Global stock markets are making a recovery
Fundamental outlook
THE dollar corrected against major and Asian currencies resulting in a flight of funds back to stocks and commodity. The second largest cryptoExchange FTX is also filing for bankruptcy due to misappropriation of funds. Global investors are seeking conventional instruments as safe haven.
US inflation cooled down to 7.75 per cent in October on a yearly basis, lower than 8.2 per cent recorded in the previous month. Stock markets rallied before the weekend as traders are expecting the rate hike to slow down soon. Weekly jobless claims rose to 225,000 for the week ended November 5.
China’s inflation rose 2.1 per cent in October from a year ago, declining from the previous month’s 2.8 per cent. Producer prices dropped 1.3 per cent on an annual basis, declining for first time since December 2020.
UK’s GDP growth declined 0.2 per cent in 3Q after making a 0.2 per cent gain in the quarter ended June. Nevertheless, the pound is recovering against the dollar as the greenback moves into a correction.
Technical forecast
US dollar/Japanese yen fell into a bearish trend and dropped beyond 144 support last week. The market settled at 139 on Friday as the dollar waned. We predict the bears will continue the fall to 135. Resistance will likely emerge at 142 in case of a recovery.
Euro/US dollar climbed above the 1.01 last week and settled at 1.035 on Friday. We forecast the bulls will rise further and stay contained within 1.02 to 1.05. Demand is building in the market due to dollar’s correction but there might be some profit-taking actions after mid-week. Caution is advised on aggressive trading.
British pound/US dollar broke above 1.16 resistance last week. We project the uptrend to continue and reach 1.22. The overall range is expected to move from 1.16 to 1.22 as demand rises. Some price swings are expected after midweek and caution is advised.
WTI Crude prices traded sideways with support rising at US$84 per barrel. We foresee the market movement will likely trade from US$84 to US$94 per barrel in mixed trading.
Uncertainty still looms in the market but traders are prone to long positions. Risk management is advised in case the prices move beyond the aforementioned range.
Crude Palm Oil (FCPO) Futures on Bursa Derivatives traded in softer demand amid reduced market interest. January 2022 Futures contract settled at RM4,290 per metric tonne on Friday. We expect the support to rise at RM4,400 per metric tonne in case of an early drawdown. The overall range will likely be limited at RM4,400 per metric tonne level. However, piercing above RM4,400 per metric tonne will likely indicate a new rising trend.
Gold prices recovered last week, reaching US$1,770 per ounce. Market bulls crossed above US$1,720 per ounce and has been sustaining the bullish sentiment. We reckoned the range will be contained from US$1,750 to US$1,800 per ounce. Profit-taking activity will likely emerge after mid-week and progress into mixed trading.
Silver prices crossed above US$21 per ounce benchmark and resumed its bullish trend. We target the trend to climb higher and probably reach US$23 per ounce. The overall range is expected to be contained from US$21 to US$23 per ounce region while dollar corrects itself.