Fundamental outlook
US and China have agreed to continue talks on the ‘Phase One’ trade deal which was signed in January. Analysts expect Chinese officials will include discussions on banned apps such as Tik Tok and Wechat. US jobless claims for the week ended August 15 rose to 1.1 million. The Federal Reserve minutes showed that officials are worried on the Coronavirus Disease 2019’s (Covid-19) impact on its economic recovery.
Apple Inc became the first American company to exceed US$2 trillion in market capitalisation listed on the stock market. Investors are speculating higher liquidity in US equity markets in the coming months.
Former President Barrack Obama urged Americans to vote for new changes during a Democratic National Convention.
Joe Biden revealed his plan to change policies on retired, disability and survivor benefits if he wins the election. German manufacturing index rose to 53 in August, beating expectations. The European markets remained jittery from uncertainties surrounding the Covid-19 pandemic.
Technical forecast
US dollar/Japanese yen traded sideways last week. The market trend remained within 105 to 107 as the dollar gradually recovered. We expect the price movement to remain unchanged within the aforementioned range but prone to an upside as the dollar might rise.
Euro/US dollar topped 1.1960 last week and sank 200 pips at the weekend’s close. We expect the trend to drive lower but stay supported at 1.17.
The range is still constricted from 1.17 to 1.19 but traders need to beware of prices falling in case the bears break beneath 1.17.
British pound/US dollar failed to stay above 1.32 for four-consecutive days last week. This is a sign of a decline in market prices in the coming week. We forecast the trend will be strongly resilient at 1.32 but it could head down to 1.28 this week. Traders should prepare their risk control.
WTI Crude prices traded in tight range last week but stayed resilient beneath US$43 per barrel. We retain in our market view of the range staying within US$40 to US$43 per barrel. Risk control must be prepared at all times.
Crude Palm Oil (FCPO) Futures on Bursa Derivatives traded sideways and in a tight range last week. The market has shown weakness and might turn down this week. November Futures contract settled at RM2,678 per MT on Friday. This week, we forecast the bears might drive down and reach RM2,550 per MT after mid-week. Resistance could emerge strong at RM2,700 per MT.
Gold prices have exhibited strong resistance at US$2,000 per ounce for the time being. We expect a volatile market trend while the movement could swing from US$1,870 to US$1,970 per ounce. Traders should exercise caution and time their entry from on technical breakout on the intra-day chart.
Silver prices traded sideways last week but have shown a strong resistance above US$27.50 per ounce level. We predict the bears might engulf the trend and likely test US$24 per ounce if the dollar increases in value. Precious metals will face some profit-taking in the coming weeks until mid-September.
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].