US jobless claims lowest since 1969
Fundamental outlook
US jobless claims ended March 30 was at 202,000, the lowest since 1969. The monthly non-farm payroll rose 196,000 in March, exceeding consensus’ expectations. The unemployment rate held steady at 3.8 per cent during the same month.
US President Donald Trump said the trade deal with China will reach an outcome in a month’s time after both parties agree to erase the trade conflict through negotiations.
UK parliament failed to find an alternative to resolve the Brexit, hence they shall leave the European Union (EU) bloc on April 12 and increasing the chances of a no-deal Brexit unless Prime Minister Theresa May resolves this with a new option. On the other hand, May is collaborating with Opposition party leader Jeremy Corbyn to break the Brexit deadlock and hope to extend the departure from the EU.
Crude prices saw firm demand, bolstered by geopolitical risk in Libya and Venezuela. OPEC leaders express their opinion to ditch the dollar if US implements the NOPEC (no oil producing and exporting cartels act). The media reported that Saudi Aramco made US$111 billion gains in 2018, making it the most profitable company in the world.
Technical forecast
US dollar/Japanese yen traded higher last week after the dollar index reached the 97 benchmark. However, we have identified strong resistance at 112 while the range is contained above 110.50 support. This week, we reckoned the trend will be range-bound but breaking beyond the aforementioned region needs to be controlled with risk management.
Euro/US dollar traded in a narrow range around 1.12 last week with strong support. We expect the trend to rebound quickly as the dollar could weaken in the near future. This week, we forecast strong bargainhunting will be at 1.1180 to 1.12 while recovery will likely reach 1.135.
British pound/US dollar ranged between 1.30 to 1.32 as the trend narrowed into a potential flag formation on the day-chart. The pound-dollar exchange remains uncertain due to the Brexit issue. We suggest traders should stay observant of the trend.
Gold prices saw strong buying interest at US$1,280 to US$1,290 per ounce (oz) last week despite firm sentiments of the dollar index (USDX). This week, we predict the consolidation will continue from USD$1,280 to US$1,295 per oz. A new demand and possible recovery could emerge at US$1,310 per oz.
WTI Crude prices closed above US$63 per barrel on Friday as demand rose last week. Currently, the market support is at US$60 per barrel and will likely push higher in the coming weeks. Due to geopolitical risk in some oil producing countries and supply cuts, the trend will probably range from US$61 to US$65 per barrel gradually.
Silver prices hovered at US$15 per oz last week as bargainhunters entered the market. This week, we reckon the trend will stay sideways but support will be strong at US$14.90 per oz. Overall range is expected from US$14.90 to US$15.20 per oz.
Crude Palm Oil (FCPO) Futures on Bursa Derivatives rose from higher export demand. The market increased beyond expectations. June futures contract settled at RM2,221 per MT on Friday. This week, we foresee resistance at RM2,280 to RM2,300 per MT region. Downside support has moved up to RM2,180 per MT region.
Dar Wong has 30 years of trading and hedging experiences in the global financial markets. The opinion is solely his own. He can be reached at dar@pwforex.com.