30 August 2021 Weekly Analysis
GCMAsia Weekly Report: August 30 – September 3
Market Review (Forex): August 23 – 27
US Dollar
The dollar index which traded against a basket of six major currency pairs slumped significantly last week over the backdrop of the dovish statement from Federal Reserve as well as the bearish economic data from the United States last week. The Dollar Index was closing its price on last Friday session at the price of 92.55.
The US Dollar received significant bearish momentum following the Federal Reserve Chairman Jerome Powell unleashed its future monetary policy plan at Fed’s annual Jackson Hole, Wyoming. Market participants reacted positively to such statement, which increasing the risk appetite in the global financial market while prompting investors to shift their portfolio toward other risky asset. According to CNBC, Federal Reserve Chairman Jerome Powell indicated that the US Central Bank is likely to begin reducing some of its easy-money policies before the end of the year, though he still sees interest rate hikes off in the distance. He also added that the economy has reached a point where it no longer needs as much policy support. That means that the Fed is likely to begin cutting bond buying program each month before the end of the year, so long as economic progress continues. Despite that, he also reiterated that the Federal Reserve will still be likely to maintain its low interest rate until the economic had reached substantial further progress. Besides, investors remained optimistic toward the global economic growth following the US House of Representatives passed the $3.5 trillion budget framework and a top health official expressed confidence in fighting Covid-19 pandemic. Such sentiment had further increased the risk appetite in the global market, which spurring further bearish momentum for the safe-haven Dollar. According to Reuters, DR. Anthony Fauci, top U.S. infections disease expert claimed that the Covid-19 pandemic could be under control by early next year with the assistance of rapid vaccination progress in the world.
As conclusion, the increasing risk appetite around the world had continue to stoke a shift in sentiment toward other riskier asset, diminishing the appeal of the safe-haven US Dollar. Despite that, investors would continue to scrutinize the latest updates with regards of future crucial economic data as well as Covid-19 pandemic development in order to gauge the likelihood movement for the US Dollar.
USD/JPY
The pair of USD/JPY received bearish momentum on last week while ending last Friday session at the price of 109.75. The overall bearish momentum for the pair of USD/JPY was mainly due to the depreciation of US Dollar. Nonetheless, increasing risk appetite in the global financial market had continue to diminish market demand on the Japanese Yen, which limiting the losses experienced by the pair of USD/JPY.
EUR/USD
The pair of EUR/USD rose throughout the week while ending last week session at the price of 1.1755 over the backdrop of upbeat economic data from the Germany region. According to Statistisches Bundesamt Deutschland, Germany Gross Domestic Product (GDP) for last quarter had notched up significantly from the previous reading of -1.8% to 1.6%, exceeding the market forecast at 1.5%. As such crucial data had fared better than market expectation, which dialed up the market optimism toward the economic progression in the European region while spurring hopes for European Central Bank to taper its monetary policy earlier-than-expected. On the Covid-19 front, Chancellor Angela Merkel said on Monday that Germany has decided to stop using the Covid-19 infections rate as its yardstick for deciding if restrictions should be in force to combat the spread of the virus. Since the number of people who are fully vaccinated continue to rise in Germany, the government will instead monitor hospitalization as a key indicator for the determination of the “lock-down” policy. Investors remained positive that high vaccination level in the European region would limit the probability for the authorities to implement lock-down measures
GBP/USD
The pair of GBP/USD had rose last week while closing its market price at 1.3625. The overall bullish momentum for the pair of GBP/USD last week was mainly due to the depreciation of the US Dollar. Nonetheless, due to lack of crucial catalyst from the United Kingdom region, the movement for the Pound Sterling remained subdued. As for now, investors would continue to scrutinize the latest updates with regards of crucial economic data in order to gauge the likelihood movement for the pair of GBP/USD
Market Review (Commodities): August 23 – 27
GOLD
Gold price surged last week with the price of $1781.15 per troy ounce following the U.S. Federal Reserve Chairman Jerome Powell unleashed his dovish stance at a symposium at Jackson hole, Wyoming. According to Reuters, he claimed that the Federal Reserve still likely to maintain its low interest rate until the economic had reached substantial further progress while describing the current period of high inflation as transitory, meaning it should be brief or short-lived. Such statement had spurred the expectation that the Federal Reserve might continue to implement its expansionary monetary policy in long-term basis, which prompting investors to shift their portfolio to safe-haven commodity in order to hedge against the inflation risk in future.
CrudeOIL
The price of crude oil surged significantly last week while closing last Friday session with the price of $69.55. The oil market edged higher over the fears upon the supply destruction at critical U.S. oil port. According to Reuters, Hurricane Ida made landfall on Sunday as a Category 4 storm near the area of the major oil production, Port Fourchon, Louisiana. Besides, the crude oil price extends its gains over the backdrop of upbeat inventory data last week. According to Energy Information Administration (EIA), U.S. Crude Oil Inventories came in -2.979M, better than the market forecast at -2.683M.
Weekly Outlook: August 30 – September 3
For the week ahead, investors would continue to focus on crucial economic data such as US Initial Jobless Claims 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: August 30 – September 3
| Time | Market | Event | Actual | Forecast | Previous |
| Monday – 30th August 2021 | |||||
| 22:00 | USD | Pending Home Sales (MoM) (Jul) | – | 0.40% | -1.90% |
| Tuesday – 31st August 2021 | |||||
| 09:00 | CNY | Manufacturing PMI (Aug) | – | 50.2 | 50.4 |
| 15:55 | EUR | German Unemployment Change (Aug) | – | -34K | -91K |
| 17:00 | EUR | CPI (YoY) (Aug) | – | 2.80% | 2.20% |
| 20:30 | CAD | GDP (MoM) (Jun) | – | 0.70% | -0.30% |
| 22:00 | USD | CB Consumer Confidence (Aug) | – | 124 | 129.1 |
| Wednesday – 1st September 2021 | |||||
| 09:30 | AUD | GDP (QoQ) (Q2) | – | 0.50% | 1.80% |
| 09:45 | CNY | Caixin Manufacturing PMI (Aug) | – | 50.2 | 50.3 |
| 15:55 | EUR | German Manufacturing PMI (Aug) | – | 62.7 | 62.7 |
| 16:30 | GBP | Manufacturing PMI (Aug) | – | 60.1 | 60.1 |
| 20:15 | USD | ADP Nonfarm Employment Change (Aug) | – | 638K | 330K |
| 22:00 | USD | ISM Manufacturing PMI (Aug) | – | 58.5 | 59.5 |
| 22:30 | USD | Crude Oil Inventories | – | -2.683M | -2.979M |
| Thursday – 2nd September 2021 | |||||
| 20:30 | USD | Initial Jobless Claims | – | 345K | 353K |
| Friday – 3rd September 2021 | |||||
| 09:30 | AUD | Retail Sales (MoM) | – | – | -2.70% |
| 16:30 | GBP | Composite PMI (Aug) | – | 55.4 | 55.3 |
| 16:30 | GBP | Services PMI (Aug) | – | 55.5 | 55.5 |
| 20:30 | USD | Nonfarm Payrolls (Aug) | – | 728K | 943K |
| 20:30 | USD | Unemployment Rate (Aug) | – | 5.20% | 5.40% |
| 22:00 | USD | ISM Non-Manufacturing PMI (Aug) | – | 61.8 | 64.1 |