Fundamental outlook
US jobless claims for the week ended June 6 was at 1.54 million, crossing 40 million total claims. Federal Reserve held the monetary policy unchanged.
Chairman Jerome Powell said policymakers would retain rates at near to zero until 2022 while increasing the monthly purchase in bonds at US$80 billion and US$40 billion for security-backed assets.
Dow benchmark closed at negative 1,861 points. US Treasury Secretary Steven Mnuchin said US cannot shut down the economy again despite ongoing fears of the spread of Covid-19.
North Korea commented that there is less reason to maintain the Kim-Trump alliance as the Trump administration is looking to score political points than to work out real deals for mutual benefits.
UK’s GDP for April fell 20.4 per cent on a monthly basis. UK, which went into lockdown on March 23, are partially easing its lockdown.
US crude inventories rose unexpectedly by 5.7 million barrels in the week to June 5 to an aggregated 538.1 million barrels, hitting a record high. Overwhelming supplies and fear of a resurgence in the spread of Covid-19 dampened demand in global transports and hampered crude prices.
OPEC+ members have agree to cut the global supply through July by a total of 9.7 million bpd.
Technical forecast
US dollar/Japanese yen was supported above 106.50 on the day-chart. The trend would likely recover but the overall movement should be contained from 106.50 to 108.50. A sideways trend is expected. Traders are advised to exercise risk control if the trend breakouts in either direction, earlier than expected.
Euro/US dollar stayed at 1.14 but declined due to the recovering dollar. We expect the trend would continue to decline and reach 1.15 before bargain-hunting emerges. Swing trading is expected to occur as the dollar begins a technical correction.
British pound/US dollar declined from 1.28 tops. The market trend has been supported at 1.25 before the weekend. We expect the market to be contained within this same range as mixed trading activity arises. Risk control is advised.
WTI Crude prices traded from US$35 to US$40 per barrel last week but showed signs of weakness towards the weekend. We expect immediate resistance at US$37.50 per barrel with a likelihood of a decline.
Beware of sliding beneath US$35 per barrel as it could reach US$30 per barrel or lower due to unexpected factors.
Crude Palm Oil (FCPO) Futures on Bursa Derivatives traded in a narrow range.
August Futures contract settled at RM2,370 per MT. We expect the resistance will emerge strong at RM2,400 per MT level and likely fall this week. Downside support is identified at RM2,320 per MT but breaking beneath this level will test RM2,250 per MT.
Gold prices closed at a very neutral range while sitting on US$1,730 per ounce on Friday. We expect the initial range will be contained from US$1,710 to US$1,760 per ounce.
Silver prices traded in sideways trend largely between US$17.20 to US$18.30 per ounce last week. We identified strong support at US$17 per ounce. Falling beneath US$17 per ounce, abandon your long-view for the time being.
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].