Fundamental outlook
PRESIDENT Joe Biden unveiled a new US$2 trillion stimulus plan as well as an increment in corporate tax to 28 per cent to bolster a post-pandemic recovery. The triple stock indexes traded in resilience and US reported positive job numbers on Friday.
US non-farm payroll rose 916,000 in March and unemployment fell to six per cent. The data is much higher than consensus’ expectations and marks the best recorded since August 2020. S&P 500 Composite Index closed at a new high at 4,019.
China’s manufacturing index rose 51.9 in March, better than the previous month. Chinese officials have defended Xinjiang’s cotton industry which was allegedly practicing forced labour as claimed by western media.
The OPEC+ members will cut the global production gradually by just over seven million barrels per day in order to support the price recovery. Starting in May, the group will add 350,000 barrels daily production and top up this equal number in June. Subsequently, the alliance will increase 450,000 barrels per day in July.
Technical forecast
US dollar/Japanese yen pierced above 110 resistance last week and advanced to 111 as the dollar rose. We foresee a possibility for the market to reach 111.50 before profit-taking emerges. For the time being, the 110 support will remain and trading is expected to range from 110 to 111.50 in the coming week.
Euro/US dollar traded in a small range and hovered around 1.175 area. We target the market might drive lower but contain from 1.16 to 1.18. Traders should expect mixed trading activities and enter market from the extreme side of the target range. The dollar will remain as the main catalyst for the euro’s movement.
British pound/US dollar neared the 1.385 resistance. Observe the trend in case it pierces above 1.385 to visit the 1.40 benchmark again. However, hovering below this level for few days will be prone to fall again with our downside target at 1.36.
WTI Crude prices’ trend remain uncertain. The market could trade between US$59 to US$62 per barrel. Risk control is recommended.
Crude Palm Oil (FCPO) Futures on Bursa Derivatives dipped and rebounded last week. Speculations and bargain-hunting activities have been heavy in the market. June Futures contract settled at RM3,737 per metric tonne on Friday. We foresee a sideways trend from RM3,650 to RM3,850 per metric tonne. We await a catalyst in the general commodities market.
Gold prices saw strong support at US$1,680 per ounce last week.
We believe the trend could be prone to firm sentiment but capped beneath US$1,760 per ounce.
The overall range might be contained from US$1,700 to US$1,760 per ounce but in mixed trading. The gold market is firm but has not gathered enough strength to break out on the topside in early April.
Silver prices tested the support at US$24 per ounce last week and rebounded.
We forecast the market could range from US$24 to US$26 per ounce with new buying interest. Generally, market traders are keen to pick up silver prices now more gold as the dual metals might begin to run up in the second quarter.
Dar Wong has more than 30 years of trading and hedging experiences in global financial markets. The opinion is solely his own. He can be reached at [email protected].