Fundamental outlook
US Fed pledged no limit to support asset purchases in order to fight the Coronavirus Disease 2019 (Covid-19) outbreak. On Thursday, US recorded the most Covid-19 cases in the world, surpassing China and Italy.
As at time of writing, US recorded more than 100,000 confirmed cases. On Friday, President Donald Trump signed a US$2 trillion stimulus programme after the Congress approved the new bill to fight the negative impact of the coronavirus.
US jobless claims soared to 3.28 million, a record high. The economy grew 2.1 per cent in the final quarter of 2019. Last Wednesday, the yields of one-month and three-month US Treasury Bills dipped to below zero for the first time in four and a half years. US Secretary of State Mike Pompeo urged Saudi Arabia to end the price war with Russia on oil production.
The recent plunge in oil prices have caused a loss in profit margin to all oil producing countries.
UK Prime Minsiter Boris Johnson orders a three-week closure on all non-essential services, places of worship and social events, ordering all Britons to stay at home. Johnson has been tested positive for Covid-19 on Friday morning.
Technical forecast
US dollar-Japanese yen headed downwards from above 111 level to 108 before the weekend. We foresee the market trend will be volatile in mixed trading activity. The range is expected to move from 106 to 109 region while some profit-taking might continue in the market.
Euro-US dollar stood off 1.0630 support and recovered strongly last week. We project some selling pressure will emerge at 1.12 to 1.1250 area in case of a further ascension. Downside support is identified at 1.095, in case of a drawdown.
British pound-US dollar reversed from the 1.14 recent support, rising to 1.2450 before the weekend close. Technically, we reckon the resistance will be strong at 1.26 in case of a further rise. Downside support will emerge at 1.22. However, we notice a high interest in selling British pound-US dollar above 1.28 level for a new shorting. Traders are advised to plan their strategies wisely.
WTI Crude prices have been struggling in a narrow range from US$20 to US$25 per barrel last week. There is not much demand in oil market and we do not foresee a quick recovery in the near future.
Saudi Arabia is in control of oil prices now as they vow to increase daily production to gain control of market share. Beware of testing the US$18 per barrel before jumping back to above US$20 per barrel benchmark.
Crude Palm Oil (FCPO) Futures on Bursa Derivatives traded in uncertainty, within a narrow range around RM2,360 per metric tonne. International trade slowed down due to the lockdown in many Asean countries.
June Futures contract settled at RM2,376 per metric tonne on Friday. We foresee the support will emerge at RM2,300 per metric tonne while topside limits to RM2,450 per metric tonne. Beware of violation of price movement beyond this target range.
Gold prices rose last week as the dollar Iindex plummeted from 104 high to 99. Gold might have reached a temporary top at US$1,650 per ounce and will begin to correct this week. We expect the range will largely swing from US$1,560 to US$1,660 per ounce in mixed movement.
Silver prices hovered at US$14.50 per ounce before the weekend. The market has reached a temporary top and will likely to correct this week. We target the correction range will be contained from US$13 to US$14.50 region. Traders are advised to control their risk in case the trend moves beyond this range.
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].