30 January 2023 Weekly Analysis
GCMAsia Weekly Report: January 30 – February 3
Market Review (Forex): January 23 – 27
US Dollar
The Dollar Index which traded against a basket of six major currencies managed to find its ground, regaining its luster throughout the past one week amid the release of a series of positive economic data. The Dollar Index has closed its market price at 101.70.
Earlier of the week, the dollar index hovered near its lowest level since June 2022 as the market sentiment remained sour, whereby the investors were expecting the Federal Reserve (Fed) to raise its interest rate at a slower pace, said 25 basis point in the upcoming meeting. With that, investors chose to shift their capital out from the dollar market and entered into the other assets, which including Sterling Pound, Euro and Gold. However, the dollar market successfully reversed its losses after the nation reported a series of upbeat economic data, which including GDP and Core PCE data. According to Bureau of Economic Analysis, the US GDP came in at 2.9%, slightly higher than the consensus forecast at 2.6%, mirroring a better-than-expected economic performance in the US during the fourth quarter of 2022. Besides, the similar institute has also reported the US Core PCE Price Index MoM, where the data notched up from the previous reading of 0.2% to 0.3%, indicating that the US inflation was having a kick back up in last month.
Going forward, the dollar index is expected to remain in downtrend for an extended period of time as the easing of inflationary pressures would likely to restrict the Federal Reserve (Fed) from changing its rate-hike tone back to hawkish tilted. It is noteworthy to highlight that the target of the US central bank remains at 2%.
USD/JPY
The pair of USD/JPY was traded flat last week while closing its market price at 129.80. The pairing was lingering near same level throughout the week as the market sentiment remained muted ahead of central banks’ decision. On the economic front, Bank of Japan (BoJ) Governor Kuroda commented that he believes it is possible to achieve 2% inflation target, with the backdrop of continuing wage growth and current easy policy. Hence, it has been detrimental to the market sentiment of Japanese Yen.
EUR/USD
The pair of EUR/USD appreciated last week while closing its market price at 1.0865. As the dollar’s weakness has been extended, the pairing of EUR/USD have been supported by bullish momentum. Separately, an ECB governing council member, Bostjan Vasle, said the central bank should raise rates by 50 basis points at its February and March meetings. The euro continued to rise on the back of hawkish ECB comment.
GBP/USD
The pair of GBP/USD surged last week while ending last week session at the price of 1.2385. With the backdrop of continuous weakness in the dollar market, the pairing of GBP/USD has been supported by the bullish momentum. The pair of GBP/USD came under heavy selling pressure following a series of UK data released last week. The UK composite PMI came in at 47.8, below the forecast of 49.3. Meanwhile, the UK Markit services PMI came in at 48.0, below expectations of 49.6. Such a series of downbeat economic data suggest that UK economy is at the risk of recession.
Market Review (Commodities): January 23 – 27
GOLD
Gold prices recorded some losses while closing its market price at $1925.25 per troy ounces. A series of upbeat economic data has dialed up the market optimism toward economic progression in the US, urging the safe haven asset retreated from its recent high level. Last week, a series of data such as US Core Durable Goods Orders MoM, US Gross Domestic Product (GDP) QoQ and US Initial Jobless Claims had given the reading that better than market expectation, while it shown that the US economy was not entering into recession yet. Prior to that, most of market participants was speculating that the US might face economy soft landing in 2023. In a nutshell, investors are waiting for the Fed’s interest rate decision on Thursday morning.
CrudeOIL
Crude oil prices edged down while ending last week session at the price of $79.40 per barrel. In the past week, the crude oil prices were pressured by the OPEC+ comment and stockpiles in US oil inventories. Last week, the US API Crude Oil Inventories printed a reading at 3.378M, higher than the forecast at 1.600M. At the same time, the OPEC+ group is likely to maintain the producers’ group’s current oil output policy when they meet in this week, five OPEC+ sources said on Tuesday, as concerns about inflation and a global economic slowdown are expected to be balanced with the rising demand from China. As a result, current production cut is likely to be in place with no adjustment.
