Fundamental outlook
US Federal Open Market Committee (FOMC) minutes released on Wednesday hinted the possibility of tapering its asset purchase programme before year-end, causing the Dow market to decline 382 points at closing on Wednesday.
US jobless claims totalled 348,000 for the week ended August 14, below forecast and down 29,000 from the week before. The market recovered on Friday as traders returned to market.
Japan’s GDP for 2Q rose 0.3 per cent, reversing its decline of 0.9 per cent recorded in 1Q, according to official preliminary estimates.
Retail sales in China rose 8.5 per cent in July as compared with a year ago, far lower than the 11.5 per cent rise forecast by analysts in a Reuters poll. On Friday, China passed a major data protection law and will set out tougher rules on how companies collect and handle their users’ information.
The Taliban forces have occupied the Kabul and many other cities within two weeks following the retreat of US military forces in Afghanistan. The country is in chaos as thousands of citizens try to flee the country. Many critics cite the improper exit plan of US forces under US President Joe Biden’s administration.
Technical forecast
US dollar/Japanese yen traded slightly firmer last week as the dollar regained strength. We predict the market trend will be firm again but resilient at 110.50. The overall trend could be contained from 109 to 110.50 range in line with the dollar’s direction. Traders are cautioned to manage risk in case of unexpected breakout beyond the aforementioned range.
Euro/US dollar slid last week and landed at 1.17 on Friday. We foresee strong support at 1.16 to 1.165. In case of reversal, there is a potential of reaching 1.175. We foresee mixed trading activities will arise after mid-week. More bargain-hunters will be expected.
British pound/US dollar fell to near 1.36 bottom on Friday. We project the support will emerge at 1.355 but limited to a sideways trend. Topside resistance will be capped at 1.375. We presume more attention will be staked on the euro’s trend.
WTI Crude prices dropped from US$68 per barrel to US$62 per barrel due to profit-taking and the rising dollar. The trend might dive further to test US$58 per barrel before bargain-hunting emerges. Topside resistance is expected to surface at US$64 per barrel in case of a recovery.
Crude Palm Oil (FCPO) Futures on Bursa Derivatives engaged in profit-taking activities last week after the roll-over period. Market trend dipped to RM4,200 per metric tonne and met bargain-hunters. November Futures contract settled at RM4,263 per metric tonne on Friday. We target the trend could recover if the RM4,200 per metric tonne support stands firm. The range is expected to be contained from RM4,200 to RM4,450 per metric tonne in mixed trading sentiment.
Gold prices traded in narrow range below US$1,800 per ounce last week but stayed above US$1,770 per ounce. The market could be contained in this region while waiting for more fundamentals to provide a clue to its trend. Trend might move in either direction, depending on the dollar’s trend. However, we feel that there might be strong support below US$1,750 per ounce.
Silver prices were jittery last week before its momentum slowed down. We project the support could emerge at US$22.50 per ounce and filled with buying interest below this level. The market might rebound after mid-week but still limit to US$24 per ounce for the time being. Traders could participate in yellow metal first before coming to the silver 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 dar@alaa.sg.