China at Slowest Growth Since 2008
- 24 December 2018
Fundamental Outlook President Trump creates news headlines again by threatening to shut down U.S. Government if the Congress refuses to pass a bill of USD5 billion for building the Mexican border wall. Deadline is set on midnight of last Friday and we expect to see a malfunction in Trump Government till year-end.
The U.S. Secretary of Defense Jim Mattis has resigned from Trump administration due to fundamental difference with the President. The tender of letter came 2 days after President Trump announced the withdrawal of U.S. troop from Syria without the knowledge of General Mattis. Dow Jones market plunged 414 points upon market close on Friday.
China has agreed to hold on to increased tariff on U.S. auto import from 1 January for 90 days truce. The national GDP for Q3 grew 6.5 percent and slowest pace since 2008 crisis. Government leaders have promised to cut more taxes in coming 2019 for stimulating the economic growth.
Bank of England holds interest rate unchanged. Governor Mark Carney says BREXIT uncertainty has been intensified over past months and might pull inflation below 2 percent target in coming year.
Technical Forecast USD/JPY traded lower last week as Dollar receded. Technically, we expect some bargain hunting will arise at 110.50 – 111.00 area in case of further drawdown. Recovery is resisted strongly from topside pressure as we forecast range to be contained from 110.50 – 112.50 region.
EUR/USD has shown a strong engulf pattern on Friday’s market close. However, we reckon the support is firm at 1.1250 – 1.1300 region in case of falling trend occurs this week. Technically, we feel the market will thread sideways in narrow range from 1.1250 – 1.1450 region until a breakout follows through.
GBP/USD bounced off recent low at 1.2500 area but hovers at 1.2650 region currently. This week, we reckon resistance will emerge at 1.2720 area and should not be challenged. There is a high chance of resuming bear trend if this resistance is intact and breaking beneath 1.2500 in near future will indicate a new downtrend in Pound.
Gold prices have broken above the previous resistance at USD1240 /oz and now threading at USD1255 /oz area now. This week, we foresee the trend will reverse into ascension after the quick consolidation. Range is forecast to move from USD1250 – USD1270 /oz but piercing above the aforementioned resistance will escalate higher to USD1300 /oz as our target in January.
WTI Crude prices broke down to lower prices as American stocks plummeted last week. Market has dipped to below USD46 /barrel at 16-month low record despite OPEC and Russia will commence supply cut in January. This week, we foresee the trend will drive down to USD42 /barrel and hold over the year-end holiday season. Resistance will emerge at USD48 /barrel in case of recovery though we do not see a high possibility. Traders should remain patient and observe the market for fishing the bottom as trading activity reduces.
Silver prices encountered strong resistance at USD14.80 /oz as we predicted last week. In our opinion, this market will be contained in tight range from USD14.40 – USD14.80 /oz till early January and tailgate yellow metal. There is not much opinion in the trend direction now but piercing below the USD14.40 /oz will need to control your risk factor before entering at lower prices again!
Crude Palm Oil (FCPO) Futures on Bursa Derivatives recovers to comparatively higher than November’s high. Demand for soyoil and palm olein increased in China last week and spiked the FCPO prices. March contract settled at RM2156 /MT after reaching intra-week high RM2200 /MT. This week, we predict some correction will occur and support at RM2110 /MT may be tested again before climbing in January. Topside resistance remains at RM2200 /MT area.
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DAR Wong and Chong HC are the market strategists in APSRI on CPO markets. DAR has 29 years of trading and hedging experiences while HC trades for 11 years and now coaches institutional customers. They can be reached at www.pwforex.com