Fundamental outlook
US’ inflation rose 0.1 per cent in August on a monthly basis while core inflation gained 0.6 per cent compared to July. On an annual basis, the inflation jumped 8.3 per cent. Investors are wary of another rate hike. Dow closed with a loss of 1,276 points on Tuesday.
US producer prices fell 0.1 per cent on a monthly basis in August. Year-on-year data rose 8.7 per cent, the lowest rate since August 2021.
US retail sale rose 0.3 per cent, beating expectations. Core sales, excluding auto sales, fell 0.3 per cent, indicating weak demand.
China retail sale grew 5.4 per cent in August on an annual basis. Industrial production rose 4.2 per cent from a year ago, exceeding expectations.
British inflation dipped to 9.9 per cent in August. Core prices, excluding fresh food and energies, rose 6.3 per cent from a year ago and still rising in strong demand.
Technical forecast
US dollar/Japanese yen traded in strong demand last week as the dollar resurged. Traders are watching the FOMC outcome on Wednesday to decide the market’s trend. We forecast the range will likely move from 141 to 144 region. There might be a clear direction until later this week based on the dollar’s trend.
Euro/US dollar topped 1.02 and receded last week. Moving forward, the market will also react inversely to the dollar’s trend after the FOMC meeting. We predict the range will be contained from 1.095 to 1.02 for the time being until it breaks beyond in either direction. Traders are advised to remain prudent in case of unusual market behavior.
British pound/US dollar tested 1.14 support again last week. The market showed weak trading as the nation mourns the passing of Queen Elizabeth II. This week, we target the trend will likely trade from 1.14 to 1.16 in mixed sentiment. The overall market behavior is still sluggish in September.
WTI Crude prices saw strong resistance at US$90 per barrel last week. The market fell back to US$85 per barrel before the weekend. We believe the market sentiment will depend on the dollar’s movement after the FOMC meeting. The overall trend is expected to move from US$85 to US$90 per barrel.
Crude Palm Oil (FCPO) Futures on Bursa Derivatives traded in a small technical recovery amid sluggish sentiment. December 2022 Futures contract settled at RM3,744 per metric tonne on Friday. We foresee the market will likely be supported at RM3,600 per metric tonne in case of a small drawdown and topside target might reach RM4,000 per metric tonne again. Sideways trend is expected within this range until we see a new movement beyond it.
Gold prices have fallen into the support region while trying to stay buoyant. We predict the overall range will trade from US$1,650 to US$1,700 per ounce in a whipsaw trend. However, risk management is advised if the market trend falls beneath the US$1,650 per ounce.
Silver prices topped US$20 per ounce and moved down to test US$19 per ounce on Friday. We target the support will emerge at US$18.50 per ounce while still resilient at US$20 per ounce. Traders should be cautious in observing this range. This week might reveal unexpected trend based on the dollar’s movement.
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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