U.K. Prime Minister Announces Shutdown of Parliament
- 2 September 2019
CURRENCY MARKET OBSERVATIONS – 2 September 2019
Fundamental Outlook The G7 summit ended last week with no highly expected outcome between the leaders. Before leaving the summit, the U.S. President Trump announces an increment in tariff in USD250 billion worth of Chinese imports on 1 September from 10 percent to 15 percent; another USD300 billion Chinese goods from 25 percent to 30 percent starting from 1 October.
China trade representative replies by willing to participate in a calm negotiation if U.S. counterparts reciprocate in same manner. On the other hand, the mainland’s manufacturing index rose 49.5 in August and submerged below 5.0 benchmark for fourth consecutive month.
Last Tuesday, China sent fresh troops to Hong Kong as military force pledges to protect the sovereign right. Chinese Yuan has fallen to 11-year low against Dollar as some analysts reckon the act by central bank to protect the trade exports.
U.K. Prime Minister Johnson has announced the Parliament will be suspended from 9 September to 14 October with the approval of the British Queen. Protest arises from millions of British citizens as they perceive a likely no-deal BREXIT will be outcome as Parliament will have insufficient time to respond before the end October.
Italian Government faces meltdown as the coalition parties has declared unworkable. Prime Minister Guiseppe Conte suffers no-confidence vote from citizens and could be calling for a snap election. As a double impact to BREXIT, investors are taking a close watch at European economy with the concurrent trade war with U.S. Government.
Technical Forecast USD/JPY has a pull-up due to Dollar recovery. Technically, the trend is temporarily supported at 104.50 level while topside is resilient at 107.00 area. Overall trend is likely to thread inside this range till it makes a breakout. Traders are advised to adopt swing trading with risk control.
EUR/USD broke below 1.1050 support and settled at 1.0990 on Friday. This week, the trend could be contained in tight range from 1.0850 – 1.1050 with a tendency to test the aforementioned support. Market is subject to many uncertain risk as Italian politics looms higher risk.
GBP/USD topped off 1.2300 and starts to behave in weak demand after news of Parliament shutdown. This week, we foresee the trend will be strongly resisted at 1.2230 in case of pull-up. However, the bears carry higher potential to engulf the market with a target set at 1.2030 bottoms. Investors are losing confidence in the acts of PM Johnson as spark to meltdown in U.K. economy.
Gold prices reversed down from USD1550 /oz as Dollar challenged 2-year high at almost 99.00 level. This week, we forecast a high chance to see the trend falling to USD1500 /oz with bargain-hunting emerging at USD1490 /oz region. For the time being, the yellow metal might be facing some liquidation as traders will move fund into energy sectors in coming weeks.
WTI Crude prices retraced after hitting USD57 /barrel top last week. Apparently, the trend is rather uncertain while threading sideways. This week, the trend will likely remain unchanged inside the constriction of USD53 – USD57 /barrel. In our opinion, Dollar needs to retrace lower in order to lend a buying force into Crude market.
Silver prices has tested the resistance at USD18.50 /oz and has reduced its trading activity at this high region. This week, we reckon the market will probably begin to reverse lower with 2 supports laying at USD18.00 /oz and USD17.50 /oz region. September could be a month for consolidation as profit-taking emerges. Traders are advised to remain patient and re-pick bottom when the prices end its sideways trend.
Crude Palm Oil (FCPO) Futures on Bursa Derivatives traded lower due to profit-taking after weeks of bullish trends. Market opened higher at RM2312 /MT and fell throughout the week. November19 Futures contract closed at RM2235 /MT on Friday. This week, we foresee the trend will trade in narrow range from RM2200 – RM2260 /MT in mixed sentiment. Market needs to digest the market bulls before finding anew directional trend.
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 email@example.com