US-China trade talks end on a positive note
CHINESE Vice Premier Liu He wrapped up the trade talks in the White House on Friday. President Donald Trump commented on a positive outcome but says the deadline on March 2 was not a “magical date” to complete negotiations between the two countries. In fact, the leaders have proposed to extend the trade talks in order for President Trump and President Xi Jinping to meet in late March in Florida. Meanwhile, China has agreed to buy US$1.2 trillion of US goods.
New loans in China reached a record high in January, chalked up to 4.64 trillion renminbi, includingthetotalsocialfinancing such as bonds. Analysts reckoned the stimulus might have kicked in but also worry that debts may go out of control.
Saudi Aramco signed an agreement to form a joint venture with Chinese conglomerate Norinco to develop a refining and petrochemical complex in Panjin city. The two parties, along with Panjin Sincen, will form a new company called Huajin Aramco Petrochemical Co that is expected to produce 300,000 barrels per day (bpd) and 1.5 million metric tonne per annum ethylene cracker. Aramco will hold 35 per cent of the new company, with Norinco and Panjin Sincen owning 36 and 29 per cent each.
Crude oil prices reached a year-high in 2019 on Friday as the dollar softened from news of the extended trade talk. The US Crude ended the session at US$57.26 per barrel.
Technical forecast
US dollar/Japanese yen has been trading in a very tight range throughout the week, capped under 111. This week, we project a potential fall in the market as the dollar may weaken. Initial range is expected to move from 109.50 to 111 but it could break lower and reach 108.
Euro/US dollar bounced off 1.1230 support last week as the trend rose gradually. This week, we expect a sideways trend to emerge and thread from 1.128 to 1.14. British pound/US dollar encountered strong resistance at 1.31. The market influenced by sentiments surrounding the Brexit as traders adjust their position in mixed trading activities. This week, we forecast the trend will be contained from 1.295 to 1.31 initially until we see a breakthrough in either direction.
Gold prices was at a 10-month high at US$1,346 per ounce last week. There was selling pressure as the bulls approached US$1,350 per oz, as we expected. This week, we reckoned the trend will be within US$1,320 to US$1,350 per oz without much expectations of prices to extend beyond this point. The week-chart shows a potential trend consolidation as uncertainties linger.
WTI Crude prices traded in a narrow range before weekend but sentiments are strong. The extension in US–China trade talk and softening dollar will help to push the market higher in the coming weeks. This week, we will presume support at US$56 per barrel and it could reach US$60 per barrel.
Silver prices were at US$16.20 on the day-chart and will slow down for a while. Technically, we forecast the market will move into a sideways consolidation from US$15.60 to US$16.20 per oz. However, we feel the trend will rise after this consolidated phase and this may be a good time for bottom picking.
Crude Palm Oil (FCPO) Futures on Bursa Derivatives traded in a narrow range last week. Support is at RM2,240 per MT, confluent to EMA200 line. May contract settled at RM2,252 per MT. This week, we reckon the trend will reverse if it can stand above RM2,220 per MT until mid-week. Topside target is identified at RM2,340 per MT.
Dar Wong has 30 years of trading and hedging experience in the global financial markets. The opinion is solely his own. He can be reached at www.pwforex.com