Fundamental outlook
AIRLINES worldwide have cancelled more than 200,000 flights in the wake of the coronavirus disease 2019 (Covid-19) outbreak that sent jet fuel prices to the more than a two-year low. Asian tourism has been hit badly shortly after the epidemic was reported.
Dow Jones fell 227 points on Friday’s closing as the Covid-19 continues to instigate fear among investors.
The US officials reported that Russia has been interfering with the Presidential Election 2020 by trying to boost the campaign of Senator Bernie Sanders, a Democratic candidate.
UK consumer prices grew 1.8 per cent in January, hitting a six-month high after being pushed up by moderate recovery in fuel demand. British manufacturing index rose to 51.9 in February, above the median forecast, indicating an expansion. Analysts are observing the performance in coming months as post Brexit remains as a major concern.
Technical forecast
US dollar/Japanese yen pierced above 110 resistance and reached 112 last week as the dollar surged. The market settled at 111.60 on Friday. We forecast the trend will be trading on the topside while demand slows down. Range is expected to be contained from 111 to 112.50.
Euro/US dollar bounced off 1.0780 last week. We project the dollar will correct this week and lift the euro into an initial recovery from 1.08 to 1.0950. Traders are reminded to exercise caution in case the trend falls beneath 1.0780 support.
British pound/US dollar traded in a sideways trend with support emerging at 1.285. We expect the trend will be strongly resisted at 1.3050 with a possibility of falling beneath 1.29 after mid-week.
Technically, this is possible if the pound is used to counterbalance the upturn of the euro over the next few days.
Gold prices have broken above US$1,600 per ounce, settling at US$1,643 per ounce on Friday. The market has been very strong as investors seek safe havens from the epidemic. Support could emerge at US$1,625 per ounce and probably continue to rise if the Dow Jones market stays weak. Our next target in spot gold prices might reach US$1,700 per ounce if the market encounters a short-squeeze above US$1,660 per ounce.
WTI Crude prices recovered last week and the trend is currently sitting well on US$52 per barrel support.
The bulls could climb higher but stay limited below US$56 per barrel. Technically, we expect some selling activities to emerge at US$55 to US$56 per barrel on the topside. Uptrend could be temporary and last until mid-March.
Silver prices traded in a bullish direction last week. The market tends to slow down even as the strong yellow metal prevails. This week, topside resistance will emerge at US$18.70 to US$19 per ounce while support is identified at US$18.20 per ounce. Precious metals have returned to be favourite instruments in the first quarter of this year.
Crude Palm Oil (FCPO) Futures on Bursa Derivatives bounced off RM2,516 per MT bottom last week in confluence with the EMA200 support line. May Futures contract settled at RM2,624 per MT on Friday.
The FCPO market is expected to be well supported in tandem with the recovering crude oil prices. Range is expected to be contained from RM2,550 to RM2,750 per MT region.
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].