Weekly Market Analysis: May 24 - 28, 2021 US Tapering Effects Ease

This Weekly Market Analysis for May 24-28, 2021 discusses several things that affect market movements, both regarding the condition of the US Dollar against other major currencies. The Greenback is still under pressure against several other major currencies in market trading for the past few days. The weakening of the US Dollar is the impact of the weakening discourse on reducing bond purchases that was previously raised by one of the US Central Bank officials. However, the chairman of the Fed, Jerome Powell, said that it was not yet time to discuss reducing monetary easing or tapering. Market players believe that it will take quite a long time for Powell to actually implement the tapering. The US government from the Democratic Party plans to cut the budget for infrastructure facilities, the initial budget of US $ 2.25 trillion has changed to US $ 1.7 trillion. This budget cut is mainly in the broadband investment section as well as for the repair or construction of roads and bridges. However, the plan for the cuts was rejected by the Republican party. The EURUSD movement is predicted to continue to strengthen. However, the movement of the Euro against the US Dollar had weakened but was limited. This weakening of the Euro occurred after the statement of the head of the European Central Bank Lagarde who said that the economic growth rate for the European region was still uncertain. On the other hand, the implementation of the Covid-19 vaccine which is very massive and fast in the European region has helped strengthen the single currency of the European zone. GBPUSD had moved to weaken for the Pound Sterling against the US Dollar. The weakening of the Pound Sterling was the impact of the strengthening of the US Dollar currency after the release of positive economic data on manufacturing and services activities. However, for today's market movement, the Poundsterling is predicted to try to strengthen compared to the US Dollar. This is supported by the statement of British Prime Minister Johnson who said that England will soon end the lockdown on June 21. AUDUSD had weakened after the strengthening of the US Dollar due to physical buying of the US Dollar. This action was carried out by market players after the release of positive economic data on US manufacturing and services activity. However, on the other hand, concerns about the reduction in purchases of US government bonds have begun to ease, which has caused the Australian Dollar to strengthen again against the US Dollar and is evident in today's market movements. The optimistic signal regarding the demand for fuel this summer has caused an increase in oil prices. This optimistic signal occurred after the massive and rapid implementation of Covid-19 vaccinations in Europe and the United States, thus raising the belief that the world economy will recover soon. The increase in oil prices is expected to continue to try to increase. Gold is predicted to continue to increase. The physical buying action carried out by market players makes Gold shine even brighter. Like the movement of Gold in trading on Friday at the end of last week, the increase in Gold is increasingly unstoppable. Market players' confidence in the return of falling US bond yields and shifting to safe haven assets such as Gold, has boosted Gold prices. Market players' confidence is supported by the weakening concerns about the tapering of bond purchases by the US Federal Reserve. The temporary shift of market players to safe haven assets such as Gold and temporarily setting aside US Dollar holdings. Many analysts predict that Gold's bias will try hard to reach the psychological level of US $ 1900 / troy ounce.

1. Important Data/High Impact Weekly Market Analysis

1.1 BOE Gov. Bailey Speaks (GBP)

Monday, 9:30 p.m. WIB. As head of the central bank, which controls short-term interest rates, he has more influence over the value of the country’s currency than anyone else. Traders watch his public engagements because they often provide subtle hints about future monetary policy.

1.2 RBNZ Monetary Policy Statment, RBNZ Rate Statment & Official Cash Rate (NZD)

Wednesday, 09:00 WIB. Reserve Bank of New Zealand (RBNZ) Monetary Policy Statement In this report, the RBNZ is mandated to include details on how the central bank will achieve its inflation target, how it proposes to formulate and implement monetary policy over the next 5 years, and how monetary policy has been implemented since the policy statement was issued. This provides valuable insight into the central bank's views on economic conditions and inflation rates in New Zealand. The RBNZ Rate Statement is a data release related to interest rates. This data is one of the main tools used by the RBNZ to provide market participants with information about New Zealand's monetary policy. This data contains the results of the central bank's decision on interest rates and comments on the economic conditions that influenced their decision. Most importantly, it discusses the economic outlook and offers clues about what policies will be taken for the future. The Official Cash Rate is the reference interest rate data at which the central bank provides loans in the form of soft loans to other banks. The decision of the head of the central bank on interest rates is usually awaited by investors, so it tends to move the market actively. Meanwhile, the short-term interest rate is the most important factor in assessing a country's currency. Market participants look at most other indicators only to predict how interest rates will change in the future.

1.3 RBNZ Press Conference (NZD)

Wednesday, 10:00 WIB. After the meeting, the central bank will hold a regular meeting and is scheduled every 3 months. This is one of the main tools used by the RBNZ to provide investors with information about monetary policy. It covers in detail the factors that influenced the latest interest rate decision, such as the overall economic and inflation outlook. Most importantly, it provides clues about future monetary policy. The press conference lasts about 30 minutes and consists of 2 parts - first a prepared statement is read, then the conference is open to questions from the press. These questions sometimes lead to unscripted answers that create large market volatility.

1.4 Prelim GDP (USD)

Thursday, 19:30 WIB. This data is a measure of the largest economic activity and is a benchmark for the health of a country's economy. This data is an index that records annual changes in the value of all goods and services produced by a country. This data is released every 3 months or about 60 days after the quarter ends. Although this is quarterly data, this data is reported in an annual format (quarterly change x4). There are 3 versions of GDP released, namely Advance, Preliminary, and Final GDP. The Advance GDP release is the earliest released and has the greatest impact on the market.

2. Weekly Market Analysis Technical Review

2.1 EUR/USD

2.2 USDCHF

2.3 GBPUSD

2.5 Gold

2.6 AUDUSD

2.7 Oil

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