Fundamental outlook
US wholesale prices rose 0.8 per cent in February on a monthly basis, lower than the forecast. Core prices gained 0.2 per cent, also below consensus’ forecast.
US Federal Reserve increased the interest rate by 0.25 per cent and the Fed rate to the range of 0.25 to 0.5 per cent, citing another upcoming six hikes.
The US dollar index (USDX) topped 99 level, and retreated to 98.20 on Friday for the closing bell.
The US stock markets recovered last week. Dow gained 270 points on Friday and posted its best week since 2020. S&P Index also charted its best gain since November 2020.
On Friday, President Joe Biden and President Xi Jinping held an online conference. Biden warned Xi on helping Russia in the Ukraine war.
Until now, both Russia and China have denied that the Kremlin has asked for help from the Beijing government.
The Bank of England raised interest rates on Thursday to 0.75 per cent for the third consecutive time to combat the rising inflation. The benchmark rate has returned to pre-pandemic level.
Technical forecast
US dollar/Japanese yen rose to a six-year high last week and settled at 119.10 on Friday. We reckoned the trend might be resilient at 120 before fizzling out thereafter.
The range is expected to make a correction while contained from 117.50 to 120 this week. We expect some profit-taking activities will take place.
Euro/US dollar traded in slight ascension last week. We foresee the support could emerge at 1.0950 while limited to 1.11 resistance.
Piercing above this resistance could lead to 1.12 if the dollar weakens. Traders are mostly bullishly now on the euro’s trend with plans to fish the bottom upon corrections.
British pound/US dollar bounced off 1.30 bottom last week. We project the range will consolidate from 1.3050 to 1.32 in a narrow region this week while waiting for another extension.
The breakout could be in either direction. Traders are reminded to be prudent in their strategies.
WTI Crude prices dipped beneath US$95 per barrel last week but rebounded immediately. We have identified the first support could emerge at US$100 per barrel in case of a drawdown.
The market range would likely be contained from US$100 to US$115 per barrel with buyback activities. Traders are watching the Russian-Ukraine crisis which will affect the Crude prices directly.
Crude Palm Oil (FCPO) Futures on Bursa Derivatives plummeted last week and after the roller over. Flight of fund into the global stock markets have put a lid on the crude and edible oil markets.
June Futures contract settled at RM5,632 per metric tonne on Friday. The market might dive deeper to RM5,200 per metric tonne before a reversal comes into the market. Resistance lies at RM6,000 per metric tonne in case of a recovery.
Gold prices reversed from US$1,900 per ounce last week after several days of decline. We forecast the trend could be trapped from US$1,900 to US$1,960 per ounce. Mixed trading is expected due to adjustments of positions after the FOMC meeting.
However, beware of a violation beneath US$1,900 per ounce that might reach US$1,880 per ounce as our next support before a rebound.
Silver prices traded sideways last week with support at US$24.50 per ounce. This week, we project the market movements could be trapped from US$24 to US$26 per ounce in some swing motions. Basically, market traders are still prone to pick silver positions on building a long-term portfolio.
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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