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S&P Makes New Historical High as Bond Yield Sinks

  • DAR Wong
  • 24 June 2019

CURRENCY MARKET OBSERVATIONS – 24 June 2019 

 
 
Fundamental Outlook   The U.S. FED policymakers hold interest rates unchanged but open to rate cut in future. FED fund rate remains at 2.25 – 2.5 percent. However, the 10Y Bond yield falls below 2.0 percent for the first time since November 2016. 
 
On Thursday in U.S. time, president Trump approved an attack on Iran after an American spy drone was shot down in the territory of Straits of Hormuz by the Iranian military force. However, Trump retracted the order immediately after it was sent out without giving a detailed explanation. 
 
Five more Chinese companies have been blacklisted by U.S. Government from buying parts from American chipmakers. Traders are optimistic that the Trump-Xi talk will turn out with good settlement. 
 
President Trump has a call conversation with Chinese President Xi on agreement to meet in G20 meeting in Osaka Japan. Xi reiterates that China is willing to negotiate on fair level field without compromising the economic interest to the Chinese sovereignty. He also stresses that collaboration of both largest economies in the world will bring growth to the global markets.
 
Following the expectation of trade talk between U.S. and Chinese leaders in Japan on coming G20 forum, S&P created new historical high at 2964 on Friday while Dollar Index (USDX) fell to 3-month low at 95.70 level. Gold and Crude prices also have recovered as U.S. 10Y Bond yield sank to below 2.0 percent benchmark. 
 
European Central Bank President Draghi rejects the comment by President Trump saying the ECB policymakers have been introducing stimulus to tank the Euro value, hence gaining unfair advantages on exchange rate. Draghi defends the responsibility and mandate of policymakers to fulfil the growth and stability in the Euro region. Targeting at exchange rate as weapon to manipulate the economic changes is not their protocol. 
 
Technical Forecast   USD/JPY fell towards Friday after Dollar sank. This week, we presume the trend will be well resisted at 108.00 level and prone to drop again. Initial range will be contained from 107.00 – 108.00 region but breaking beneath 107.00 support will head down to 105.00 as our next target. 
 
EUR/USD climbed from 1.1200 bottom and closed at 1.1380 on Friday. This week, we expect firm sentiment in market but some profit-taking is also expected at 1.1450 area. Overall range will be contained from 1.1250 – 1.1450 region until the trend goes beyond in either direction. Bullish trend is favored as Dollar weakens. 
 
GBP/USD is supported at 1.2500 and closed at 1.2750 region on Friday. Bank of England holds rate unchanged and maintains GBP435 billion in asset purchase program. This week, we forecast the initial range from 1.2650 – 1.2800 region and piercing above the resistance will probably climb higher to 1.3000 region. Traders are still waiting for an emerging new Prime Minister from U.K. cabinet who could handle the BREXIT matter on coming end October. 
 
Gold prices rose rapidly last week and reached USD1400 /oz at 6-year high. This week, we remain in strong forecast that the trend will move from USD1380 – USD1420 /oz while prone on the upside potential. However, falling beneath USD1380 /oz level needs to abandon your long-view in case of unexpected changes in market fundamentals. 
 
WTI Crude prices have pierced above the previous resistance at USD55 /barrel level. This week, we presume the support will be laid at USD55 /barrel while the expected range will be limited below USD60 /barrel. Technically speaking, it is advisable to be patient to capture the bottom entry in case the trend makes a quick retracement at USD55 / barrel.
 
Silver prices have shown a temporary top at USD15.50 /oz on Friday. This week, we target the trend will consolidate with some profit-taking activities expected. Overall range will move from USD15.10 – USD15.60 /oz until we see a breakout beyond this range. Mid-term trend is still prone to bullishness as we have predicted in past weeks. 
 
Crude Palm Oil (FCPO) Futures on Bursa Derivatives have been trading in narrow range without new market interest. However, the USD/MYR fell from 4.18 to 4.15 area and indicate a probability of recovering FCPO in coming week. FCPO September19 contract closed at RM2021 /MT on Friday. This week, initial range is forecast from RM2000 – RM2050 /MT but prone to break on topside range and attempt RM2100 /MT level. 
 
 
 
 
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 dar@pwforex.com 
 
 
 

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.