Fundamental outlook
BREXIT talks reached a critical level but no deal has been confirmed so far. UK Government officials doubt any agreement could be reached with the European Union (EU). On the other hand, the EU could move ahead with pushing the massive stimulus for Coronavirus Disease 2019 (Covid-19) relief despite being vetoed by Hungary and Poland.
US economy added 245,000 payrolls in November, below consensus. Unemployment rate fell to 6.7 per cent, matching expectations. Dow Jones market gained as traders reckoned the weak payroll will expedite the Congress’ decision to roll out a new stimulus soon.
President-elect Joe Biden said he would not immediately cancel the phase one deal with Chin. He is also working on a generous stimulus through Congress, making it a top priority.
Pfizer and BioNTech have obtained the approval for distribution from the British government, making it the first country to give a green light to use of drugs to control the spread of Covid-19.
Technical Forecast
US dollar/Japanese yen traded in a narrow range last week. The trend has been supported above 103.70. This week, we forecast the market could be trapped from 103.50 to 105 until it breaks beyond in either direction. Traders are advised to exercise caution and risk control.
Euro/US dollar broke above the 1.20 benchmark and re-visited the six-month high near 1.22 level last week. The trend could be supported at 1.205 but prone to escalate should the dollar fall again. We project the market could be threading sideways from 1.205 to 1.22 in mixed sentiment.
British pound/US dollar surged above 1.34 due to the decline in the dollar. The pound is still limited to 1.35 resistance while trapped in a small range movement. The market movement would likely consolidate from 1.34 to 1.36 through a whipsaw behaviour. Caution is advised in case of adversity against your position.
WTI Crude prices stood above US$44 per barrel support but limited to US$47 per barrel. We project the market movement could remain the same. The market’s focus is largely staked on US stock and gold prices now due to the dollar’s movement. The overall uptrend could be resisted at US$50 per barrel in December if some more buying activities emerge.
Crude Palm Oil (FCPO) Futures on Bursa Derivatives reached an eight-year high last week due to the rise in crude and commodity prices. February Futures settled at RM3,439 per metric tonne on Fridayk. Moving forward, we project the support could be firm at RM3,400 per metric tonne and the market movement could reach RM3,600 per metric tonne benchmark.
Gold prices bounced off US$1,770 per ounce last week as the dollar devalued. Gold has been quickly supported by market demand and returned to US$1,840 per ounce. We reckon the market movement could hover around US$1,800 per ounce in a whipsaw trend. Traders are reminded to control risk as the trend is expected to be volatile in December.
Silver prices has hit resistance at US$24.20 per ounce last week. We expect a correction in prices ranging from US$22 to US$24 per ounce. In case of piercing above US$24.00 per ounce, we foresee strong selling pressure could emerge at US$25 per ounce.
Dar Wong has 30 years of trading and hedging experiences in global financial markets. The opinion is solely his own. He can be reached at [email protected].
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