Tuesday, November 30

US to raise debt ceiling

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Fundamental outlook

 

THE Senate House approved a short-term extension of the debt ceiling by US$480 billion. The bill has been presented to President Joe Biden’s desk for signing and approval. It could help pay for national debt until early December.

US consumer prices grew 0.4 per cent in September on a monthly basis, pushing the data to 5.4 per cent growth on year-on-year comparison. Excluding fresh food and energy, core consumer prices gained 0.2 per cent compared with the previous month.

The Federal Open Market Committee (FOMC) minutes revealed that the Federal Reserve could begin reducing the pace of its monthly asset purchases as soon as mid-November, bringing down the asset purchase by US$15 billion monthly.

Russian President Vladimir Putin denied that the country is using natural gas as an economic weapon against European counterparts, citing US’ energy crisis by reducing supplies to the region. WTI Crude crossed above US$80 per barrel on Friday and settled at US$82 per barrel for the first time since October 2014.

 

Technical forecast

 

US dollar/Japanese yen crossed above 114 last week, reaching a three-year record high. We forecast the market might begin to move sideways as profit-taking activity emerges. Topside resistance is identified at 114.50 while support will be at 113.50. Traders should prepare for mixed tradings and be ready with risk control in case the trend extends beyond the limit.

Euro/US dollar saw a strong reversal last week after bouncing off 1.1530. We project the bullish market movement but contained from 1.1550 to 1.1680. The market’s attention could be on the dollar’s trend, with eyes on Biden’s possible the approval of raising the debt ceiling.

British pound/US dollar began its bullish movement by moving above 1.37. The market could sit on 1.37 support and probably charge higher to 1.39. Traders should exercise caution when the trend falls beneath 1.37 support again.

WTI Crude prices hit a near seven-year high, above US$80.00 per barrel on Friday. We forecast the support could emerge at US$80 per barrel and likely climb higher to US$85 per barrel. The price window is projected to be within this range until end-October due to global production shortage of energies and crude. Observe OPEC news in gauging the crude’s trend.

Crude Palm Oil (FCPO) Futures on Bursa Derivatives continued to make a new record high at RM5,035 per metric tonne last week. The market has been short-squeezed during the rollover season due to production shortage. The new active month will be January from this week onwards.

January Futures contract settled at RM4,865 per metric tonne on Friday. We are optimistic that the market will be well supported at RM4,850 per metric tonne and likely to move higher to RM5,300 per metric tonne before end-October.

Gold prices declined on Friday after the market fund fled into the crypto market. We foresee the gold market could stay sideways from US$1,750 to US$1,800 per ounce. The market has shown strong resistance at US$1,800 per ounce for the time being.

Silver prices traded higher after last Tuesday. We target the support could sit tight at US$23 per ounce while buying interest could return to the market. The range projection is limited to US$22.70 to US$24.00 per ounce for time being until we see an extension beyond this consolidation. Gold will be the lead factor to guide the silver’s trend as usual.

 

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]