APAC countries form largest trading bloc via RCEP

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Fundamental outlook

CHINA and 14 Asia-Pacific countries signed a major trade pact known as Regional Comprehensive Economic Partnership (RCEP). Chinese President Xi Jinping said China will not seek to disassociate itself with US economy and pledges to cut tariffs. He reassured of gradually opening the door for China to integrate with its global bilateral partners.

US jobless claims for the week ended November 14 climbed 742,000 as the job market continued to struggle.

US Treasury Secretary Steven Mnuchin called for an end to the Covid-19 pandemic relief for struggling businesses and this caused jitters in the market.

Before the weekend, he explained that the media has misunderstood his words and reassured of a surplus fund to support the market’s recovery.

Moderna company said its vaccine showed 94.5 per cent effectiveness during its preliminary tests. Pfizer and BioNtech request that the FDA to expedite the approval of their Covid-19 vaccines.

British Prime Minister Boris Johnson goes back into 14-days quarantine after coming into contact with someone who was tested positive for Covid-19.

Technical forecast

US dollar/Japanese yen fell last week from 105 for more than 100 pips. We foresee the support could emerge at 103 for some bargain-hunting. The overall range is expected to be contained from 103 to 105 but beware of penetrating beneath 103 support if the dollar falls.

Euro/US dollar ranged from 1.175 to 1.19. The market will probably remain unchanged until we see a catalyst in the dollar. Traders are reminded to reinforce risk-control in case the trend surges unexpectedly above 1.19.

British pound/US dollar recovered slightly and approached 1.33 before the weekend. We predict the trend could be contained from 1.32 to 1.34 until it breaks beyond in either direction. Strong selling pressure is expected to emerge at topside due to the looming uncertainties.

WTI Crude prices stayed in a small range between US$40 to US$42 per barrel. We expect the market could climb a little higher to test US$44 per barrel. The overall trend is expected to be contained from US$40 to US$44 per barrel. Traders are advised to stay cautious.

Crude Palm Oil (FCPO) Futures on Bursa Derivatives made an eight-and-a-half year high before fizzling out on Friday. Profit-taking rose in the market after FCPO prices soared. February Futures settled at RM3,288 per metric tonne on Friday. The trend might make a deeper correction at RM3,100 per metric tonne with the rise in volume. Topside resistance could emerge at RM3,350 per metric tonne or higher.

Gold prices traded sideways from US$1,850 to US$1,900 per ounce last week. There is a lot of uncertainties in the market now. Beware of an unexpected fall beneath US$1,850 per ounce support. In our opinion, the market is capable of making a quick drawdown in case the Dow market crosses above the 30,000 benchmark in the near future.

Silver prices remained in a narrow range from US$23 to US$25 per ounce last week without a clear directional headway. The market trend looks very neutral now and might move in either direction soon. We advise traders to remain alert and observe a possible breakaway in either direction soon.

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].