China Slows Down in Manufacturing for Second Month
- 4 February 2019
Fundamental Outlook The U.S. FED chair Powell and policymakers hold interest unchanged rate policy. He mentions the policymakers will remain patience in rate hike plan. However, Powell also says the rate hike policy will stay on course despite criticism from President Trump. Before weekend, U.S. Bond yields fell and Dow Jones market recovered on the 6 weeks of winning streaks.
The U.S. non-farm payroll rose 304,000 in January and above forecast. Average hourly earnings slid to 0.1 percent and lowest in 9 months. President Trump remarks he may declare a national emergency to obtain the funds for building border wall. The Government is temporarily re-open until 15 February after shut down for 35 days.
China’s Caixin manufacturing index fell for second month in January at 48.3 reading. Investors are still wary of the U.S. – China trade deal talk that is running out of time. Bilateral trades have been reduced since the trade war began in April last year.
Technical Forecast USD/JPY erased the weekly loss after closed at 109.50 on Friday. Market is still entrapped in sideways consolidation as Dollar fluctuates. This week, we presume the range will be contained from 108.50 – 110.00 in uncertainty as traders transact in mixed sentiment. Main catalyst is staked on Dollar trend for leading the USD/JPY movement.
EUR/USD has shown strong resistance at 1.1500 region last week. Technically, the range is contained from 1.1300 – 1.1500 for past 2 weeks. Fundamentally, the emerging sovereign debts in Eurozone may rekindle a new weakness in Euro currency in due time. We propose the observation of the market trend for breaking beyond the aforementioned range before a clearer direction can be forecast.
GBP/USD topped 1.3200 and closed at 1.3100 for the weekend. This week, we forecast the range will be supported at 1.3000 while contain in the tight range beneath 1.3200 resistance. Due to the cautious situation of BREXIT that is less than 2 months to come, beware of the unexpected change in market in market sentiment. We foresee strong selling pressure has laid above market level at 1.3300 and 1.3500 areas in case of pull-up trend.
Gold prices have reached our target resistance at USD1320 /oz predicted weeks ago. Market topped off USD1326 /oz last week and closed slight lower. This week, we forecast the yellow metal will trade in lower prices due to profit-taking activity. Technically, we reckon the range will be constricted within USD1300 – USD1325 /oz while prone to go southward. Risk control is recommended in case of breakout above USD1330 /oz level.
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 USD16.20 /oz last week and fell. This week, we foresee profit-taking will emerge and drive the prices lower. First support is identified at USD15.70 /oz and USD15.00 /oz areas. By studying the Gold /Silver ratio, we predict the Silver is gradually firmer than yellow metal and probably will rise faster when both precious metals advance in the next phase.
Crude Palm Oil (FCPO) Futures on Bursa Derivatives closed lower after topped off RM2333 /MT level. France and Norway have announced the ban on importing palm oil from Y2020 for protecting home grown oil-based product like rapeseed and sunflower. April Futures contract settled at RM2298 /MT on Friday. This week, we reckon the range will swing from RM2230 – 2330 /MT while prone to liquidation. Bargain-hunting will emerge on downside once the demand draws down.
DAR Wong has 30 years of trading and hedging experiences in global financial markets. The opinion is solely at his own. He can be reached at www.pwforex.com