Eurozone inflation up 10 per cent

0

 

Fundamental outlook

 

EUROZONE inflation surged 10 per cent in September on an annual basis, reaching a record high. The rise inflation is mainly driven by soaring energy prices due to supply disruptions from Russia.

US home sales rose 685,000 in August, exceeding expectations. Weekly jobless claims for the week ended September 24 dropped to 193,000, a five-month low record in the wake of the rising inflation.

On Friday, Dow lost 500 points and closed below 29,000, hitting its lowest since November 2020. Market investors remain cautious of another two rate hikes towards the year-end.

On Thursday, North Korea fired at least one ballistic missile towards eastern waters beefore US Vice President Kamala Harris arrived in South Korea for an official visit. The nuclear diplomacy between US and North Korea broke down in 2019 after talks of disarming North Korea’s nuclear arsenals failed in exchange of the sanction-lift by US Government. Over the weekend, North Korea fired another four missiles into east coast seas to display its displeasure.

 

Technical forecast

 

US dollar/Japanese yen traded in narrow range but submerge below 144. We predict the trend might climb higher to 146 before simmering down. Support is identified at 144 in case of a drawdown. Market traders expect another intervention from the Bank of Japan once the prices reach 145.

Euro/US dollar bounced off 0.96 last week. The market movement might be range-bound from 0.96 to 0.98 while waiting for a new breakout. The dollar is taking a breather now, we expect the euro/US dollar to likely make some recovery this week and re-test 0.98 resistance. Risk management is reminded.

British pound/US dollar hit the lowest record since 1985 at 1.0380 last week. We expect the market to whipsaw within the range of 1.08 to 1.12 in mixed trading activity. Breaking above 1.12 might lead to 1.14 in case of a technical recovery. There is not much positive news for the pound but some technical buy-back actions might emerge in market.

WTI Crude prices found a support at US$77 per barrel last week. The trend might trade from US$78.00 – US$82.50 per barrel in mixed sentiment. Beware of piercing above US$82.50 per barrel that will drive up to US$87.50 per barrel.

Crude Palm Oil (FCPO) Futures on Bursa Derivatives reached RM3,225 per metric tonne low last week, the lowest since June 2021. Currently, the market is facing more selling pressure with slower rise in interest amid a recovery before the weekend. December 2022 Futures contract settled at RM3,418 per metric tonne on Friday. We foresee the market range will likely move from RM3,250 to RM3,650 region and prone to make technical recovery.

Gold prices fell to US$1,614 per ounce, the lowest since April 2020. We expect the trend will be contained from US$1,640 to US$1,680 per ounce as some new demand move into market. The gold market will move inversely to the greenback’s strength but will likely stay within the aforementioned range.

Silver prices reversed up from US$18 per ounce last week. We forecast new support will emerge at US$18.50 per ounce as bargain-hunters step into market. The overall range will likely be contained from US$18.50 to US$20 per ounce if the market begins to make a small recovery. Abandon your long-term view for the time-being if the market sinks beneath US$18 per ounce.

 

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]