Dow Market Closes on Fresh New High
- 18 November 2019
CURRENCY MARKET OBSERVATIONS – 18 November 2019
Dow Market Closes on Fresh New High
Fundamental Outlook The U.S. President Trump speaks in Economic Club of New York and bashes the Federal Reserve for hesitation to lower interest rates that has capped the gains in economic growth and stock prices. Meanwhile, Trump also singles out EU for unfair trade practices and continues to add pressure on China for reinstating the tariff if no deal is signed by year end.
The U.S. consumer prices rose 0.4 percent in October and above forecast, while core prices steadied at 0.2 percent gains. On Friday, Dow markets closed at new historical high 28,004 afterWhite House economic advisor Larry Kudlow said China and the U.S. are very near to reaching a trade deal. The other market on Nasdaq composite and S&P 50 indexes also closed at all time high at 8540 and 3120 respectively.
China’s Commerce Ministry says tariff should be removed completely to end trade war with U.S. country. Trade deal on phase one is still closely watched by traders for details to be announced by U.S. and Chinese leaders.
U.K. GDP grew 0.3 percent in Q3 seasons and below forecast. British consumer prices gained 1.5 percent in October on annualized rate and below consensus. BREXIT remains a major national event for U.K. after the general election in December completes.
Excluding India, a group of 15 Asia-Pacific countries could be signing the largest trade pact known as Regional Comprehensive Economic Partnership, or RCEP, in 2020. The framework was initially discussed in 2013 in Cambodia and has taken almost 6 years to formalize the mutual agreement.
Technical Forecast USD/JPY traded in the range below 109.50 resistance last week as we predicted. This week, we foresee the trend will stay unchanged and trap inside the range from 108.00 – 109.50 region. Breaking beyond this range will signal a new directional trend in market.
EUR/USD traded in sideways as the trend bounced off 1.0980 bottom last week. Technically, we reckon the market will be well supported at 1.0950 – 1.0980 bottom in case of drawdown. This week, the trend is likely to trade in narrow range from 1.0980 – 1.1130 region while waiting for more fundamental news in market.
GBP/USD moved in gradual recovery last week especially after Brexit Party leader Nigel Farage confirmed his stand down in challenging seats in the coming election. This week, we project not much change in market as the resistance is still strong at 1.3000 benchmark. Overall range is contained from 1.2750 – 1.3000 region until we see a breakthrough in December.
Gold prices recovered in mild uptrend last week as Dollar weakened moderately. This week, we aim for a potential down move in Gold since the positive comments of White House’s Kudlow have pushed the U.S. stock markets to fresh highs. Technically, we predict strong selling activity will ambush above USD1480 /oz in case of recovery. Overall range is expected to move from USD1450 – USD1480 /oz region. Beware of dropping beneath the range that could land at USD1400 /oz as our next target.
WTI Crude prices threaded in sideways narrow range last week. Market showed a new protruded uptrend on Friday as trade deal prevails positive sentiment. This week, initial narrow range is expected to be contained from USD56 – USD58 /barrel. However, piercing above this range will rise to USD60 /barrel as our next target.
Silver prices are currently making a small recovery amid downtrend. This week, we target the resistance will emerge at USD17.20 /oz in case of rising. Market tends to fall after mid-week while overall trend is forecast at USD16.20 – USD17.20 /oz region. Market fund will probably favor oil demand towards year-end as they flight out precious metals.
Crude Palm Oil (FCPO) Futures on Bursa Derivatives moved into correction after topped above RM2650 /MT level. This week, the active month will roll into February20 Futures contract after it closed at RM2606 /MT on Friday. Technically, we forecast the trend will be resisted above RM2620 /MT and trend to fall sharply back to RM2500 /MT region. Risk control is advised in case the trend swings against your favour.
DAR Wong has 30 years of trading and hedging experiences in global financial markets. The opinion is solely at his own. He can be reached at firstname.lastname@example.org