Trump declares national emergency

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Fundamental outlook

PRESIDENT Donald Trump declared a national emergency in a bid to fund his promised US-Mexico border wall without congressional approval.

On Friday, US officials from both Democrats and Republicans objected the bill and vowed to challenge as a violation of the US Constitution. Meanwhile, on the US–China trade talk, the Trump administration cited its intention to extend the deadline for another 60 days.

China’s trade surplus grew US$39.2 billion in January, better than forecast, compared to US$57.1 billion in the previous month. Consumer prices grew 1.7 per cent in January, the lowest in 12 months.

The Organisation of Petroleum Exporting Countries (OPEC) cut production by 800,000 barrels in January and hopes this could lift demand for the oil commodity. On Friday, WTI Crude rose to 2019 high and closed above US$555 per barrel. OPEC and oil producing countries vowed to maintain production cut in the coming months to fight the global slowdown.

Technical forecast

US dollar/Japanese yen showed strong resistance at 111 on Friday. The market is prone to fall in the coming week, testing 109.50. We foresee the trend will trade within the aforementioned range as the dollar remains weak.

Euro/US dollar fell last week after European Central Bank (ECB) discussed issuing new multi-year cheap loans. This week, we predict the trend will be supported at 1.22 to 1.2220. The overall range will be limited at the 1.24 resistance.

British pound/US dollar exhibited interest at 1.28 and closed higher on Friday. The pound is still subject to the Brexit uncertainties. This week, we expect consolidation from 1.28 to 1.30.

Gold prices recovered from US$1,302 to US$1,321 per ounce the last two days before the weekend. This week, we foresee the trend will be contained from US$1,310 to US$1,330 per oz. Unless the bulls pierce above US$1,330 per oz resistance, we expect sideways movements.

WTI Crude prices saw strong demand on Friday after comments from OPEC’s Saudi leader on the continuation of a cut in production.

This week, we reckon the support will be very firm at US$54 per barrel and the bulls could climb higher to US$60 per barrel. Observe the dollar index (USDX) that will be main catalyst to energy prices.

Silver prices traded in tight consolidation last week. The market stood firm at US$15.50 per oz and it is prone to climb higher this week. Observe the gold-silver ratio at 84 that is about to decline soon and push up demand for silver.

Crude Palm Oil (FCPO) Futures on Bursa Derivatives traded sideways in a small range after the holiday season. April contract settled at RM2,253 per MT on Friday. We forecast the support to emerge at RM2,230 per MT and potentially trade higher. Resistance is at RM2,350 per MT.

Dar Wong has 30 years of trading and hedging experiences in the global financial markets. The opinion is solely his own. He can be reached at www.pwforex.com