American Payroll Slows Down in Growth
- 13 January 2020
MARKET OBSERVATIONS – 13 Jan 2020
American Payroll Slows Down in Growth
Fundamental Outlook The U.S. President Trump warns Iraqi on slapping sanction after the Iraqi Parliament decided to defend the sovereign right by expelling U.S. troops. The act comes after U.S. drone attacked and “assassinated” Iran’s military leader General Soleimani in Baghdad.
Last Wednesday, Iran shot more than a dozen of missiles at U.S. military bases in Iraq but U.S. media reported no casualties. President Trump plays down on the strike and claims the intentional miss by Iranian forces. Japanese media reported 20 casualties have been found on the sabotage sites.
Oil prices rose after the U.S. –Iran tension escalated following the death of General Soleimani. However, market prices fell towards weekend to USD60 /barrel region as demand waned. Iran goes through national mourning and vows to seek vengeance with U.S. Government. Meanwhile, China encourages U.S. to seek dialogue with Iran instead of using forces in resolving the dispute.
Dow Jones benchmark made new record high on last Thursday while Gold and Crude prices sank. On Friday, American payroll added 145,000 jobs in December and below forecast. Unemployment rate remained steady at 3.5 percent. Dow markets protruded above 29,000 and fell on Friday as profit-taking emerged before weekend.
Technical Forecast USD/JPY rose last week after exhibited strong support at 108.00 level. This week, market is seeing immediate resistance at 109.70 level and depends on the ongoing strength of Dollar to seek higher ground. Breaking above the 109.70 resistance will test 110.70 region, otherwise the trend might correct at 108.50 area.
EUR/USD traded in downtrend as Dollar rose last week. Technically we foresee the market will be supported at 1.1070 in coming week. However, the topside potential is limited at 1.1070 level as the trend will thread in narrow movement. Swing patterns are likely to occur and traders are advised to control risk in case the prices extend beyond the consolidated range.
GBP/USD has been moving within the range from 1.2900 – 1.3200 as we predicted. Traders are grasping the opportunity to sell from high side whenever market pulls up. This week, we reckon the market sentiment will remain unchanged and prone to fall as we pace towards end January for BREXIT realization.
Gold prices protruded above USD1600 /oz on last Wednesday and fizzled out. Market is likely to lose steam as fund might rush back to stock indexes. This week, we project the range to be USD1530 – USD1580 /oz but likely in a downward retracement. Theoretically, the yellow metal is becoming directly inverse to Dow benchmark for the movement of fund.
WTI Crude prices plunged from USD65 /barrel top on middle last week to USD60 /barrel as fund rushed back into Dow market. Dollar recovery is another factor that has added pressure on commodity prices. This week, we foresee the range will be sideways from USD58 – USD61 /barrel amid weak trend. In overall, market is subject to bearish trend once it submerges below USD62 /barrel.
Silver prices whipsaw last week by piercing above USD18.50 /oz on Wednesday but dived below USD18.00 /oz unexpectedly on following day. This week, the market will be contained from USD17.70 – USD18.50 /oz in uncertain swinging patterns. Traders are advised to take control of positions in case of erratic price movements.
Crude Palm Oil (FCPO) Futures on Bursa Derivatives traded sideways amid profit-taking activity last week. Trend is rather inactive as traders just started off the New Year. However, buying interest might kick-in again after the rollover period in January. March20 contract closed at RM3136 /MT on Friday. This week, we project the trend will continue to thread from RM3020 - RM3160 /MT range but piercing above the resistance will probably aim for RM3200 /MT target.
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