30 November 2020 Weekly Analysis
GCMAsia Weekly Report: November 30 – December 4
Market Review (Forex): November 23 – 27
US Dollar
Dollar index which traded against a basket of six major currencies continue to extend its losses throughout the week while ending Friday’s session with the price of 91.77. With mixed economic data and continuous increase of new COVID-19 cases in the U.S, demand for the greenback remains soft. On top of that, hopes for vaccine also provided riskier markets with support which in turn diminishing further the value for safe-haven market such as dollar.
On data front, private sector PMI numbers for November have impressed. Markit Services PMI rose from 56.9 to 57.7, while the manufacturing PMI climbing from 53.4 to 56.7. However, the important jobs data have failed as Initial jobless claims rose from 742k to 778k in the week ending 20th November. The latest figure further confirmed that the labor market recovery had stalled. U.S GDP for the 3rd quarter also came in short with the reading of 33.1% against market expectation of 33.2%. Michigan Consumer Sentiment also fell to 76.9, lower than market expectation of 77.0. On a more significant note, annual rate of inflation of eased from 1.6% to 1.4%.
Besides that, FOMC meeting on last week also exert some pressure for the pair. According to the FOMC minutes, FOMC members have witness general economic progress but still believe that the more action is needed in order to get the economy back to pre-COVID levels. Besides that, members have also discussed a range of options on bond purchases to support the recovery which include increasing the pace of purchases or shifting focus to a longer duration of bonds.
With the vaccine optimism continue to support riskier markets, the greenback is expected to continue its downfall while market awaits for further catalyst and data to determine its further direction. Besides that, U.S will also focus on the development on U.S politics that could also potentially the future course of U.S outlook.
USD/JPY
The pair of USD/JPY have fell throughout the week while ending last Friday session at the price of 104.08. On data front, November inflation figures at the end of the week failed to move the market. Tokyo’s core consumer prices fell by 0.7%, following a 0.5% decline in October. Despite that, the announcement from Japan’s government on relief stimulus helping the Yen to pick up bid. Yoshihide Suga-led government stated that it will extend its compensation scheme for firms that impacted by COVID-19 to February. The deadline for the scheme was to expire in December previously.
EUR/USD
The pair of EUR/USD have soared throughout the week despite with various mixed data and grim view from ECB while ending last Friday’s trading session with the price of 1.1961. With lockdown measures in place, the services sector took a hit, with the Eurozone Services PMI falling from 46.9 to 41.3. Eurozone manufacturing sector activity eased as a result of a contraction in France, while Germany continued to report solid growth in the sector. While German’s GDP came in positive, a slide in business sentiment disappointed. The Ifo Business Climate Index fell from 92.5 to 90.7. ECB financial stability review and monetary policy meeting minutes also delivered a grim view. Despite that, euro stay resilient due to progress towards a COVID-19 vaccine.
GBP/USD
The pair of GBP/USD also held steady and gains throughout the week while ending the Friday market with the price of 0.3221. On data front, it was a mixed bag, with manufacturing sector activity seeing a pickup, while the services sector contracted. U.K manufacturing PMI rose from 53.3 to 55.2 while services PMI slid from 52.3 to 45.8 as lockdown measures hit the sector. Despite that, the pound continue to find support on hopes of an imminent Brexit deal and also vaccine hopes.
Market Review (Commodities): November 9 – 13
GOLD
Gold price continue to experience significant pressure and plunged while ending at the price of $1786.80 a troy ounce. Despite with the pandemic is still the biggest threat to the macro economy with the total number of coronavirus cases in the world exceeded 60 million, the latest developments in vaccines are positive for risk sentiment which causes investor to stray away from safe-haven market. Not only the United Kingdom’s Drug and Healthcare Products Regulatory Agency (MHRA), but also the United States and Europe’s drug regulatory agencies are scrambling to approve the top vaccines from Pfizer-BioNtech, Moderna and AstraZeneca. Therefore, expectations of overcoming this pandemic are rising. In addition, the smooth transition of the White House also increased risk sentiment, which in turn pushed the price of gold down.
CrudeOIL
The crude oil price continue its advance to new highs throughout the week while ending last Friday session with $45.67 per barrel following upbeat inventories data and vaccine optimism to support the demand for the black commodity.
