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Dow Jones Lifts after Powell’s Comments

  • DAR Wong
  • 7 January 2019

Fundamental Outlook   The Secretary of U.S. Defense Jim Mattis tendered his resignation and supposed to leave Trump administration at end February. Instead, President Trump instructed him to leave 2 months in advance at end December. Generally, market economists are concerned of the erratic and egregious behavior of Trump as no more senior ranked officials is staying in White House.  

After the U.S. Government has been shut down before Christmas, the House passed a Bill on Friday to fund 8 Government Departments through September. However, the budget does not include the funding of border wall as proposed by President Trump. It is still unclear now if Trump will approve it or the House could get enough bipartisan votes to override the President’s veto.    

The U.S. economy added 312,000 jobs in December and way above median forecast. FED chair Powell comments the policymakers will be patient to tighten rates, quelling fears of rapid rate increment in near future. On Friday, Dow market surged 800 points through the mid-day session. 

China announces the cutting of its bank’s reserve requirement ratio (RRR) by 1 percent in January, preparing for economic slowdown and mounting pressure from U.S. tariff. The current RRR for large banks is 14.5 percent and small banks at 12.5 percent.  

 

Technical Forecast   USD/JPY took a dip last week to 10-month low at 105.00 as Dollar fell. Market rebound to 108.50 area on Friday and await a clearer trend in coming week. Technically, we reckon the trend has spearheaded into a bear sentiment and will drive lower in coming weeks. This week, resistance will be strong at 109.00 region while first support lies at 107.30 level. The eventual penetration below the support will lead into the next support area at 104.50 – 105.00 region.

EUR/USD has been well contained from 1.1300 – 1.1500 region last week without much erratic movement. This week, we reckon the trend will be prone to test the topside range resistance. However, piercing above 1.1500 level will drive higher to 1.1700 area in due time as Dollar tends to weaken.

GBP/USD is still threading sideways due to much uncertainty in BREXIT negotiation with European Commission. This week, we foresee little change in market movement from 1.2500 – 1.2800 range. The trend will be prone to test the upside prices but selling pressure is equally strong. In case of unexpected penetration above 1.2800 level, the bulls will attempt 1.3000 as our next target though it may be slim for the time being.

Gold prices reached 1298 /oz on last Friday and retreated. The trend will begin to consolidate for a while due to profit taking and fund will flight to Crude prices for technical recovery. This week, we predict the yellow metal will stay on high prices though it may not pierce above USD1310 /oz benchmark. Technically, we expect the price movement to be contained from USD1270 – USD1310 /oz with many profit takers ambushing on topside of market.

WTI Crude prices has begun to recover with strong support building at USD43 /barrel region. Currently, the trend may still do some sideways consolidation before advancing in coming weeks. Over near term, we foresee the support will be firm at USD45 /barrel while the range is constricted below USD50 /barrel. Weakening Dollar and subsequent correction in Gold will be good lifting factors for Crude prices though we foresee the next resistance will emerge at USD53 /barrel.     

Silver prices have started bullish trend while the Gold/Silver ratio has declined from 86.00 to 82.00 level. Moving forward, we expect the Silver prices to climb higher despite slowdown in yellow metal. This week, we forecast the support will lay firm at USD15.50 /oz in case of mild drawdown. Topside potential will aim at USD16.50 /oz if bulls could cross above USD16.00 /oz benchmark.     

Crude Palm Oil (FCPO) Futures on Bursa Derivatives recovered last week in mild ascension. Most of the general commodity have reversed higher amid lower Dollar. FCPO is considered a slower recovering commodity compared to soyoil and olein. March contract settled at RM2171 /MT on Friday with moderate trading volume and open-interest. This week, we predict the trend will be sideways from RM 2130 – RM2200 /MT with potential bargain hunting from bottom prices. Price jump is only possible towards end of week or rollover period.

 

 

Disclaimer: This article is written for general information only. No liability by the writers, publisher or any third party involved in the distribution of this work.  

DAR Wong has 30 years of trading and hedging experiences in global financial markets. He can be reached at www.pwforex.com


About the Author
DAR Wong (Singapore)
An international speaker with 27 years of trading experience in the global financial markets, DAR is a Market Master and author of “Living Daylight in Stock Market: Monetizing Your Profits in 8 Days”.

