31 October 2022 Weekly Analysis
GCMAsia Weekly Report: October 31 – November 4
Market Review (Forex): October 24 – 28
US Dollar
The Dollar Index which traded against a basket of six major currencies received significant bearish momentum last week after crucial downbeat economic data had been unleashed, which prompting investors to shift their capitals toward other assets. The Dollar Index has closed its market price at 110.48.
Last week, the US Dollar index retraced from its recent high level amid the bearish economic data. According to the Conference Board, the US CB Consumer Confidence data came in at 102.5, far lower than the consensus forecast at 106.5, mirroring that the consumer confidence in economic activity deteriorated. The lower-than-expected data might prompt Fed to adjust the size of rate hike in the upcoming meeting, says 50 basis point in order to avoid economy recession issue. Besides that, the lowered 10-year Treasury Yield had also pressured the value of US Dollar. The dollar’s decline came as the benchmark 10-year U.S. Treasury yield continued its descent from last week’s multi-year high of 4.338%, and was last down four basis points at 4.0317%. On the other hand, the resignation of UK Prime Minister, Liz Truss had led to the appreciation of Pound Sterling, which causing the US Dollar to receive sell-off pressure earlier of the week.
Nonetheless, the upbeat economic data which announced last Thursday had sent US Dollar back to higher level. A series of data such as US GDP and US Initial Jobless Claims had given a higher-than-expected readings, which indicated that a more upbeat snapshot of the economy and labor market in the US. It had dialed up the market confidence to invest in the US currency.
USD/JPY
The pair of USD/JPY extended its losses last week while closing its market price at 147.46. The pairing received bearish momentum after the government and the BoJ made an unannounced intervention in the foreign exchange market. Over $33.6 billion has been sold by BoJ in order to support Yen, reported by The Financial Times. However, the losses of USD/JPY was limited following BoJ confirmed to keep negative rates to support the fragile economy. On the other hand, 75 basis point rate hike from Fed in the 3 November meeting was expected by majority of investors, causing the interest rate differential of BoJ and Fed become wider, which prompting investors to flee away from Japanese currency market and purchase US Dollar.
EUR/USD
The pair of EUR/USD appreciated last week while closing its market price at 0.9964. The Euro received bullish momentum over the optimistic economic data had been released. The Germany Ifo Business Climate Index in October came in at the reading of 84.3, exceeding the consensus forecast of 83.3. Such data had given a sign of economic expansion in German, which brought positive prospects toward economic progression in Eurozone as Germany was the largest economy in Europe. Though, the gains experienced by Euro was limited after ECB hiked its rates. Last week, ECB increased its interest rate by 75 basis point to 2.00%, the highest level since 2009, which met with the consensus forecast. Nonetheless, the Euro retraced from the level around 1.0095 upon the rate differential between Fed and ECB. In the earlier moment, Fed has raised its rate to 3.25%, as well as 0.75% rate hike might be implemented again in the meeting which scheduled on this week. In the perspective of investors, they are more willing to shift their capital toward US currency market to earn higher return, which spurred bearish momentum on the Euro.
GBP/USD
The pair of GBP/USD surged last week while ending last week session at the price of 1.1614. The Pound received bullish momentum last week following the resignation of UK Prime Minister Liz Truss. Earlier, Liz Truss and her government had planned to implement aggressive tax cut policy. However, the policy was widely rejected by the citizens as well as her ability was in doubt. Thus, there was a new candidate to replace her, who named Rishi Sunak. Rishi Sunak became Britain’s third prime minister in two months on last Tuesday, tasked with tackling a mounting economic crisis and a warring political party. As Rishi Sunak is tilted toward increasing tax and reducing government spending, the market participants take him as someone who can save the UK economy from recession and stabilize the financial market going forward.
Market Review (Commodities): October 24 – 28
GOLD
Gold price dropped significantly last week while closing its market price at $1644.21 per troy ounces. Gold price received bearish momentum last week amid the better-than-expected GDP data. The data had provided more spaces for Fed to hike its rate aggressively. Currently, the possibility of 75 basis point rate hike has reached around 81.3%. Though, the losses experienced by gold price was limited over the speech from the US Senate Banking Committee. According to Reuters, the US Senate Banking Committee Chair Sherrod Brown on 25 October urged Federal Reserve Chair Jerome Powell to be careful about tightening monetary policy so much that millions of Americans already suffering from high inflation also lose their jobs. With that, Fed might adjust the size of rate increase in order to assure their job opportunities.
