US payroll declines but unemployment still low

Fundamental outlook THE US payrolls saw an increase of just 20,000 in February compared with 311,000 recorded the previous month. However, unemployment rate stayed low at 3.8 per cent. Dow Jones market fell on Friday.

China is worried that US President Donald Trump will walk away from the deal table which is expected to be held the end of this with Chinese President Xi Jinping at Mar-a-Largo. There were rumours that the meeting has been cancelled but the White House has not officially commented on the topic.

European Central Bank (ECB) announced that it has retained the policy and will maintain zero interest until at least the end of 2019.

Policymakers will launch another programme to stimulate bank lending in the eurozone for the third time. A new series of quarterly targeted longer-term refinancing operations (TLTROIII) will be launched, starting in September 2019 and ending in March 2021, each with a maturity of two years

Chinese giant telco Huawei is suing the US Government over a law that bans Government agencies from buying the Chinese technology giant’s equipment, claiming the legislation is unconstitutional, and with possible intention to involve the business in a political fight over 5G market. Technical forecast US dollar/Japanese yen topped 112 last week after encountering strong resistance. This week, we forecast a correction but it could be contained within 110 to 112. The market will likely consolidate for a short perioud before continuing its downtrend over the coming months.

Euro/US dollar broke below 1.12, a 21-month low, after the ECB announced another series of stimulus plans. This week, we reckoned a narrow range will be traded in mixed sentiment with not much new interest in the euro. The trend is expected to be contained from 1.1170 to 1.1320 with mild recovery as the dollar tends to decline.

British pound/ US dollar declined last week as the Brexit woes continues in the UK. However, bargain- hunting is expected to emerge at 1.30 with support rising from 1.2970. This week, a small range is expected in the pound’s movement with resistance expected at 1.31 area.

Gold prices have been holding firm above US$1,280 per ounce and bounced off on Friday as the dollar receded. Generally, the yellow metal is moving from US$1,280 to US$1,310 per oz as we predicted last week. The movement is likely to remain this week and traders are encouraged to trade safe.

WTI Crude prices closed above US$56 per barrel on Friday after bouncing off the week’s low from US$54.52 per barrel. This week, we project a possibility of seeing higher prices as the bulls drive up to US$360 per barrel. Nevertheless, the forecast for uptrend will be nullified in case the trend penetrates beneath US$54 per barrel.

Silver prices found strong support at US$15 per oz last week. This week, we reckoned the trend will drive higher with the same support at US$15 per oz. For the time being, range is still limited within US$15 to US$15.80 per oz while the trend will consolidate in mixed sentiments.

Crude Palm Oil (FCPO) Futures on Bursa Derivatives traded lower in weak sentiments last week as the edible oil fell. The mild slide in the ringgit against dollar from 4.07 to 4.09 has not helped to support in the FCPO market. Contracts for May settled at RM2,126 per MT on Friday in bearish mode.

This week, we reckoned the support lies immediately at RM2,120 per MT but breaking below this level might lead to the next support at RM2,070 per MT area. In case of a potential rebound, it will be limited at RM2,200 per MT this week.

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 www.pwforex.com.