DAR Wong is an active market trader, registered fund manager, educator and author.He began his career in 1989 as an institutional Futures trader with Bank of America. DAR Wong specializes in trading global derivatives and financial markets. He has 26 years of experience accumulated through tenure with Bankers Trust, Barclays Bank, Citigroup (Smith Barney Shearson Inc) and as an independent trader.

DAR is the author of “8 Ways to Invest in China’s Emerging Market” and contributes frequently to regional media, including financial TV/Radio programmes, newspapers and magazines for professional traders and active investors.

He is a popular and sought after international speaker who has presented to financial professionals and investors throughout the region including Singapore, Malaysia, Indonesia, Thailand, Hong Kong, China, Cambodia, Myanmar, Philippines, Sri Lanka, India, South Korea, Laos, Vietnam, United Kingdom and Middle East (UAE).

DAR is registered with NASD (now known as FINRA) series 3 and 5 as approved by National Futures Association (NFA) of USA and holds a current portfolio as Fund Strategist and Advisor with Dektos Investment registered with Monetary Authority of Singapore.

DAR is profiled as “One of the most successful traders – Market Masters” in Brent Penfold’s bestselling book “The Universal Principles of Successful Trading “. In January 2015, DAR was honored with Outstanding Award for International Financial Market Analysis granted by ASEAN Commerce (Thailand).

DAR is the author of "8 Waysto Invest in China's Emerging Market" and contributes frequently to regional media, including financial TV/Radio programmes, newspapers and magazines for professional tradersand active investors.1

He is a popular and sought after international speaker who has presented to financialprofessionals and inverstors throughout the region including Singapore, Malaysia, Indonesia, Thailand, Hong Kong, China,Cambodia, Myanmar, Philippines, Sri Lanka, India, South Korea, Laos, Vietnam, United Kingdom and Middle East(UAE).2


Year
2003 - Set up ASPRI to provide hedging advisory for corporate clients and training for financial professionals
2009 - Released first book “8 Ways to Invest in China’s Emerging Market”
2010 - Profiled as “one of the most successful traders – Market Masters” in Brent Penfold’s bestselling book “The Universal Principles of Successful Trading” along with Larry Williams, Andrea Unger, Michael Cook, and Daryl Guppy etc
2011 - Received “Spirit of Enterprise”awarded by Singapore Management University in Singapore
2012 - Honored with Individual Diamond Career (Thailand) awardedby Royal Privy Council of Kingdom of Thailand
2013 - Appointed Vice Chairman of ASEAN-China Commerce Association and led a delegationtothe annual China-Asean Expo in Guangxi Province, China
2014 - Fund Manager cum Director in Dektos Investment Corporation registered with Monetary Authority of Singapore
2015 - Released new book “Living Daylight in Stock Market - Monetizing Your Profits in 8 Days” in January
2015 - Honored with Outstanding Award in International Financial Market Analysis awarded by ASEAN Commerce (Thailand)
2016 - Honored with Medal of Integrity by Royal Councilin Palace of Palembng, Indonesia

References

1.TV programs on ChannelNewsAsia (Singapore);Radio on 95.8 Capital (Singapore); Newspapers such as The Borneo Post (Malaysia), 资汇报 (Malaysia); Regional financial magazines such as The Analyst (India), 东盟商界(ASEAN, China), 资本杂志 (Malaysia).

2.Spoke at events for CME Group, Euronext LIFFE, Tokyo Commodity Exchange, Singapore Exchange, Korea Exchange, Bursa Malaysia, Thailand Futures Exchange, Jakarta Futures Exchange, Indonesia Commodity and Derivatives Exchange, Tokyo Commodity Exchange, Interactive Brokers, Xinhu Futures, Hangzhou Money Fair, China (Shenzhen) International Finance Expo, China (Guangzhou) International Finance Expo, Euromoney, CIMB, Maybank, RHB, UOB Bank, Asia Trader & Investor Convention, Global Rubber Conference, International Rubber Conference, Malaysia Rubber Board, International Rubber Research and Development Board,Malaysia Ministry of Agriculture, Rubber Industry Smallholders Development Authority, Vietnam Rubber Association, Cambodian Rubber Association, Bureau of Agriculture Research Philippines, Myanmar Rubber Planters & Producers Association etc.