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U.S. – China Tension Intensifies amid Pandemic Crisis

  • DAR Wong
  • 18 May 2020

CURRENCY MARKET OBSERVATIONS – 18 May 2020

 

 

Fundamental Outlook   The U.S. consumer prices fell 0.8 percent in April on monthly comparison. Excluding fresh food and energies, core prices slid 0.4 percent that was worst data since 1957. The filings for jobless claims for the week ended 9 May was reported at 2.981 million, bringing the aggregate number to 36.5 million till date.

Federal Reserve chair Powell reiterates that policymakers are not considering negative interest rates at this time. However, President Trump has been nudging the FED officials to welcome negative rates as solution to stimulate the falling economy.  

President Trump threatens to cut all ties with China and saves the repayment of USD500 billion on Treasury Bonds held by the Beijing Government. China responds by urging United States to meet halfway for working mutually to fight against pandemic crisis.

The crude prices have recovered after the production cut by OPEC+ countries have taken effect on 1 May. Saudi Arabia further stresses on cutting another 1 million barrels production per day from 1 June onwards, in addition to the current 9.7 million barrels reduction currently.    

Technical Forecast   USD/JPY traded in narrowing range last week as we predicted. This week, we remain unchanged in our forecast that the trend will be contained from 106.00 – 108.00 until the next breakout. There is no clue on the directional trend at the moment until we see the Dollar Index (USDX) taking a lead in a new headway.

EUR/USD has displayed strong support at 1.0770 level and hovered at this region before weekend. Technically, we project the market movement will be contained from 1.0750 – 1.0900 range in coming week. Just like USD/JPY, Euro currency is now waiting for Dollar to take the lead and trigger the next directional trend in the currency pair. Traders are advised to exercise caution in case the trend extends beyond the consolidated range mentioned above.

GBP/USD has broken down below 1.2200 support last week and turned this level into a strong resistance now. This week, we foresee the market might fall deeper with resistance emerging at 1.2200 area. Technically, the immediate psychological support lies at 1.2000 benchmark but violating beneath this level will drive lower to 1.1750 area. Traders need exercise risk control in case the trend reverses above 1.2200 due to unexpected circumstances!

Gold prices touched the 7-1/2 high at USD1752 /oz on Friday and settled on high side. This week, we forecast the high probability of yellow metal shooting higher. Inversely, Gold or Dollar prices will fall in order to push the Gold demand into new intra-year high. Technically, we expect the support to be firm at USD1725 /oz in case of drawdown. Breaking above the USD1760 /oz will likely take a new jump to USD1800 /oz benchmark.

WTI Crude prices have been approaching USD30.00 /barrel on Friday after sequential days of price ascension. This week, we reckon the trend will be well resisted at USD30.00 /barrel and likely to take a drawdown at USD26.00 /barrel. In case of persistent uptrend, the next target will be USD34.00 /barrel that is ambushed by many profit-taking activities.

Silver prices climbed higher last week as we predicted. The market has yet to reach USD17.00 /oz as we expected. This week, we aim for the topside target to be USD17.50 – USD18.00 /oz if the bulls persist in ascension. Support lies at USD15.80 /oz and should not be broken to ensure the bullish trend.

Crude Palm Oil (FCPO) Futures on Bursa Derivatives climbed higher after the holiday weekend. Recovery was partly due to higher Crude prices and growing demand in food commodity. July20 Futures closed at RM2089 /MT on Friday. This week, market trend may consolidate from RM2050 – RM2100 /MT range initially. However, piercing above the aforementioned resistance will drive the demand higher at RM2200 /MT as our next target.

 

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.