Fundamental outlook
THE Biden administration laid out a US$65 billion stimulus plan that is expected to help the nation combat the next possible biological threat after the Covid-19 pandemic subsides.
US weekly jobless claims totaled 340,000 for the week ended August 28, the lowest since march 2020 after the pandemic crisis erupted. The Dow markets surged on Thursday’s closing.
Non-farm payroll for August was at 236,000 compared with the 720,000 expectation. Unemployment rate stayed at 5.2 per cent as forecast. Traders foresee the Federal Reserve could roll out more stimulus this month. Gold prices surged on Friday as the Dow benchmark fell 74 points at 35,369 upon market closing.
Chinese regulators have summoned and interviewed 11 ride-hailing firms asking them to rectify non-compliant behaviour, including recruiting unapproved drivers and vehicles. Companies called up for interview include Didi, T3 and Meituan. Market analysts speculate the Chinese regulators will conduct more “in-house cleaning” on Chinese companies in the coming months to conform with China’s data protection law.
The World Health Organisation urged world leaders to hold off on giving Covid-19 booster shots so there would be more supply for poorer nations and they can vaccinate more of their populations.
Technical forecast
US dollar/Japanese yen saw strong resistance at 110 last week. The dollar is starting to weaken and we expect the US dollar-yen will head lower in the coming week. The overall range would likely be contained from 108.50 to 110. Abandon your short term view in case the trend moves above 110.
Euro/US dollar reached 1.19 resistance on Friday. We foresee the trend could consolidate within 1.18 1.19 or pierce above 1.19. In case of breaking above 1.19 resistance, we target the bulls might drive up to 1.20.
British pound/US dollar began to rise before the weekend. We predict the trend will be bullish this week and reach 1.40 benchmark. Support lies at 1.38 in case of a drawdown correction. The weakening dollar could lift European currencies.
WTI Crude prices traded in a very tight range at around US$70 per barrel last week. We reckoned the market has no clear technical trend and the overall range could be contained from US$68 to US$72 per barrel. However, the potentially weakening dollar could lift crude demand higher in our observation.
Crude Palm Oil (FCPO) Futures on Bursa Derivatives traded sideways after market bounced off RM4,150 per metric tonne bottom. Traders are observing the market while there are no indications on the market’s direction, for now. November Futures contract settled at RM4,310 per metric tonne on Friday. We expect the trend to stay sideways from RM4,150 to RM4,350 per metric tonne until the prices break in either way. The next uptrend is expected to come only after the September rollover.
Gold prices have risen from US$1,810 per ounce on Friday, signalling a possible new surge. It will be challenging for the market to pierce above US$1,835 per ounce resistance. Rising above this resistance will hit US$1,850 per ounce as our next target. The market support will still be resilient at US$1,810 per ounce in case of a fall back.
Silver prices saw a clear sign of bullish trend on Friday. We forecast the uptrend will continue to reach US$26 per ounce, following the gold market’s trend. Support lies at US$24 per ounce but unlikely to be re-tested as the bulls have bounced off this ground area.
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 dar@alaa.sg.