Saudi Aramco Prepares for IPO Listing
- 16 September 2019
CURRENCY MARKET OBSERVATIONS – 16 September 2019
Fundamental Outlook The U.S. National Security Advisor John Bolton leaves the trump administration on Tuesday. Both Trump and Bolton could not see on same level in state affairs. Crude prices fell after the news was released as Bolton has been well known to be opposing to Iran.
President Trump says the U.S. Government will delay the new tariffs on USD250 billion Chinese goods till mid-October due to China celebrating its 70th anniversary on National Day. China has prepared to make order for soy beans and agricultural products in exchange for the good favour. Trump comments that he might consider an interim trade deal with China.
The European Central Bank announces new stimulus of injecting EUR20 billion monthly on massive buying bonds in order to support the ailing economy. Deposit rate is cut by 10 BP to minus 0.5 percent on savings account. Market analysts reckon this could be a long run stimulus from the ECB policy.
U.K. Parliament has been suspended and will be closed for 5 weeks before opening in mid-October. Prime Minister Jonson has vowed to lead U.K. for a BREXIT regardless the situation. Pound raises to 7-week high while reacting to a new hope of possible breakthrough in BREXIT deal. Johnson is due to meet European Union Commission on 16 September and the EU leaders on 17 and 18 October.
Saudi Aramco has announced its listing for IPO in home Exchange in near future then follow by a second listing sometime next year in U.K. or U.S. markets. Iraq has agreed to cut production in-line with OPEC proposal.
OPEC leader Saudi Arabia reiterates that deeper cut on global oil production will be start in December. The target is to reduce 1.7 million barrels per day from current 1.2 million reduction now.
Technical Forecast USD/JPY regained in recovery last week. The market is still in mild uptrend while it may move into sideways consolidation this week. Technically, we foresee the movements will be ranged from 107.00 – 109.00 region with interest prone to pick bottom. Risk control is advised in case of breaking beneath this support.
EUR/USD has traded higher after the announcement of stimulus. This week, the trend is likely to move in firm sentiment with support rising at 1.1020 area. Overall range is expected to be contained from 1.1020 – 1.1170 while trading in narrow prices. Real impact of stimulus is not known yet until we move into Q4 seasons.
GBP/USD closed slightly above 1.2500 after a sudden surge on Friday. This week, we forecast the trend might climb further but resistance will emerge in 1.2600 – 1.2650 region. Downside is supported at 1.2400 level in case of drawdown. Market interest will lean to picking bottom over the short-term period till the British Parliament re-opens in mid- October.
Gold prices lingered around USD1500 /oz throughout last week and caught many traders in the jittery prices. This week, we predict the trend will be prone to fall further. Resistance is expected to emerge at USD1500 – USD1510 /oz in case of recovery. Falling beneath USD1475 /oz will expose the potential to slide further to USD1450 /oz level.
WTI Crude prices fell off USD58.00 /barrel last week after the resignation of U.S. National Security Advisor Bolton. This week, we expect the support will be tested at USD53.50 /barrel before rebound. Overall range is likely to be contained from USD53.50 – USD57.50 /barrel with some bargain-hunting emerging from aforementioned bottom.
Silver prices have begun dropping on Friday. Technically, the trend is well resisted at USD18.00 /oz for the time being and prone to head down further in coming week. Support is identified at USD16.80 /oz in case of further drawdown. However, we expect the market will lay a strong foundation at this bottom in September before the next uptrend resumes in October.
Crude Palm Oil (FCPO) Futures on Bursa Derivatives traded in slight fall last week. Market will have its active month rollover to December on Monday and probably will help to adjust in contago premium. December19 Futures contract closed at RM2223 /MT on Friday. This week, the trend will be supported at RM2200 /MT and likely to recover to RM2280 /MT region if open-interest increases.
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