Fundamental outlook
A second whistleblower has been lodged against President Donald Trump on his open invitation to China to investigate Joe Biden and his son. With many interference created by the Trump administration on the inquiry, the House Intelligence chairman Adam Schiff called the White House’s moves as “further acts of obstruction of a coequal branch of government.”
Three US companies angered the Chinese Government. To appease the situation, Apple Inc removed apps that enable protestors to monitor movements of the Hong Kong police, Activision Blizzard suspended a virtual game that simulates Hong Kong protestors in mask and goggles.
Separately, NBA activities, broadcast programmes and all sponsorship from Chinese partners have been removed from public access in China, resulting in the loss of billions of dollars.
President Trump said his team has come to substantial phase one deal with China with Chinese delegates led by Vice Premier Liu He. Dow market closed with 319 gains in optimism.
UK GDP on monthly basis in August fell 0.1 per cent. British housing prices grew at its slowest rate in six years by 1.1 per cent in September from a year ago. Economists and investors anticipate that housing prices will remain sluggish after Brexit.
The pound fell as market critics lose confidence in the Brexit deal since the deadline is just less than three weeks away.
However, the pound shot up on Friday in optimism after UK and EU leaders rushed for a hasty meeting to re-negotiate a deal on the Brexit.
An Iranian oil tanker was struck by two rockets on the red sea off Saudi Arabia. Crude prices rose two per cent on Friday after the news release. No one has claimed responsibility to the sabotage.
Technical forecast
US dollar/Japanese yen traded in recovery last week but halted at 108.50. We foresee the range is still constricted from 106.50 to 108.50 region in mixed trading. Beware of a violation above 108.50 for settlement as this might initiate a new upward trend in October.
Euro/US dollar climbed within our forecast range. The resistance will lift slightly higher to 1.11. We reckon the bargain-hunting will be at 1.095. The price movement could remain within a narrow range.
British pound/US dollar shot up 500 pips over last two days before the weekend from 1.22. The rapid rise was triggered by the unexpected optimism over UK discussion with EU Governors in Brussels. We project strong selling pressure will emerge above 1.27 and some profit-taking might occur in market. Overall range is expected from 1.25 to 1.27 while traders stay on the fence.
WTI Crude prices regained its uptrend and traded around US$55 per barrel before the weekend. The trend sits well on US$52 per barrel support. Topside target lies at US$58 per barrel and should encounter some profit-taking. The Syrian tension and Iran’s reaction to the sabotage of oil tanker will be prime focus in oil market in the coming week.
Crude Palm Oil (FCPO) Futures on Bursa Derivatives traded slightly higher last week. Recovery in energy prices might pull the FCPO higher in the coming week. December Futures contract closed at RM2,182 per MT on Friday. The market support could emerge at RM2,160 per MT. In case of strong bullish strength, breaking above RM2,220 per MT will aim for RM2,260 per MT area.
Gold prices have shown downturn pattern on the day-chart. The overall range is expected to be contained from US$1,460 to US$1,500 per ounce and prone to bear sentiments. The correction in yellow metal may lend buying forces to push oil prices higher. Long traders should be cautious in case gold prices sink below US$1,460 per ounce level.
Silver prices traded sideways and has been waiting for more fundamental signs in the market. We expect the trend to be contained within a tight range from US$17.30 to US$18 per ounce. However, it may be prone to fall on the downside as precious metals could fall for a technical correction.
Dar Wong has 30 years of trading and hedging experiences in global financial markets. The opinion is solely his own. He can be reached at [email protected]