American Payrolls Rise and Dampen Rate Cut
- 8 July 2019
CURRENCY MARKET OBSERVATIONS – 8 July 2019
Fundamental Outlook The U.S. payroll rose 224,000 in June and above forecast, dampening the traders’ expectation of impending rate cut by policymakers. Dollar recovered on Friday and punted the precious metals and Crude demand.
The U.S. President Trump accuses of Europe and China for devaluing their currencies for unfair advantage. Trump also threatens a new tariff on EUR400 billion of European goods. Meanwhile, Vietnam and European Union have signed a treaty of eradicating almost 99 percent tariff on imports made in Asian countries.
China says the trade tariffs must be removed completely if a trade deal is to be reached between U.S. and China. However, President Trump cites the current 25 percent trade tariffs on USD250 billion worth of Chinese imports will be not removed.
European Union leaders have agreed to nominate the International Monetary Fund chief Christine Lagarde as the new head of European Central Bank. Before the weekend, European stock markets cheered in rally.
OPEC allies have agreed to cut supply through March 2020 to support oil prices by maintaining 1.2 million barrels production per day.
Technical Forecast USD/JPY has shown a recovery on Friday as Dollar strengthened. This week, we reckon the trend will trade slightly higher but contain from 107.50 – 109.00 range. Only breaking beyond the range will extend into a new direction in either headway.
EUR/USD has dipped before the weekend but nearing to support area. This week, the trend could be supported at 1.1150 – 1.1180 region and rebound for short-covering. Topside resistance is identified at 1.1300 area in case of pull-up retracement. Technically, the movement of Dollar Index will play an essential role in triggering an inverse relationship to Euro.
GBP/USD has come back to 1.2500 benchmark as Pound recedes in waning confidence. This week, we foresee a strong resistance will lay across 1.2600 level in case of recovery. However, the breaking beneath 1.2500 support will open a huge potential to test 1.2370 level on the downside. Uncertainty has been looming over British economy as BREXIT approaches in October.
Gold prices reversed down on Friday after following the surge in Dollar. This week, we forecast the yellow metal will trade in weaker demand but still may encounter some bargain-hunting activities at USD1380 /oz area. Overall range is expected to move from USD1380 – 1420 /oz for the time being until we see a breakthrough in either directional headway.
WTI Crude prices have been standing firm on USD56.50 /barrel level and likely to rise this week. Technically, the trend will trade in bullish sentiment from USD56 – USD60 /barrel range. However, piercing above USD60 /barrel will lift the prices to USD63 /barrel as our next target.
Silver prices dived on Friday with yellow metal as Dollar rose. This week, we presume the trend will go lower and likely to test USD15.60 /oz again before bargain-hunting emerges. Resistance is identified at USD16.20 /oz in case of upward retracement.
Crude Palm Oil (FCPO) Futures on Bursa Derivatives traded in small range last week while hovering around RM1950 /MT level. The market is supported from falling further but could not summon enough demand to drive up the prices. This week, the trend may bounce up to RM2000 /MT so long as it doesn’t penetrate beneath RM1930 /MT support. On the contrary, breaking beneath the RM1930 /MT will head down to RM1880 /MT region.
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 firstname.lastname@example.org