China cuts fiveyear prime rate
Fundamental outlook
THE People's Bank of China cut its five-year prime rate by 25 basis points from 4.2 per cent to 3.95 per cent. The effort is to stimulate consumer spending and revive market liquidity.
US flash manufacturing index grew 51.5 in February while the flash service index gained 51.3. Both reports showed strength. The Dow benchmark and S&P Index closed at another record high on Friday as traders wrapped up the week with high euphoria.
German flash manufacturing index fell to 42.3 in February. Service index gained 48.2 this month, slightly better than consensus' expectations. However, both data were below the 50 benchmark.
UK flash manufacturing index slid to 47.1 in February, indicating a contraction. The flash service index grew 54.3m indicating strong consumer sentiments.
Technical forecast
US dollar/Japanese yen traded in a small range last week but resisted below 151. We expect the market will likely reach 148.50. Risk control is advised.
Euro/US dollar ascended gradually last week amidst some selling pressure in the market. We forecast the market might sit on 1.08 support and within in a small correction of 1.08 to 1.09. An eventual uptrend is expected early March if the support can remain at 1.075.
British pound/US dollar climbed slowly last week but stayed at 1.27. The market might make sideways correction within a small range from 1.26 to 1.275. Mixed trading activity is expected and traders should stay avoid taking large positions in this consolidation phase.
Gold prices have been resilient beneath US$2,025 per ounce as we predicted last week. The market will likely fall while trading within US$2,000 to US$2,035 per ounce. Beware of unexpected uptrend above US$2,035 per ounce that may re-test US$2,060 per ounce.
WTI Crude prices fizzled out at US$79 per barrel after the market rushed into US blue-chip equity last week. The trend is prone to wane as profit taking emerges. We expect the trend to decline and trade within US$75 to US$78 per barrel. Traders are advised to be patient.
Silver prices topped off US$23.40 per ounce and slid last week. The market is prone to wane further with resistance emerging at US$23 per ounce. The overall range is expected within US$22 to US$23.40 per ounce in mixed trading sentiment. Long traders are advised to stay cautious.
Crude Palm Oil (FCPO) Futures on Bursa Derivatives swung last week and closed on Friday with a star sign on week-chart. The market is uncertain and still unable to find a clear headway. We forecast the trend might trade from RM3,800 to RM3,900 per metric tonne. Breaking away from the aforementioned range will lead into a new 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.