Fundamental outlook
CRUDE prices took a hit from the Russian-Ukraine conflict. Earlier last week, Russian forces entered Ukraine territory and European allies have condemned this as an act of ‘invasion’.
Crude prices receded from US$100 per barrel and back to US$92 per barrel before last week’s close. Gold prices also sank back to below US$1,900 per ounce after reaching US$1,974 per ounce the previous day. Dow market recovered 934 points on Friday’s close for the weekend.
Earlier, Russia President Vladimir Putin signed the pact to recognise the new independence and sovereignty of Donetsk People’s Republic and Luhansk People’s Republic, hence sending Russian troops into these two states to maintain military order.
Ukraine defence system was mobilised within two hours after Russian military entered into Ukraine from the South through Black sea, East and Down from North on land. NATO nations vowed to impose hard sanctions on President Putin and other Kremlin aides.
US economy grew seven per cent in GDP in 4Q21, matching the forecast. Jobless claims for the week ended February 19 gained 232,000 versus revised 249,000 in the previous week.
Technical forecast
US dollar/Japanese yen traded from 114.50 to 116 last week while prone to be firm. We project the range will remain the same but subject to a weaker dollar. Despite our expectations of a weaker trend, be cautious of the prices moving above 116 resistance.
Euro/US dollar bounced back into a recovery after sinking below 1.115. We foresee the market might be contained from 1.12 to 1.14. The overall trend is subject to high volatility and uncertainties due to the conflict in Ukraine. Traders are advised to be prudent and wait for a clear breakout trend.
British pound/US dollar turned down from 1.355 and will likely move into a new bear trend. The selling pressure could emerge at 1.35 in case of a recovery. We project the range will be contained from 1.33 to 1.35 but proned to slide further in March.
WTI Crude prices hit US$102 per barrel last week that was last seen in July 2014. However, the trend settled lower at US$92 per barrel. We reckoned the range could move from US$92 to US$98 per barrel in sideways consolidation. Market is prone to whipsaw for a while but we foresee it might still climb up in March.
Crude Palm Oil (FCPO) Futures on Bursa Derivatives reached RM6,465 per metric tonne at all-time-high last Thursday after war broke out in Ukraine. The market fell the following day after warfare simmered down and NATO allied forces reiterated its intention to send troops to aid to Ukraine. May Futures contract settled at RM5,984 per metric tonne on Friday. We predict the trend will whipsaw amidst the uncertainties. Support could emerge at RM5,750 per metric tonne. Topside resistance is identified at RM6,250 per metric tonne but will surge into higher prices if the conflict intensifies.
Gold prices remain uncertain this week in view of the Ukraine-Russian conflict. We predict the range might be trapped between US$1,880 to US$1,920 per ounce but prone to surge again if the sanctions on Russian government stiffens. Generally, traders are keen to pick bottoms but remain cautious on wild swings.
Silver prices topped US$25.50 per ounce last week but fell quickly, trailing the gold market. We target the support to emerge at US$24 per ounce and the market could be trading in a very tight range from US$24 to US$25 per ounce. Fundamentally, there are many traders still keen to pick bottom for silver while waiting to see future rise. Observe the gold trend as a lead to the silver.
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.
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