On data front, the American Petroleum Institute reported an inventory build of 3.8 million barrels for the week ending November 20. However, EIA have confirmed with a surprise draw in crude oil inventories with the stockpiles fell 754,000 on the previous week while analysts in a Reuter’s poll had predicted a 127,000-barrel rise. Besides that, the commodity is being bought on the promise that the pandemic will be curbed over time and life returns to normal that could result in more mobility and travel than now, thus more demand for oil. Speculation of OPEC plans to delay output cut last week have also help driving the market higher, According to the deal reached in previous times, the current cut of 7.7 million barrels per day (bpd) is meant to be eased to 5.8 million bpd as of January 2021, but most observers expect this to be extended by between three and six months.
Nonetheless, the commodity is expected to extend its gains in near term as the ongoing optimism on vaccine may continue to support the demand while market now looking ahead for further data and upcoming crucial OPEC meeting to determine further direction.
Weekly Outlook: November 30 – December 4
For the week ahead, investors would continue to monitor on the development of coronavirus, vaccine and also crucial inflation data such as Non-Farm Payroll in order to gauge the direction of every each currency’s pair.
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 30 – December 4
| Time | Market | Event | Actual | Expectation | Previous |
| Isnin – 30th November 2020 | |||||
| 09:00 | CNY | Manufacturing PMI (Nov) | – | 51.5 | 51.4 |
| 18:00 | EUR | ECB President Lagarde Speaks | – | – | – |
| 21:30 | CAD | GDP (MoM) | – | – | 1.2% |
| 23:00 | USD | Pending Home Sales (MoM) (Oct) | – | 1.0% | -2.2% |
| Selasa – 1st December 2020 | |||||
| 09:45 | CNY | Caixin Manufacturing PMI (Nov) | – | 53.5 | 53.6 |
| 11:30 | AUD | RBA Interest Rate Decision (Dec) | – | 0.10% | 0.10% |
| 11:30 | AUD | RBA Rate Statement | – | – | – |
| 16:55 | EUR | German Manufacturing PMI (Nov) | – | 57.9 | 57.9 |
| 16:55 | EUR | German Unemployment Change (Nov) | – | 10K | -35K |
| 17:30 | GBP | Manufacturing PMI (Nov) | – | 55.2 | 55.2 |
| 18:00 | EUR | CPI (YoY) (Nov) | – | -0.2% | -0.3% |
| 21:30 | CAD | GDP (MoM) (Sep) | – | 0.9% | 1.2% |
| 23:00 | USD | Fed Chair Powell Testifies | – | – | – |
| 23:00 | USD | ISM Manufacturing PMI (Nov) | – | 57.9 | 59.3 |
| Rabu – 2nd December 2020 | |||||
| 01:00 | EUR | ECB President Lagarde Speaks | – | – | – |
| 08:30 | AUD | GDP (QoQ) (Q3) | – | 2.5% | -7.0% |
| 08:30 | CNY | Caixin Manufacturing PMI | – | – | 53.6 |
| 21:15 | USD | ADP Nonfarm Employment Change (Nov) | – | 400K | 365K |
| 23:00 | USD | Fed Chair Powell Testifies | – | – | – |
| 23:30 | CrudeOil | Crude Oil Inventories | – | 0.127M | -0.754M |
| Khamis – 3rd December 2020 | |||||
| 17:30 | GBP | Composite PMI (Nov) | – | 47.4 | 47.4 |
| 17:30 | GBP | Services PMI (Nov) | – | 45.8 | 45.8 |
| 21:30 | USD | Initial Jobless Claims | – | 770K | 778K |
| 23:00 | USD | ISM Non-Manufacturing PMI (Nov) | – | 56.0 | 56.6 |
| Friday– 4th December 2020 | |||||
| 08:30 | AUD | Retail Sales (MoM) (Oct) | – | 1.6% | -1.1% |
| 17:30 | GBP | Construction PMI (Nov) | – | 52.0 | 53.1 |
| 21:30 | USD | Nonfarm Payrolls (Nov) | – | 500K | 638K |
| 21:30 | USD | Unemployment Rate (Nov) | – | 6.8% | 6.9% |
| 21:30 | CAD | Employment Change (Nov) | – | 27.5K | 83.6K |