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Massive Job Loss in American Economy Spikes Worries

  • DAR Wong
  • 11 May 2020

CURRENCY MARKET OBSERVATIONS – 11 May 2020

 

Massive Job Loss in American Economy Spikes Worries

Fundamental Outlook   The U.S. ISM non-manufacturing index dropped to 41.8 in April from 52.5 in March, showing the first contraction in services since December 2009.

American jobless claims were reported at 3,169 million for the week ended 2 May, reaching 33.5 million since February. On Friday, the American non-farm payroll fell 20.5 million in April and unemployment jumps to 14.7 percent. President Trump continues to put blame on China for diverting market focus.

The trade representatives from U.S. and China re-open talk on the phase one of trade deal signed on January. Both parties agree to remain in communication amid uncertainty looms. 

U.K. reports the lowest auto sales in April at 4,321 compared to 161,064 in April 2019, lowest record since 1946. Bank of England expects the GDP to fall over 14 percent in 2020 as the growth plummeted 25 percent in Q2 seasons.

Bank of England held the benchmark rate unchanged at 0.1 percent and asset purchase program at GBP645 billion.  Investors put a lid on Pound value as fund derails from U.K. economy in post-BREXIT and amid pandemic crisis.

Technical Forecast   USD/JPY reveals a sign of support at 106.00 last week. The market is prone to recover in near future as Dollar may weaken. This week, we foresee the trend will be contained from 106.00 – 108.00 region amid mixed trading activity. Beware of breaking and settlement below 106.00 level as the support may begin to give way due to unexpected circumstances.

EUR/USD made an upward reversal on Friday and showed strong support at 1.0770 – 1.0800 area. This week, we project the trend will climb higher and range from 1.0800 – 1.0950 region. The day-chart has shown the beginning of triangle formation and probably will narrow down in market movement in coming days. Traders are reminded to be cautious in mixed trading.

GBP/USD has shown strong resistance above 1.2600 on day-chart and also suppressed by EMA200 line. Market settled at 1.2400 region before the weekend and prone to imminent weakness. Technically, we reckon the selling pressure will emerge at 1.2450 area and head down to 1.2100 level this week. Going above 1.2500 level needs to exercise risk control for short traders.

Gold prices have been trading from USD1680 – USD1720 /oz and narrowing into a triangle formation on day-chart. Moving forward, we foresee the trend will break in either direction depending on the inverse catalyst of Dollar trend. Traders are advised to be cautious and adopt proper risk management when the trend pierces beyond the aforementioned range.

WTI Crude prices slowed down in ascending trend last week and capped beneath USD25.00 /barrel. This week, there could be new selling forces as the Futures market approaches last trading day in less than 10 market days. Technically, we estimate the trend will be contained from USD19.00 – USD25.00 /barrel as the prices unwind. Beware of sliding beneath the USD19.00 /barrel as this could be disastrous for long traders.

Silver prices have shown strong support at USD14.75 /oz and bounced off this level last week. This week, the trend is likely prone to climb further with target aimed at USD17.00 /oz region. Generally, we foresee the Silver may ascend faster than the yellow metal in near future after studying the chart of Gold/Silver ratio chart.

Crude Palm Oil (FCPO) Futures on Bursa Derivatives traded lower last week while challenging a new 10-month low at RM1939 /MT bottom. Demand for oil palm remains weak throughout regional buyers due to the economic recession. July20 Futures closed at RM2019 /MT on Friday. This week, the market may recover and trade in slightly firm sentiment ranging from RM2000 – RM2100 /MT. However, breaking beneath the support might drive lower to re-test RM1900 /MT ground. 

 

DAR Wong has 31 years of trading and hedging experiences in global financial markets. The opinion is solely at his own.  He can be reached at dar@alaa.sg


About the Author
DAR Wong (Singapore)
An international speaker with 27 years of trading experience in the global financial markets, DAR is a Market Master and author of “Living Daylight in Stock Market: Monetizing Your Profits in 8 Days”.