CrudeOIL
Crude oil price rallied while ending last week session at the price of $88.34 per barrel. Crude oil price received bullish momentum last week following the upbeat economic data. On the economic data front, the China GDP and US GDP had shown a bullish figures, which provided a optimistic view on current economic growth while dialed up the market demand on this black commodity. Besides, the output cut from OPEC+ which would be implemented on November had pushed oil price higher. Nonetheless, the gains of oil price was limited over the rising of crude oil inventories. According to the API, the US crude oil inventories data came in at 4.520M, higher than the consensus forecast at 0.200M. In addition, the EIA Crude Oil inventories data also shown some stockpile over the week.
Weekly Outlook: October 31 – November 4
For the week ahead, investors would continue to focus on crucial economic data such as the Fed interest rate decision and Nonfarm Payrolls 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: October 31 – November 4
| Time | Market | Event | Actual | Forecast | Previous |
| Monday – 31st October 2022 | |||||
| 08:30 | AUD | Retail Sales (MoM) (Sep) | – | 0.6% | 0.6% |
| 09:30 | CNY | Manufacturing PMI (Oct) | – | 50.0 | 50.1 |
| 18:00 | EUR | CPI (YoY) (Oct) | – | 10.2% | 9.9% |
| Tuesday – 1st November 2022 | |||||
| 09:45 | CNY | Caixin Manufacturing PMI (Oct) | – | 49.0 | 48.1 |
| 11:30 | AUD | RBA Interest Rate Decision (Nov) | – | 2.85% | 2.60% |
| 11:30 | AUD | RBA Rate Statement | – | – | – |
| 17:30 | GBP | Manufacturing PMI (Oct) | – | 45.8 | 45.8 |
| 22:00 | USD | ISM Manufacturing PMI (Oct) | – | 49.9 | 50.9 |
| 22:00 | USD | JOLTs Job Openings (Sep) | – | 10.000M | 10.053M |
| Wednesday – 2nd November 2022 | |||||
| 05:45 | NZD | Employment Change (QoQ) (Q3) | – | 0.5% | 0.0% |
| 06:00 | NZD | RBNZ Gov Orr Speaks | – | – | – |
| 06:00 | NZD | RBNZ Press Conference | – | – | – |
| 16:55 | EUR | German Manufacturing PMI (Oct) | – | 45.7 | 45.7 |
| 16:55 | EUR | German Unemployment Change (Oct) | – | 13K | 14K |
| 20:15 | USD | ADP Nonfarm Employment Change (Oct) | – | 190K | 208K |
| 22:30 | USD | Crude Oil Inventories | – | – | 2.588M |
| Thursday – 3rd November 2022 | |||||
| 02:00 | USD | FOMC Statement | – | – | – |
| 02:00 | USD | Fed Interest Rate Decision | – | 4.00% | 3.25% |
| 02:30 | USD | FOMC Press Conference | – | – | – |
| 16:05 | EUR | ECB President Lagarde Speaks | – | – | – |
| 17:30 | GBP | Composite PMI (Oct) | – | 47.2 | 47.2 |
| 17:30 | GBP | Services PMI (Oct) | – | 47.5 | 47.5 |
| 20:00 | GBP | BoE Interest Rate Decision (Nov) | – | 3.00% | 2.25% |
| 20:30 | GBP | BoE Gov Bailey Speaks | – | – | – |
| 20:30 | USD | Initial Jobless Claims | – | 220K | 217K |
| 22:00 | USD | ISM Non-Manufacturing PMI (Oct) | – | 55.4 | 56.7 |
| 22:15 | GBP | BoE Gov Bailey Speaks | – | – | – |
| Friday – 4th November 2022 | |||||
| 17:30 | GBP | Construction PMI (Oct) | – | 48.0 | 52.3 |
| 17:30 | EUR | ECB President Lagarde Speaks | |||
| 20:30 | USD | Nonfarm Payrolls (Oct) | – | 200K | 263K |
| 20:30 | USD | Unemployment Rate (Oct) | – | 3.6% | 3.5% |
| 20:30 | CAD | Employment Change (Oct) | – | 5.0K | 21.1K |
| 22:00 | CAD | Ivey PMI (Oct) | – | – | 59.5 |
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.