U.S. Federal Reserve Cuts 25bp rate
- 4 November 2019
CURRENCY MARKET OBSERVATIONS – 4 November 2019
Fundamental Outlook The U.S. policymakers cut 25 BP rate on last Wednesday to 1.5% - 1.75% benchmark for the third time this year. FED chair Powell hints the act to end the trimming cycle for time being while monitoring growth. On Friday, S&P 500 Index closed at historical high 3066 after the rate cut. Traders expect Dow market might continue the market sentiment and soon will break new high as well in-lieu of positive trade negotiation between U.S. and China.
U.S. economy added 128,000 payrolls in October and above forecast. However, average hourly earnings grew at 0.2 percent and fell below median forecast. The data boosts the policy of President Trump in favourable result of his repatriation of overseas U.S. businesses.
UK lawmakers have agreed to a general election on coming 12 December for electing a new party to decide in BREXIT matter. This is the first general election on nationwide polls since 1923.
Chile announces the cancellation of APEC summit in November. Trump and Xi are supposed to meet and sign the mutual trade deal on phase one agreement, but may be affected now. Till date, the change of venue has yet to be announced by the leaders of the two countries for the signing the document.
Saudi Crowned Prince Mohammed bin Salman has finally agreed to the IPO of state enterprise Aramco Oil be year-end in domestic market before going to another secondary market in 2020. The initial public listing will release USD2 trillion that is biggest IPO in history of mankind.
Technical Forecast USD/JPY spiked above 109.00 level briefly last week and fell below this benchmark. This week, we forecast the trend will thread sideways from 107.70 – 108.70 in mixed trading. However, falling beneath 107.70 support will trigger a new selling force in market. Overall trend is prone to develop bearish sentiment in coming weeks unless the prices recover above 109.00 level again!
EUR/USD traded in mild uptrend last week. The market sentiment is prone to recover higher in coming weeks if the prices can stay above 1.1070 level. Strong buying interest is expected to emerge at 1.1070 – 1.1100 region in case of quick correction. Moving higher, immediate resistance is checked at 1.1200 but piercing above this level will initiate a new buying force in market to 1.1300 level.
GBP/USD is trapped within 1.2800 – 1300 range for time being while pretty uncertain about BREXIT matter. Technically, we predict the trend will stay sideways till December before British Parliament finds a firm direction for the BREXIT deal with EU leaders. Traders are staying cautious and adopt swing trading for quick profiting strategy amid volatile trend.
Gold prices traded in sideways last week while trapped within the large range of USD1475 – USD1525 /oz. This week, we aim for no change in this market sentiment as the market is caught in mixed activity. Only when the trend breaks beyond the aforementioned range in either direction should there be a new headway. No clue is anticipated for the time being.
WTI Crude prices rose on last Friday after news of Saudi Aramco Oil has confirmed for IPO listing. Currently, the market trend is still contained from USD54.00 – USD57.00 /barrel with not enough strong factor to push the demand higher. This week, we shall observe the trend in the aforementioned range unless the bulls cross above USD57.50 /oz level. Relatively, a downfall in Dollar may trigger the WTI prices to reach USD60.00 /barrel.
Silver prices didn’t change much in weekly closing prices on Friday. This week, we reckon the resistance will emerge at USD18.70 /oz in case of rising further. On downside, the support is identified at USD17.70 /oz while keeping the price movement in tight range. Currently, market attention is mostly pinned on Gold prices and little attention in Silver trend. Hence, we do not foresee any major trend in coming weeks.
Crude Palm Oil (FCPO) Futures on Bursa Derivatives fell off 17-month high RM2514 /MT last week. India proposes a plan to increase import tariff on refined palm oil and caused FCPO prices to drop. January20 Futures contract closed at RM2462 /MT on Friday. This week, the trend might head into correction as trader take profit after news of increasing tariff. Overall trend is expected to trade from RM2400 – RM2500 /MT amid mixed trading activity.
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 email@example.com