US 4Q23 advanced GDP data better than expected
THE first release of advance GDP data in US showed that its economy charted 3.3 per cent gains in 4Q. The figure is better than expected but lagged behind the previous quarter at 4.9 per cent growth.
The S&P 500 index soared to an all-time high and closed at a historical record at 4,890. Tech stocks like Alphabet, Meta and Microsoft celebrate fresh new highs in market while traders cheer for the bullish trends.
Eurozone reported that flash manufacturing index in January at 46.6, higher than consensus’ expectation. Being the largest economy, Germany reports its flash manufacturing index at 45.4, exceeding expectations. German services index also rose to 47.6. However, the average reading of these economic markers were below 50.0 benchmark, signalling a slowdown.
Bank of Japan retained its monetary policy. Its governor gave no hints on when to pull out the interest rate from its negative zone. However, market traders expect the interest rate to normalise in April and has triggered a small rise in the yen.
WTI Crude prices climbed last week and settled at US$78 per barrel on Friday. Security in Red Sea stays in unstable threats while another commercial vessel was hit on Friday by the Houthis militants.
Technical forecast
US dollar/Japanese yen traded sideways last week, staying mainly within 146.50 to 148.50. We target the range to be unchanged and still prone to fall slightly. However, the topside resistance is expected to be strong at 148.50 to 149. Traders are reminded to be cautious ahead of FOMC meeting at the end of the month.
Euro/US dollar consolidated in a small range last week. The market is prone to trade within 1.08 to 1.095 with a small rebound pattern. We do not expect a big movement in the market as the dollar is subject to the outcome of the FOMC meeting. Traders should stay cautious.
British pound/US dollar stayed around 1.27 for days. The trend is prone to fall and we target the range to be 1.2550 to 1.27 region. Beware of the unexpected surge above 1.275 in case of adverse news about the dollar. Short traders are advised to stay alert this week.
WTI Crude prices climbed last week and reached US$78 per barrel on Friday. We project the trend might be resisted at US$80 per barrel in case of an ascension. Profit-taking is expected towards month-end while downside support lies at US$75 per barrel.
Crude Palm Oil (FCPO) Futures on Bursa Derivatives traded in rising trend as global edible oil and energies recovered last week.
However, we anticipate some profit-taking will occur this week due to the month-end season. April 2024 contract closed at RM4,021 per metric tonne on Friday. We predict the trend might be resisted at RM4,100 per metric tonne and begin to wane. Downside support lies at RM3,950 per metric tonne in case of price decline.
Gold prices have been trading in a small range last week. The market is gathering its selling momentum but it might unwind this week. We reckon the range might trade within US$2,000 to US$2,025 per ounce in bearish sentiment. Beware of piercing above US$2,025 per ounce resistance that could reverse up the trend and reach US$2,040 per ounce.
Silver prices bounced off US$22 per ounce but stayed at US$23. per ounce last week. Moving forward, we forecast the market might remain unchanged and the trend will likely trade within this range at a slightly bearish pattern. Beware of extension beyond the aforementioned range in either direction.
Dar Wong has more than 30 years of trading and hedging experiences in global financial markets. The opinion is solely his own. He can be reached at dar@alaa.sg.