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30 May 2022                           Weekly Analysis

GCMAsia Weekly Report: May 30 – June 3

Market Review (Forex): May 23 – 27

US Dollar

The Dollar Index which traded against a basket of six major currencies extend its losses over the backdrop of bearish economic data recently, which prompting the US Treasury yield dipped.  Though, investors would continue to scrutinize the economic data from the US region to receive further trading signal. The Dollar Index has closed its market price at 101.50.

 

The US Dollar slumped amid the diminishing the rate hike expectation from the Federal Reserve as well as the improving inflation and consumer spending data continue to ease recession fears, which stoked a shift in sentiment toward another riskier asset. According to the latest data, despite the currently inflation rate continued to increase in April, it rose less than in recent months. US Department of Commerce reported that the US PCE price index only increased by 0.2%, the smallest gain since November 2020 after surging up to 0.9% in March. Besides, the yield on the benchmark 10-year Treasury note moved lower by 1 basis point to 2.743%, which reducing further odds for the aggressive rate hike in futures. Recently, the bearish economic data had appeared to reduce the support for hawkish tone from Fed. Inflation risk have been predicted lower, and tightening financial conditions are beginning to jeopardize the market demand in key sectors of the economy including housing and manufacturing industry.

 

On the other hand, the Federal Reserve policymakers agreed that the Fed should act “expeditiously” on their contractionary monetary policy to stabilize the spiking inflation rate in short-term basis. Though, they also reiterated that the Fed could be well positioned for pause on rate hike decision later this year as they expected the global inflation risk would start to stabilize following the supply disruption issues resolved. As for now, investors would continue to scrutinize the latest updates with regards of the monetary policy decision from Federal Reserve.

 

USD/JPY

The pair of USD/JPY depreciated last week while closing its market price at 127.40. The overall movement for the pair of USD/JPY remained bearish amid the weakening US Dollar. Besides, the rising concerns upon the global recession as well as stagflation risk had also stoked a shift in sentiment toward the safe-haven asset such as Japanese Yen, spurring further bearish momentum on the pair of USD/JPY.

 

EUR/USD

The pair of EUR/USD surged last week while closing its market price at 1.0570. The Euro received significant bullish momentum following the European Central Bank unleashed their hawkish tone toward the economic momentum in Europe region last week. According to CNBC, the ECB President Christine Lagarde claimed that the ECB is likely to increase its deposit interest rate from negative territory by the end of September and could raise further if it sees the inflation rate unable to stabilize at 2.0%. Besides, the Euro extend its gains over the backdrop of upbeat economic data. According to Ifo Institute for Economic Research, Germany Ifo Business Climate Index came in at 93.0, better than the market forecast at 91.4.

 

GBP/USD

The pair of GBP/USD appreciated last week while ending last week’s session at the price of 1.2500. The overall bullish trend for the pair GBP/USD was mostly due to the weakening US Dollar. Nonetheless, the gains experienced by the Pound Sterling was limited by bearish economic data. The UK Composite Purchasing Manager’s Index (PMI) and UK Manufacturing Purchasing Managers Index (PMI) came in at 51.8 and 54.6, both fared worse than market expectation at 56.5 and 54.9 respectively.

 

 

 

 

Market Review (Commodities): May 23 – 27

GOLD

Gold price surged last week while closing its market price at $1854.30 per troy ounces. The gold price received bullish momentum last week amid easing hopes upon the rate hike expectation from Federal Reserve. In addition, the bearish economic data recently from United States and United Kingdom had also stoked a shift in sentiment toward safe-haven asset, spurring further bullish momentum on the gold. Though, investors would continue to focus on the latest monetary policy decision from Fed to gauge the likelihood movement for the gold.

 

CrudeOIL

Crude oil price was edged higher while ending last week’s session at the price of $110.80 per barrel. The oil market continues to extend its gains as investors speculated that a further tightening in supplies and spiking oil demand as the Memorial Day holiday weekend kicks off the start of the US driving season when Americans take to the road vacation. According to Reuters, the weekly win streak for oil prices was supported by bets that demand for oil will continue to increase amid US driving season gets underway.  On the supply front, the decreasing number of Russian oil on the market had insinuated further fears upon the supply shortage for the crude oil. Russian Deputy Prime Minister Alexander Novak claimed earlier that the total oil output from Russia this year could decline by 5% to 8% compared with previous year. Besides, the EU leaders will meet on Monday and Tuesday to discuss a new sanction package against Russia, investors would eye on the EU summit meeting to gauge the likelihood movement for the crude oil.

 

 

Weekly Outlook: May 30 – June 3

For the week ahead, investors would continue to focus on crucial economic data such as the US GDP 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 inventory level reported by API and EIA to gauge the strength of crude demand for the world’s largest oil consumer.

 

Highlighted economy data and events for the week: May 30 – June 3

Time Market Event Actual Forecast Previous
Monday – 30th May 2022
All Day USD United States – Memorial Day
18:00   EUR EU Leaders Summit
Tuesday – 31st May 2022
9:30   CNY Manufacturing PMI (May) 48 47.4
15:55   EUR German Unemployment Change (May) -16K -13K
17:00   EUR CPI (YoY) (May) 7.70% 7.40%
18:00   EUR EU Leaders Summit
20:30   CAD GDP (MoM) (Mar)   0.50% 1.10%
22:00   USD CB Consumer Confidence (May) 103.9 107.3
Wednesday – 1st June 2022
9:30   AUD GDP (QoQ) (Q1) 0.70% 3.40%
9:45   CNY Caixin Manufacturing PMI (May) 46
15:55   EUR German Manufacturing PMI (May) 54.7 54.7
16:30   GBP Manufacturing PMI (May) 54.6 54.6
19:00   EUR ECB President Lagarde Speaks
20:15   USD ADP Nonfarm Employment Change (May) 300K 247K
22:00   USD ISM Manufacturing PMI (May) 54.5 55.4
22:00   USD JOLTs Job Openings (Apr) 11.400M 11.549M
22:00   CAD BoC Interest Rate Decision 1.50% 1.00%
Thursday – 2nd June 2022
All Day GBP United Kingdom – Bank Holiday
9:30   AUD Retail Sales (MoM) 0.90%
20:15   USD ADP Nonfarm Employment Change (May) 280K 247K
20:30   USD Initial Jobless Claims 210K 210K
23:00   USD Crude Oil Inventories -0.737M -1.019M
Friday – 3rd June 2022
All Day GBP United Kingdom – Bank Holiday
All Day HKD Hong Kong – Dragon Boat Festival
All Day CNY China – Dragon Boat Festival
20:30   USD Nonfarm Payrolls (May) 320K 428K
20:30   USD Unemployment Rate (May) 3.50% 3.60%
22:00   USD ISM Non-Manufacturing PMI (May) 56.4 57.1

 

Risk Statement:

Forex, Gold, Crude Oil, Commodities, CFD and all other margin trading investment products involve high level of risk and may not be suitable for all investors. Your previous investment success in stock, futures or any other investment achieved does not mean that all your future investment will obtain the same results. You should carefully consider your investment objectives; risk associated and seek professional advice before deciding to trade or if you have any doubts.