ECB expands stimulus programme
Fundamental Outlook
THE European Central Bank expanded its massive monetary stimulus programme by 500 billion euros, in the wake of the second wave of lockdown weighing on the economy.
US home mortgage rate fell to 14th time this year at 2.9 per cent for the 30-year fixed rate, driving up refinancing demand.
US weekly claims for jobless benefits jumped by 853,000 in the week ended December 5, higher than the previous week's 716,000.
There are 17 states supporting Texas in reversing the winning results of President-elect
Joe Biden. Market traders are disappointed that the fiscal stimulus might not be approved before the month-end.
The United Arab Emirates (UAE) said the Covid-19 vaccine from China's Sinopharm has proven 86 per cent effective rate after three phases of trials conducted among 31,000 users from 125 nations. In the US, the FDA has approved Pfizer's Covid-19 vaccine for emergency use.
OPEC and allies have agreed to increase 500,000 barrels production per day from January onwards. Many market analysts expect the OPEC leaders will continue to maintain supply cut until March 2021.
Technical forecast
US dollar/Japanese yen has been strongly resisted at 104.50. We project the range could be moving from 103.50 to 104.50 while waiting to break in either direction. The dollar's direction is essential to determine the overall market trend.
Euro/US dollar broke above 1.20, building strong demand at 1.205. We foresee the movement could be contained from 1.2050 to 1.22. The dollar is temporary hitting a low side while possibly waiting for a rebound.
British pound/US dollar settled at 1.3220 on Friday after the market fell off 1.34. The
Brexit complications have caused the pound to weaken. We foresee the trend could be very volatile and generally contained within 1.31 to 1.34. Risk control is advised.
WTI Crude prices have climbed slowly as the dollar weakens. The market movement was largely contained from US$45 to US$48 per barrel. We foresee a strong resistance at US$50 per barrel in case of a further rise. Traders should exercise caution and minimise risk when volatility emerges in the market.
Crude Palm Oil (FCPO) Futures on Bursa Derivatives traded in a small range and limited to RM3,450 per metric tonne resistance. The market is losing steam. February Futures settled at RM3,407 per metric tonne on Friday. We foresee some strong resistance above RM3,450 per metric tonne and ultimately at RM3,500 per metric tonne in case of a continued uptrend. We believe the trend could trade in correction from RM3,350 to RM3,450 per metric tonne amid profit-taking activity.
Gold prices will depend on the FOMC meeting outcome in the coming week. We expect the market to hover at US$1,810 per ounce if there is no announcement on a stimulus following the FOMC meeting. The market range is expected to be contained from US$1,770 to US$1,850 per ounce.
Silver prices topped of US$24.70 level last week after encountering strong selling pressure. We project the trend could trade lower while contained from US$22.50 to US$24 per ounce. Gold will remain as the main lead in precious metals but traders need to be disciplined in managing risk in case the trend pieces above US$24.70 per ounce.