFarm Payrolls 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: November 29 – December 03
| Time | Market | Event | Actual | Forecast | Previous |
| Monday – 29th November 2021 | |||||
| 23:00 | USD | Fed Chair Powell Testifies | – | – | – |
| 23:00 | USD | Pending Home Sales | – | 1.00% | -2.30% |
| Tuesday – 30nd November 2021 | |||||
| 4:05 | USD | FOMC Member Powell Speaks | – | – | – |
| 9:00 | CNY | Manufacturing PMI (Nov) | – | 49.6 | 49.2 |
| 16:55 | EUR | German Unemployment Change (Nov) | – | -25K | -39K |
| 18:00 | EUR | CPI (YoY)(Nov) | 4.40% | 4.10% | |
| 21:30 | CAD | GDP (MoM)(Sep) | 0.10% | 0.40% | |
| 23:00 | USD | CB Consumer Confidence (Nov) | – | 110.9 | 113.8 |
| Tentatif | USD | Fed Chair Powell Testifies | – | – | – |
| Wednesday – 1st December 2021 | |||||
| 8:30 | GBP | GDP (QoQ) (Q3) | – | -2.70% | 0.70% |
| 9:45 | EUR | Caixin Manufacturing PMI (Nov) | – | 50.5 | 50.6 |
| 16:55 | EUR | German Manufacturing PMI (Nov) | – | 57.6 | 57.6 |
| 17:30 | GBP | Manufacturing PMI (Nov) | – | 58.1 | 58.2 |
| 21:15 | USD | ADP NonFarm Employment Change (Nov) | – | 525K | 571K |
| 22:00 | GBP | BoE Gov Bailey Speaks | – | – | – |
| 23:00 | USD | Fed Chair Powell Testifies | – | – | – |
| 23:00 | USD | ISM Manufacuturing PMI (Nov) | – | 61 | 60.8 |
| 23:30 | USD | Crude Oil Inventories | – | -0.481M | 1.017M |
| Thursday – 2nd December 2021 | |||||
| 8:30 | AUD | Retail Sales | – | – | – |
| 21:30 | USD | Initial Jobless Claims | – | 250K | 199K |
| Friday – 3rd December 2021 | |||||
| 17:30 | GBP | Composite PMI (Nov) | – | 57.6 | 57.7 |
| 17:30 | GBP | Service PMI (Nov) | – | 58.6 | 58.6 |
| 21:30 | USD | Nonfarm Payroll (Nov) | – | 550K | 531K |
| 21:30 | USD | Unemployment Rate (Nov) | – | 4.50% | 4.60% |
| 21:30 | CAD | Employment Change (Nov) | – | 40.0K | 31.2K |
| 23:00 | USD | ISM Non-Manufacturing PMI (Nov) | – | 65 | 66.7 |