Borneo Post Online (04/02/2019) - Fundamental outlook
THE US Fed chairman Jerome Powell and policymakers retained US interest rate policy. He mentioned that the Fed will remain patient in its rate hike plan. However, Powell also said the rate hike policy will stay on course despite criticism from President Donald Trump. Before the weekend, US bond yields fell and Dow Jones market recovered, making its six consecutive weeks of winning.
The US non-farm payroll rose 304,000 in January, above forecast. Average hourly earnings slid to 0.1 per cent, the lowest in nine months. President Trump said he might declare a national emergency to obtain funds for building the border wall. The government is temporarily re-opened until February 15 after the historical 35-day shutdown.
China’s Caixin manufacturing index fell for the second month in January at 48.3. Investors are still wary of the US-China trade deal talk that is running out of time. Bilateral trades have been reduced since the trade war began in April last year.
US dollar/Japanese yen erased weekly losses, closing at 109.50 on Friday. The market is still stuck in a sideways consolidation as the dollar continues to fluctuate.
This week, we presumed the range will be contained from 108.50 to 110 as traders transact in mixed sentiments. The main catalyst is the dollar’s trend against the yen.
Euro/US dollar showed strong resistance at 1.150 last week. The range is contained from 1.13 to 1.15 for the past two weeks. Fundamentally, the emerging sovereign debts in the eurozone may rekindle a new weakness in the euro. We propose an observation of the market trend.
British pound/US dollar topped 1.32 and closed at 1.31 for the weekend. This week, we forecast the range will be supported at 1.30 while contained within the tight range beneath the 1.32 resistance. Due to the cautious situation of the Brexit, be aware of unexpected changes in market sentiments. We foresee strong selling pressure above 1.33 and 1.35.
Gold prices have reached our target resistance at US$1,320 per ounce, as predicted weeks ago. This week, we forecast the yellow metal will trade at lower prices due to profit-taking activities. Technically, we reckon the range will be constricted within US$1,300 to US$1,325 per oz. Risk control is recommended.
WTI Crude prices have exhibited strong buying interest on Friday as the market closed at USD55 /barrel region. This week, we reckon the downside room is supported at USD52 /barrel in case of unexpected fall. By studying the technical appearance, we propose buying on retracement if there is any pull-down in early week. Our hind side target remains unchanged at USD62 /barrel once the bulls pierce above USDS56 /barrel.
Silver prices topped US$16.20 per oz last week and fell. This week, we foresee profit-taking will emerge and drive prices lower. First support is identified at US$15.70 per oz and US$15 per oz. By studying the gold/silver ratio, we predict the silver will firm up gradually and will likely rise faster when both precious metals advance in the next phase.
Crude Palm Oil (FCPO) Futures on Bursa Derivatives closed lower after topping off RM2,333 per MT. France and Norway have announced a ban on importing palm oil from 2020 onwards to protect their home-grown oil-based products like rapeseed and sunflower. April Futures contract settled at RM2,298 per MT on Friday. This week, we reckoned the range will swing from RM2,230 to RM2,330 per MT while prone to liquidation. Bargain-hunting will emerge on the downside once the demand draws down.
Read more at http://www.theborneopost.com/2019/02/04/us-holds-interest-rate-policy-unchanged/