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IMF Forecasts on Global Slowdown

  • DAR Wong
  • 10 June 2019

CURRENCY MARKET OBSERVATIONS – 10 June 2019

Fundamental Outlook   Last week, the U.S. President Trump ended his 3-day visit to U.K. and assures that U.S. will cut a very phenomenal trade deal with the U.K. Government. On the other hand, some anonymous sources say U.S. is preparing to make a USD2 billion sale of military weapons to Taiwan, escalating the tension of trade war with China.

President Trump announces a deal has been reached with Mexico while the import tariff supposed to commence on 10 June has been averted. Measure on deterring involuntary immigrants also will be strengthened at the border. On separate case, President Trump says tariff on Chinese imports could raise by another USD300 billon benchmark if necessary.

The American payroll added 75,000 in May and triggered an increased expectation of rate cut in coming FOMC meeting. Unemployment rate at 3.6 percent and unchanged from April. Dow benchmarks closed 260 points higher on Friday followed through the expected rate cut in June. 

The U.S. treasury yield curve has turned inverted as the 10Y Bond yield tanks down to 19-month low at below 2.084 percent on Friday. Traders are now forecasting a possible rate cut in June as the inflation wanes and sign of recession surfaces. 

China has issued a new whitepaper claiming U.S. to be an untrustworthy negotiator and backtrack on the proposed deal. Beijing Government also warns its citizens from travelling to U.S. country.

Last week, China’s President Xi visited Russia for a 3-day visit and called President Putin as his best friend and colleague. Xi also cited U.S. will remain strong as allied country to China. 

The European Central Bank President Mario Draghi pushes backward the possibility of rate hike due to uncertainty of trade war tension and fear of global recession.

IMF forecasts the GDP growth for China will be lowered to 6.2 percent in 2019 from previous year 6.3 percent. Impact of trade war will wipe out USD455 billion on global GDP next year.

Technical Forecast   USD/JPY has been trading sideways last week in consolidation. The trend is threading in tight range from 107.50 – 108.50 region while waiting to break in either directional headway. Our next targets will be 106.00 or 109.50 upon breaking beyond the aforementioned range.

EUR/USD surged last week for recovery and closed at 1.1330 on Friday. This week, we forecast the trend will consolidate at 1.1250 area before climbing higher. Temporary target is identified at 1.1400 level in case of continual rise. Dollar index will pay an essential role for leading the inverse direction of Euro.

GBP/USD has been trading in mild recovery after PM May announced her resignation. This week, we reckon the range will be limited from 1.2650 – 1.2800 region while waiting for more fundamental news. The English cabinet is waiting for the electing a new Prime Minister from Conservative Party to replace Theresa May.

Gold prices closed at USD1340 /oz resistance area on Friday. This week, it is very likely to see a surge on upside due to potential Dollar fall. Initial range is expected to be contained from USD1325 – 1350 /oz for yellow metal. Piercing above USD1350 /oz will probably reach higher at USD1380 /oz with many unbelievers caught in shorting position!

WTI Crude prices dipped below USD51 /barrel last week and reversed a little. This week, we predict the trend will be trading in small range from USD50 – USD54 /barrel amid mixed sentiment. No clear direction is seen yet though Dollar is weakening. Breaking beneath USD50 /barrel needs to control your risk before fishing for a lower bottom after mid-June.

Silver prices have moved into recovery by entailing Gold trend. This week, the trend will likely consolidate sideways from USD14.75 – USD15.15 /oz until a new bullish strength returns to market. Piercing above USD15.20 /oz will lead a new uptrend to USD15.60 /oz.

Crude Palm Oil (FCPO) Futures on Bursa Derivatives traded in consolidation last week. Ringgit has strengthened against Dollar as the USD/MYR might fall further in the range 4.12 – 4.17 this week. August19 Futures closed at RM2027 /MT on Friday. This week, we foresee the trend will be supported at RM2000 /MT and likely to make a recovery. Topside resistance will emerge at RM2100 /MT area.

 

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 dar@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.