DAR Wong is an active market trader, registered fund manager, educator and author.He began his career in 1989 as an institutional Futures trader with Bank of America. DAR Wong specializes in trading global derivatives and financial markets. He has 26 years of experience accumulated through tenure with Bankers Trust, Barclays Bank, Citigroup (Smith Barney Shearson Inc) and as an independent trader.

DAR is the author of “8 Ways to Invest in China’s Emerging Market” and contributes frequently to regional media, including financial TV/Radio programmes, newspapers and magazines for professional traders and active investors.

He is a popular and sought after international speaker who has presented to financial professionals and investors throughout the region including Singapore, Malaysia, Indonesia, Thailand, Hong Kong, China, Cambodia, Myanmar, Philippines, Sri Lanka, India, South Korea, Laos, Vietnam, United Kingdom and Middle East (UAE).

DAR is registered with NASD (now known as FINRA) series 3 and 5 as approved by National Futures Association (NFA) of USA and holds a current portfolio as Fund Strategist and Advisor with Dektos Investment registered with Monetary Authority of Singapore.

DAR is profiled as “One of the most successful traders – Market Masters” in Brent Penfold’s bestselling book “The Universal Principles of Successful Trading “. In January 2015, DAR was honored with Outstanding Award for International Financial Market Analysis granted by ASEAN Commerce (Thailand).

DAR is the author of "8 Waysto Invest in China's Emerging Market" and contributes frequently to regional media, including financial TV/Radio programmes, newspapers and magazines for professional tradersand active investors.1

He is a popular and sought after international speaker who has presented to financialprofessionals and inverstors throughout the region including Singapore, Malaysia, Indonesia, Thailand, Hong Kong, China,Cambodia, Myanmar, Philippines, Sri Lanka, India, South Korea, Laos, Vietnam, United Kingdom and Middle East(UAE).2


Year
2003 - Set up ASPRI to provide hedging advisory for corporate clients and training for financial professionals
2009 - Released first book “8 Ways to Invest in China’s Emerging Market”
2010 - Profiled as “one of the most successful traders – Market Masters” in Brent Penfold’s bestselling book “The Universal Principles of Successful Trading” along with Larry Williams, Andrea Unger, Michael Cook, and Daryl Guppy etc
2011 - Received “Spirit of Enterprise”awarded by Singapore Management University in Singapore
2012 - Honored with Individual Diamond Career (Thailand) awardedby Royal Privy Council of Kingdom of Thailand
2013 - Appointed Vice Chairman of ASEAN-China Commerce Association and led a delegationtothe annual China-Asean Expo in Guangxi Province, China
2014 - Fund Manager cum Director in Dektos Investment Corporation registered with Monetary Authority of Singapore
2015 - Released new book “Living Daylight in Stock Market - Monetizing Your Profits in 8 Days” in January
2015 - Honored with Outstanding Award in International Financial Market Analysis awarded by ASEAN Commerce (Thailand)
2016 - Honored with Medal of Integrity by Royal Councilin Palace of Palembng, Indonesia

References

1.TV programs on ChannelNewsAsia (Singapore);Radio on 95.8 Capital (Singapore); Newspapers such as The Borneo Post (Malaysia), 资汇报 (Malaysia); Regional financial magazines such as The Analyst (India), 东盟商界(ASEAN, China), 资本杂志 (Malaysia).

2.Spoke at events for CME Group, Euronext LIFFE, Tokyo Commodity Exchange, Singapore Exchange, Korea Exchange, Bursa Malaysia, Thailand Futures Exchange, Jakarta Futures Exchange, Indonesia Commodity and Derivatives Exchange, Tokyo Commodity Exchange, Interactive Brokers, Xinhu Futures, Hangzhou Money Fair, China (Shenzhen) International Finance Expo, China (Guangzhou) International Finance Expo, Euromoney, CIMB, Maybank, RHB, UOB Bank, Asia Trader & Investor Convention, Global Rubber Conference, International Rubber Conference, Malaysia Rubber Board, International Rubber Research and Development Board,Malaysia Ministry of Agriculture, Rubber Industry Smallholders Development Authority, Vietnam Rubber Association, Cambodian Rubber Association, Bureau of Agriculture Research Philippines, Myanmar Rubber Planters & Producers Association etc.