US retains monetary policy
Fundamental outlook
US Federal Reserve retained its monetary policy but chairman Jerome Powell hinted at least three rate cuts this year. Flash manufacturing PMI grew 52.5 in March, rising for three consecutive months. Data reading is higher than forecast, indicating resilient growth since January.
China industrial production rose seven per cent in February from a year ago, stronger than expectations. Retail sales grew 5.5 per cent on an annual basis but missed forecast.
Bank of Japan increased its interest rate by 10 basis points, lifting the short-term interest rate to the range of zero per cent to 0.1 per cent. The central bank will also abolish its control on yield-curve and will stop buying REIT funds in the near future.
UK inflation fell to 3.4 per cent in February from a year ago, missing consensus’ expectations. On Thursday, the Bank of England kept its interest rate unchanged at 5.25 per cent. However, the falling inflation brings expectations of a rate cut in the upcoming months.
UK’s flash manufacturing PMI rose 49.9 in March. The reading below 50.0 benchmark indicates a contraction in manufacturing sectors.
On Thursday, Swiss National Bank surprised the market with a decision to lower its main policy rate by 0.25 per cent points to 1.5 per cent, being the first European Bank to cut rates this year.
Technical forecast
US dollar/Japanese yen rose last week after BoJ’s monetary policy news. We forecast the market might be resisted at 152. The target range is expected to trade within 150.50 to 152 region in mixed sentiment as traders might adjust positions.
Euro/US dollar traded sideways last week. The market closed at 1.0813 on Friday and is prone to fall soon. We predict the market might stay within 1.08 to 1.09 but falling beneath 1.08 support will likely land at 1.07.
British pound/US dollar fizzled out at 1.28 and fell last week. We predict the market might wane further and trade from 1.25 to 1.265. Bware of breaking beneath 1.25 support which might open the risk of declining further to 1.235.
Gold prices broke above US$2,200 per ounce and reached a historical high at US$2,218 per ounce before retreating. The gold market is prone to make a correction and trade within US$2,140 to US$2,200 per ounce as traders tend to adjust their positions. The recovering dollar might create some selling pressures in the gold market for profit-taking activity.
WTI Crude prices rose to US$82.50 per barrel. The market might make a correction and thread sideways. We expect the market might be contained within US$79 to US$83 per barrel and encounter some profit-taking activities. Gold and WTI markets should be moving in same direction this week.
Silver prices turned bearish after diving beneath US$25.50 per ounce. We project the market might trade in weaker sentiment and move within US$24 to US$25 per ounce. Traders should remain patient as it will take another few months to break a new high record like the gold market.
Crude Palm Oil (FCPO) Futures on Bursa Derivatives failed to settle above RM4,300 per metric tonne, triggering profit-taking activity.
Market demand stayed consistent on a regional basis but not robust enough to push up new high prices. June 2024 Futures settled at RM4,187 per metric tonne on Friday. We predict the market might fall and trade within the range of RM4,000 to RM4,250 per metric tonne.