Dow Benchmark Reaches Historical High above 27,000 Level
- 15 July 2019
CURRENCY MARKET OBSERVATIONS – 15 June 2019
Fundamental Outlook TheU.S. President Trump lambasts U.K. Prime Minister May and the ambassador to U.S. after the leakage of confidential emails quoting White House as “Uniquely Dysfunctional” and “Inept”.
The U.S. Treasury Department says the Government could be running out of budget in early September and asks for increasing the debt limit before lawmakers go for recess in September. Earlier this year, the Government was shut down for 35 days after funding lapsed.
President Trump expresses disappointment in China for not buying American crops after both countries met in G20 meeting and have agreed to hold the tariff unchanged during the truce period.
Last Thursday, Dow markets ended above 27,000 benchmark for the first time after FED chair Powell cited weaker overseas economic performance and trade tension may dampen the U.S. growth. Traders interpret the remark as a signal for impending rate cut in coming September.
China urges U.S. to halt sales of weaponry arms to Taiwan worth USD2.2 billion, rebuking it as an interference to the domestic security to the mainland.
China’s trade surplus increased USD51 billion in June and higher than previous month. Exports fell 1.3 percent from a year ago while imports dropped 7.3 percent in the same period.
International Energy Agency (IEA) expects the resurgence of global supply glut in 2020, despite the recent agreement of OPEC and allies to hold onto 1,2 million barrels of production per day till March next year.
Technical Forecast USD/JPY topped off 109.00 level last week and fell. This week, we forecast the trend will be resisted at 108.40 area and tend to fall further. Our target is identified at 107.00 region as the Dollar may weaken. It may be a good strategy to pick the short position upon pull-up retracement with risk control preset.
EUR/USD bounced off 1.1200 level while buyers have gradually entered market. this week, we foresee the trend will thread in sideways pattern while prone to more buying sentiment. Overall range is expected to move from 1.1200 – 1.1350 region.
GBP/USD has shown strong support at 1.2440 area. This week, we predict the Pound will recover mainly due to lower Dollar. Overall range is expected from 1.2500 – 1.2700 region as the short-covering arises in market. International traders are still speculating the Pound as the outcome of new Prime Minister is waiting to be elected in British cabinet.
Gold prices have been trading sideways last week in mixed sentiment. Traders are speculating in market as rising expectation of FED fund rate cut in September. However, we are still adopting a neutral opinion as the trend is likely to narrow into the range of USD1390 – USD1420 /oz this week. The trend will only move into a new directional headway after it breaks beyond the aforementioned range.
WTI Crude prices broke above USD60 /barrel during last mid-week. Traders are becoming optimistic as Dollar begins to weaken and OPEC reiterates the determination to cut global supply. This week, we reckon the initial range will be constricted in narrowly from USD59 – USD61 /barrel until there is a breakthrough in either direction. Nevertheless, there is a higher chance of price ascension due to flight-out from Dollar. Breaking above USD61 /barrel might climb to USD64 /barrel as our next target.
Silver prices have been hovering around USD15.10 while confluent to the EMA200 line. Same as the yellow metal, we predict the Silver will stay in narrow sideways from USD15.00 – USD15.40 /oz until it pierces the constriction in either direction. Generally, the impending Dollar trend will be an essential catalyst to influence Gold and Silver inversely in coming weeks.
Crude Palm Oil (FCPO) Futures on Bursa Derivatives traded in small range but in sluggish sentiment. Market sentiment is weak in demand but prices are unwilling to slide further. August19 Futures closed at RM1944 /MT on Friday. This week, we predict the market will trade in recovery from RM1920 - RM1980 / MT in short-covering. However, long traders should abandon your view once the trend falls beneath RM1920 /MT level.
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