Japan’s finance minister hints of possible intervention
Fundamental outlook
JAPAN’S Finance Minister Shunichi Suzuki says currency intervention may be necessary to contain the excessive movement of the yen. However, he refused to comment further at which level is appropriate for such intervention. On Friday, the US dollar-yen closed lower at 152.99 while reacting to this comment.
The US manufacturing PMI reached 50 in April, meeting expectations. Services PMI was at 49.2 compared with 50.3 in March, below forecast.
US non-farm payroll saw less added jobs in April, reaching 175,000 and missing forecast. It was also significantly lower than the revised 315,000 recorded in March. Unemployment rate rose to 3.9 per cent compared with 3.8 per cent in March. The average hourly wage also grew at a slower pace of 0.2 per cent. The market expects a rate cut by mid-year.
At the FOMC meeting, policymakers kept the Fed fund rates unchanged between 5.25 to 5.50 per cent. Federal Reserve chairman Jerome Powell ruled out possibilities of a rate hike as inflation has been well contained.
China manufacturing PMI reached 50.4 in April, matching expectation. Services PMI rose to 51.2, missing consensus’ expectations.
Technical forecast
US dollar/Japanese yen made a correction as long traders take profit. We forecast the sentiment might whipsaw and move largely within 152 to 154.50. Breaking beneath the 152 support might lead to 150.
Euro/US dollar saw a reversal uptrend on Friday, settling above 1.074. The market is prone to rise further and we target the bullish trend will move from 1.07 to 1.09. The dollar will likely weaken as rate cut sentiments resurge in the market. However, abandon your long-view if the market drops below 1.07.
British pound/US dollar traded in a tight range last week. We believe the market might thread within 1.246 to 1.256 until there is a break out beyond this range. We foresee a higher probability in breaking and the trend might reach 1.27.
Gold prices traded in consolidation last week, well supported above US$2,300 per ounce. We predict the market might make a technical recovery and move within US$2,280 to US$2,350 per ounce. The weakening dollar might provide a lift to the gold market.
WTI Crude prices declined last week and closed below US$80 per barrel. We expect the market to drop further due to declining demand. The range trading target is at US$72 to US$80 per barrel. However, reversing above the aforementioned range will initiate a new rise in case of an unexpected catalyst arising from the Middle East tension.
Silver prices exhibited good support at US$26.20 per ounce last week. We project the market might trade cautiously from US$26.20 to US$27.20 per ounce until a breakout pattern emerges. We favour the trend in ascension after this consolidation stage.
Crude Palm Oil (FCPO) Futures on Bursa Derivatives traded in a weak trend last week following the fall in edible oil. July 2024 Futures settled at RM3,842 per metric tonne on Friday. We predict the market might make a technical recovery and trade from RM3,800 to RM3,930 per metric tonne. Some buying interest might step into the market before the rollover period.