Bank of England holds interest rate unchanged
THE Bank of England held its benchmark rate unchanged at 5.25 per cent with the aim to reduce the national inflation down to 2.0 per cent. During the meeting, one out of eight members of the Monetary Policy Committee Member voted for a rate cut while six members voted for an unchanged policy and one voted for a rate hike. Traders expect a rate cut to begin this year.
US Federal Reserve retained its interest rate policy following its first FOMC meeting this year. Chairman Jerome Powell discounted the possibility of a rate hike in March based on the current inflation which is still growing. Dow Jones benchmark fell 317 points at market close on Wednesday after market traders squared off their long positions.
US nonfarm payroll increased 353,000 in January, surpassing expectations. Unemployment rate stayed at 3.7 per cent. S&P 500 Index closed at a record high on Friday and settled at 4,958. Tech stock reported strong earnings and Meta also announced its first-ever dividend of 50 cents per share for March.
German preliminary inflation grew 0.2 per cent in January on a monthly basis, surpassing consensus’ expectations. Eurozone flash inflation in January grew 2.8 per cent while core inflation rose 3.3 per cent. Both annualised rates surpassed consensus’ expectations.
Technical forecast
US dollar/Japanese yen surged on Friday after the release of US nonfarm report. The market rose to 148.50 and settled for the weekend. We expect the trend to trade within 147.50 to 149. Swing trading is more likely to occur in the market.
Euro/US dollar fell on Friday and closed at 1.0788 as the dollar surged. We target the trend might trade slightly lower and within the range of 1.07 to 1.085. We foresee some selling pressure at 1.085 and the overall sentiment is prone to bearish trend for the time being.
British pound/US dollar dove on Friday following the decline in the euro. The British pound is likely to wane further as market traders have long expected a decline to occur. Resistance is identified at 1.27 and the trend will likely travel south and reach 1.25 as our immediate target. Traders are advised to be cautious.
WTI Crude prices traded in a streak of losses last week as the dollar gradually climbed. We foresee the market might extend its downward trend and reach US$70 per barrel. The overall range is target at US$70 to US$74 per ounce. Traders should stay cautious.
Crude Palm Oil (FCPO) Futures on Bursa Derivatives fell short of our target at RM4,100. The sudden fall in crude demand triggered a price fall in edible oils and palm oil. April 2024 contract closed at RM3,762 per metric tonne on Friday. We expect the trend to trade from RM3,700 to RM3,850 per metric tonne. However, the market might head in either direction and hit the first target before reversing into the opposite position.
Gold prices topped US$2,060 per ounce last week and sank on Friday. The day-chart could be showing a headand-shoulder pattern and the overall trend might fall. We forecast the market might fall and reach US$2,000 per ounce.
Silver prices topped US$23.30 per ounce area and fizzled out. We retain our forecast that the trend might trade within US$22 to US$23 per ounce. The market consolidated last week and has delayed the downtrend. However, beware of piercing above US$23 per ounce due to unexpected news and shorttraders need to control their risk.
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.