Boris Johnson Becomes the New British Prime Minister
- 29 July 2019
CURRENCY MARKET OBSERVATIONS – 29 June 2019
Fundamental Outlook American jobless claims fell to 206,000 in the week ended 20 July and data signals strong employment market. The quarterlyGDP for Q2 seasons grew 2.1 percent and above forecast, versus 3.1 percent gains in Q1 seasons.
President Trump agrees to give timely licensing approval to U.S. chipmakers for selling equipment to Chinese tech giant Huawei. Chinese importers have made inquiry on prices from American agriculture exporters of potential transaction. This week, trade negotiators from U.S. and China will meet to further discuss on trade deal after the last meeting between Trump and Xi in end June.
China’s industrial profit fell 3.1 percent in June from a year ago to RMB601.9 billion, following a 1.1 percent annualized gain in May. In the business sector, Alibaba Group is planning for a second listing in Hong Kong and other Chinese companies may follow suit.
IMF forecasts the global economy will grow 3.2 percent in 2019 and risk continues to weigh on downside due to ongoing U.S. – China trade war.
European Central Bank policymakers keep interest rates unchanged. President Draghi signal more easing may follow if recession surfaces. In Eurozone, another trade war is heated up among U.S., Germany and France on automobile, wine and digital tariffs.
Boris Johnson wins election and becomes the U.K. Prime Minister. Pond has fallen as market analyst reckon Johnson is a believer for no-deal BREXIT and will lead U.K. into harsh separation in October.
Last Thursday, North Korea fired 2 short-range missiles and conducted first test launch after conversation with President Trump in June. Leader Kim says this is warning to warmongers from the South. U.S. Government has not given any comment.
Technical Forecast USD/JPY recovered from 107.30 support after Dollar strengthened. This week, we forecast the range will be limited below 109.30 level while the overall range will be contained above 107.30 area. Traders are still watching the Dollar as major catalyst in moving the USD/JPY trend.
EUR/USD has settled at support area on Friday as Dollar rose. Market is still sitting on 1.1100 support and hopefully can bounce for recovery this week. Technically, there is a danger of plunging lower at 1.0850 region before bargain-hunting steps into market. On the other hand, upside potential is limited at 1.1200 level in case of recovery.
GBP/USD fell after Johnson was announced as the new Prime Minister. Currently, market is very near to the 1.2350 support and may drive lower to test 1.2100 ground. In case of recovery, we foresee the resistance will emerge at 1.2500 level. Pound is rather uncertain and needs caution for trading.
Gold prices have been trading in small range amid uncertainty last week. For the time being, market has lost the bullish steam but still well supported above USD1410 /oz level. This week, we reckon the range will be contained from USD1410 – USD1430 /oz until there is a breakout beyond. However, this might be observed by using the Crude trend as a counterbalance to the yellow metal.
WTI Crude prices traded in small range last week with no fundamental news in oil market. Technically, the trend is still contained from USD55.00 – USD57.50 /barrel until there is a new driven force pushing beyond the range. We foresee a potential in moving up as Dollar may begin to weaken in near future. Piercing above USD57.50 /barrel will rise to USD60.00 /barrel as our next target.
Silver prices have met strong selling forces above USD16.60 /oz and will begin to correct soon. This week, we foresee the trend to lower at USD16.00 /oz support. Sideways trend is expected to emerge in market from USD16.00 – USD16.60 /oz as traders adjust their mixed positions. Comparatively, we predict the Gold prices will have more market participations in case the precious metals fall in coming week.
Crude Palm Oil (FCPO) Futures on Bursa Derivatives traded higher last week following soybean oil rise. October19 Futures closed at RM2065 /MT on Friday and closed at 8-week high record. If the trend could stand above RM2040 /MT level, we foresee the bulls will ascend higher to test RM2120 /MT before profit-taking activity emerges. Ideally, the USD/MYR rate has to trade above 4.10 level in order to lead FCPO on continual recovery.
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 firstname.lastname@example.org