U.S. Lifts Government Shutdown Temporarily
- 28 January 2019
Fundamental Outlook The U.S. President Trump’s associate Roger Stone is arrested on 7 counts of charges for lying to the Congress during investigation of Robert Mueller relating to Russian operatives link. Following that, Trump passes a funding bill to temporarily re-open the Government after 35 days of shutdown. He stresses this is not a concession and the shutdown will reinforce after 15 February if no deal is reached.
The U.S. leaders has cancelled meeting with China on trade deal talk due to disagreement to reinforce intellectual property regulation. President Trump cites will reinstate the punitive tariffs on Chinese imports if no agreement is reached by 1 March.
China’s GDP grew 6.4 percent in Q4 seasons and matched forecast. Industrial production rose 5.9 percent on year basis in December. Global leaders are worried spreading slowdown from China’s to the bilateral trade partners.
European Central Bank President warns of rising global risk after formally ended EUR2.6 trillion stimulus program in December. He assures of keeping interest rates at present low level through summer, or longer if necessary.
Bank of England’s President Carney says policymakers predict a hard BREXIT will follow since the referendum vote resulted in June 2016. No deal has been reached within the Parliament while Prime Minister May is denied of further negotiation by European Commission.
Technical Forecast USD/JPY has shown resilient selling interest at 110.00 and closed before this benchmark on Friday. This week, we forecast the trend will range from 108.00 – 110.00 region with whipsaw sentiment. However, overall trend is prone to southward and risk control needs to be reinforced if it pierce above 110.00 level.
EUR/USD is supported at 1.1300 and projects a technical recovery from this level. This week, we foresee the trend will be range bound from 1.1300 – 1.1500 with some short-covering expected. Mixed trading is expected as Dollar fell on last Friday before market closed.
GBP/USD is advancing higher and pierces above EMA200 line on day-chart. Market closed at 1.3200 on Friday in bullish patter as traders ignore the BREXIT risk after no new fundamentals of fear emerges inn market. This week, we predict the support will stay strong at 1.3050 in case of drawdown. The trend is likely to continue to climb with initial target aimed at 1.3300 and secondary target at 1.3500 area.
Gold prices spiked up strongly on Friday before market closed as Dollar fell. This week, we presume the yellow metal will go higher but also encounter strong selling pressure at 1310.0 – 1320.0 range. Demand will circulate in market for a while before it fizzles out. Downside support lies at 1295.00 in case of technical drawdown.
WTI Crude prices traded in small sideways throughout the whole week and climbed higher on Friday. Generally, market is hitting toppish pattern and may do a small correction in coming week. Technically, we expect the correction will be supported at USD51 /barrel and piercing above USD54 /barrel might drive higher to USD58 /barrel before profit-taking activity emerges. Ultimately, it will depend much on inverse relationship of Dollar strength to decide the Crude trend this week.
Silver prices stood well at USD15.20 /oz and has shown a drive-up before market closed on Friday. This week, we project strong demand at USD15.50 /oz area and likely will advance higher at USD16 /oz region. However, we are still uncertain if this is a long-term bullish recovery or short-term bull-trap. Hence, traders are advised to do swing trading before extensive trend could be estimated better.
Crude Palm Oil (FCPO) Futures on Bursa Derivatives closed on Friday at 4th consecutive week higher prices. Production cut has helped to lift the demand in market amid weak Ringgit. April delivery contract settled at RM2292 /MT on Friday with temporary toppish outlook. This week, we expect strong profit-taking activity will emerge at RM2300 - RM2310 /MT and likely to decline for correction. Downside support lies at RM2200 /MT in case of drawdown.
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 www.pwforex.com