Fundamental outlook
US consumer prices rose 0.5 per cent in January. On an annual basis, inflation rose 6.4 per cent, triggering new fears of an inflation. The market expects few more rate hikes to curb the persistent inflation.
US producer prices rose 0.7 per cent in January. Core producer prices gained 0.5 per cent in the same month. Both data exceeded forecast.
President Joe Biden confirmed the three ‘spy-balloons’ being shot down by U.S. military last week were not linked to Chinese spy programme.
Japan GDP grew 0.2 per cent in 4Q, below forecast. The market is preparing for the new Bank of Japan Governor Ueda Kazuo to take office in April.
UK inflation rose 10.2 per cent in January on an annual basis and retreated for the fourth consecutive month. However, the data is still considerably high compared to the 11.1 per cent charted four months ago.
Technical forecast
US dollar/Japanese yen rose last week as predicted. We forecast the trend will consolidate from 133 to 135 in a sideways trend. Beware of piercing above the 135 resistance that might lead the trend to rise further to 138 as the next target. The dollar is recovering on favouring more rate hikes.
Euro/US dollar traded in a small range last week, staying above 1.065. We identified the resistance at 1.08 level and the overall trend is prone to weaken. We target the bears could break beneath 1.065 and drive down to 1.05. However, short sellers should observe risk management in case of an unexpected uptrend.
British pound/US dollar stayed within 1.195 to 1.22. The trend might swing sideways without a clear direction. However, we foresee the extension is more prone to falling, the pound might hold better than the euro against the rising dollar this week.
WTI Crude prices failed to cross above US$80 per barrel last week. Moving forward, we speculate the market will continue to trade sideways amid uncertainties until we hear more news from OPEC leaders. The market trend is likely to stay within US$72 to US$80 per barrel.
Crude Palm Oil (FCPO) Futures on Bursa Derivatives traded in rising demand towards the weekend. Rollover into new month in May delivery has lured traders to establish new positions in the market.
May 2023 Futures contract closed at RM4,136 per metric tonne on Friday. We have identified the weekly pattern to be strong and sitting on RM4,050 per metric tonne support. The uptrend might stretch and reach RM4,300 per metric tonne as our next target.
Gold prices have been falling for three consecutive weeks. We reckoned the trend will recoil towards month-end and trade sideways. We target the trend to trade from US$1,820 to US$1,870 per ounce in mixed sentiment. The bears might continue in early March for a new monthly bearish pattern.
Silver prices fell gradually last week in weak demand. We forecast the trend might move in a tight range from US$21 to US$22 per ounce. More attention will likely be focused on the gold market compared to silver prices. Traders should adopt swing trading method if they want to participate in this market.
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].