Fundamental outlook
US consumer prices rose 0.3 per cent in January, as expected. Core prices, excluding fresh food and energies, remained flat and below consensus’ expectations. US jobless claims rose by 793,000 for the week ended February 6, worse than forecast, due to rising Covid-19 cases.
The impeachment trial for former US President Donald Trump has begun. The trial will decide if Trump is guilty of instigating last month’s deadly riot at Capitol Hill.
UK GDP for 4Q was better than expected, growing 1.0 per cent. Britain continues to be threatened by the growing spread of a new Covid-19 variant throughout the country.
Germany is set to extend its lockdown measures until March 14. Many countries in Europe have banned all but essential travel during the lockdown.
Despite the massive rollout of vaccines over the past two months, health officals warned the Covid-19 may become endemic and people have to live with it.
Technical forecast
US dollar/Japanese yen traded sideways after the dollar lost its strength last week. The market would likely continue moving in mixed sentiments. The overall range is expected to be contained from 104 to 105.50. Risk control is recommended in case of adversity.
Euro/US dollar traded in a slight upward momentum last week. Based on Friday’s closing, the market is expected to break in the coming week while contained in a tight range. We forecast the market could move between 1.21 and 1.22. Traders should continue to observe the dollar’s trend to gauge the euro-dollar direction.
British pound/US dollar traded in firm sentiment despite the rising Covid-19 cases. We foresee the range could trade from 1.3750 to 1.39. Traders are advised to be prudent in their risk control.
WTI Crude prices reached a new high, closing above US$59 per barrel on Friday. The initial range is expected to stay within US$56 to US$60 per barrel. However, piercing above US$60 per barrel might lead to US$65 per barrel in case of a further weakening of the dollar.
Crude Palm Oil (FCPO) Futures on Bursa Derivatives climbed slightly last week due to rising demand. April Futures contract settled at RM3,558 per metric tonne on Friday. The trend is expected to be supported at RM3,500 per metric tonne and capped beneath RM3,650 per metric tonne level. Breaking above the aforementioned resistance will initiate a new uptrend in the near future.
Gold prices traded in uncertainty as the market might be conducting its final correction. We reckoned the market could range from US$1,800 to US$1,840 per ounce. However, most traders are planning to pick bottom as the aforementioned support has proven resilient for the past few months.
Silver prices traded sideways last week in uncertainty. We project the overall range will be contained from US$26 to US$28 per ounce while waiting for the gold market to lead the way. Just like gold prices, we observe that most traders are waiting to pick bottom upon a drawdown in market prices.
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 dar@alaa.sg.
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