Weekly Outlook: January 30 – February 3
For the week ahead, investors would continue to focus on crucial economic data such as the NFP and Fed Interest Rate 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: January 30 – February 3
| Time | Market | Event | Actual | Forecast | Previous |
| Monday – 30th Jan 2023 | |||||
| 17:00 | EUR | German GDP (QoQ) (Q4) | – | 0.00% | 0.40% |
| Tuesday – 31st Feb 2023 | |||||
| 8:30 | AUD | Retail Sales (MoM) (Dec) | – | -1.00% | 1.40% |
| 9:30 | CNY | Manufacturing PMI (Jan) | – | 49.7 | 47 |
| 16:55 | EUR | German Unemployment Change (Jan) | – | 5K | -13K |
| 21:00 | EUR | German CPI (YoY) (Jan) | – | 9.20% | 8.60% |
| 21:30 | CAD | GDP (MoM) (Nov) | – | 0.10% | 0.10% |
| 23:00 | USD | CB Consumer Confidence (Jan) | – | 109 | 108.3 |
| Wednesday – 1st Feb 2023 | |||||
| 5:30 | USD | API Weekly Crude Oil Stock | – | – | 3.378M |
| 5:45 | NZD | Employment Change (QoQ) (Q4) | – | 0.30% | 1.30% |
| 9:45 | CNY | Caixin Manufacturing PMI (Jan) | – | 49.5 | 49 |
| 16:55 | EUR | German Manufacturing PMI (Jan) | – | 47 | 47 |
| 17:30 | GBP | Manufacturing PMI (Jan) | – | 46.7 | 46.7 |
| 18:00 | USD | OPEC Meeting | – | – | – |
| 18:00 | EUR | CPI (YoY) (Jan) | – | 9.10% | 9.20% |
| 21:15 | USD | ADP Nonfarm Employment Change (Jan) | – | 170K | 235K |
| 21:45 | EUR | ECB Press Conference | – | – | – |
| 23:00 | USD | ISM Manufacturing PMI (Jan) | – | 48 | 48.4 |
| 23:00 | USD | JOLTs Job Openings (Dec) | – | 10.200M | 10.458M |
| 23:30 | USD | Crude Oil Inventories | – | – | 0.533M |
| Thursday – 2nd Feb 2023 | |||||
| 3:00 | USD | FOMC Statement | – | – | – |
| 3:00 | USD | Fed Interest Rate Decision | – | 4.75% | 4.50% |
| 3:30 | USD | FOMC Press Conference | – | – | – |
| 5:45 | NZD | Employment Change (QoQ) (Q4) | – | – | 1.30% |
| 20:00 | GBP | BoE Interest Rate Decision (Jan) | – | 4.00% | 3.50% |
| 20:00 | GBP | BoE MPC Meeting Minutes | – | – | – |
| 21:15 | EUR | Deposit Facility Rate (Feb) | – | 2.50% | 2.00% |
| 21:15 | EUR | ECB Marginal Lending Facility | – | – | 2.75% |
| 21:15 | EUR | ECB Monetary Policy Statement | – | – | – |
| 21:15 | EUR | ECB Interest Rate Decision (Feb) | – | 3.00% | 2.50% |
| 21:30 | USD | Initial Jobless Claims | – | 200K | 186K |
| 21:45 | EUR | ECB Press Conference | – | – | – |
| 22:15 | GBP | BoE Gov Bailey Speaks | – | – | – |
| 23:15 | EUR | ECB President Lagarde Speaks | – | – | – |
| Friday – 3rd Feb 2023 | |||||
| 2:30 | EUR | ECB President Lagarde Speaks | – | – | – |
| 17:30 | GBP | Composite PMI (Jan) | – | 47.8 | 47.8 |
| 17:30 | GBP | Services PMI (Jan) | – | 48 | 48 |
| 21:30 | USD | Nonfarm Payrolls (Jan) | – | 185K | 223K |
| 21:30 | USD | Unemployment Rate (Jan) | – | 3.60% | 3.50% |
| 23:00 | USD | ISM Non-Manufacturing PMI (Jan) | – | 50.3 | 49.6 |
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