BREXIT Delays till End October
- 15 April 2019
Fundamental Outlook The U.S. Federal Reserve officials release the minute of their most recent meeting that expresses the possible room for interest rate increase before the end of the year should economic conditions improve.
The U.S. jobless claims fall to 196,000 in the week ended 6 April, lowest record since 1969. President Trump says U.S. will be prepared to launch 5G technology before year-end and will win the race.
China’s trade surplus posts RMB221 billion in March and above forecast. Inflation reports show consumer prices rose 2.3 percent on year basis while producer gained 0.4 percent from a year ago.
European Central Bank President Draghi says recession risk remains low and interest rates will likely stay unchanged till year-end. Draghi also cites the Trump’s tariff threat is hurting the European’s confidence.
European Union has granted the delay to BREXIT until 31 October, more than what PM May and U.K. lawmakers ask for. Analysts predict the Pound will rise and U.K. Parliament will expedite to reach an agreement for the departure.
IMF downgrades the world’s growth forecast to 3.3 percent in 2019, and subsequently the report may gain 3.6 percent growth in 2020.
Saudi Aramco’s Bonds offer has attracted a massive USD100 billion placement from global investors. Market analysts predict the crude prices will raise to USD70 /barrel in 2019 due to geo-political risk in Syria and Venezuela, while OPEC and Russia persist in cutting global supply.
Technical Forecast USD/JPY rose after mid-week and settled at 112.00 region on Friday. This week, we reckon the resistance will emerge at current region and the trend will be caught in between the forces. Trend will be contained in tight range from 111.50 – 112.50 region. Otherwise, piercing above 112.50 level will rise to 114.00 target.
EUR/USD rose gradually last week and sat on strong support around 1.1250 area. This week, we expect the bulls to emerge after mid-week and rise to 1.1400 region. Support at 1.1250 level cannot be breached, otherwise the uptrend needs to be abandoned.
GBP/USD has been narrowing into a flag formation and ready to extend in either direction. This week, we foresee the trend is initially contained from 1.3000 – 1.3100 but trend to surge upon breaking the topside resistance. Positive outcome for BREXIT delay till end October may lift the demand for Pound to 1.3300 before we could further evaluate the trend again.
Gold prices traded in sideways weakening trend last week due to firm Dollar. This week, we foresee the support will emerge at USD1280 /oz region in case of further drawdown and likely to rebound from this bottom. Overall trend is expected to move from USD1280 – USD1300 /oz for time being though we aim to see further ascension towards month end. Abandon your long-view if the trend breaches below USD1280 /oz level.
WTI Crude prices failed to pierce above USD65 /barrel for settlement last week. The market sentiment may be stagnated for time being and begin to thread in sideways correction. This week, we forecast the trend will trade in narrow range and prone to correct a bit. Overall movement will be contained from USD62 – USD65 /barrel until the trend breaks beyond in either direction. However, we still carry the opinion of higher trend in Q2 season.
Silver prices have retreated to the strong support at USD15.00 /oz region. This week, we reckon the trend may stagnate awhile but poise above USD14.80 /oz level. Overall range is expected to thread from USD14.80 – USD15.30 /oz with a recovery anticipated toward coming Friday. In our opinion, it may be a good opportunity to pick bottom for Silver prices as the Gold/Silver ratio is getting ready to fall from current 86.00 high.
Crude Palm Oil (FCPO) Futures on Bursa Derivatives fell last week after report showed higher output. Futures contract in June19 closed at RM2166 /MT. This week, we predict the initial range will hover between RM2140 – RM2180 /MT until it breaks out of this region. Technically, we have identified the secondary targets at RM2100 /MT and RM2250 /MT levels in case of breaking beyond the range in either direction.
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