US FOMC indicates lower hikes in coming months
US FOMC minutes hinted of smaller rate hikes in the coming months but officials still see few signs of inflation abating. Market economists target another 50 basis points hike in December instead of 75 basis points or a final rate hike in January.
Dow markets rose on Friday before the weekend. Traders anticipate a ‘cool-down’ in rate hike will be favourable to stock markets over the short term. The dollar index (USDX) has been sitting around 106 in the wake of the next FOMC meeting in mid-December.
UK manufacturing PMI rose 46.2 in November, falling below the 50 benchmark for the fourth consecutive month. The pound has recovered from 1.18 to 1.21 levels due to the weakening dollar.
WTI Crude prices fell beneath US$80 per barrel before the weekend due to a decline in market demand. The European Union retained its sanction on Russia’s oil export but the western allied countries are trying to suppress oil prices from climbing.
Technical forecast
US dollar/Japanese yen fell from 142 last week. The market is held firm at 138 for the time being. We predict the range will be contained from 138 to 142. New bearish sentiment will probably continue in December.
Euro/US dollar formed a double-top formation on the day-chart. We expect the trend to encounter some selling actions and trade lower. The overall range is expected to move from 1.0250 to 1.0450. We predict the trend might turn bearish as the dollar might make a small rebound.
British pound/US dollar traded in recovery last week as the dollar fell. We forecast the market will be trading from 1.20 to 1.225 with some selling pressure building on the topside. Profit-taking is expected in the market as traders are still prone to adopt short-term trading strategy. Risk control is advised.
WTI Crude prices fell last week due to fears of recession. Some supports have been identified at US$80.00 per barrel before the weekend. We predict the range will move from US$80 to US$90 per barrel in mixed sentiment. Traders are still adopting a cautious stance in the crude market as many uncertainties loom from the ongoing Ukraine-Russia crisis.
Crude Palm Oil (FCPO) Futures on Bursa Derivatives traded in good demand as price recovery bounced off RM3,800 per metric tonne level. February 2022 Futures contract closed at RM4,134 per metric tonne on Friday. We predict the market will continue to rise from RM4,000 to RM4,500 per metric tonne as our next target. Abandon your long-view in case the trend falls beneath RM4,000 per metric tonne again.
Gold prices traded sideways around US$1,740 per ounce. This week, we foresee the trend will likely trade from US$1,730 to US$1,780 per ounce. Beware of the market breaking away in either direction. We expect many buyers will likely ambush the bottom area in case of price weakness.
Silver prices traded in a mild bullish trend last week. The market is expected to move sideways from US$20.50 to US$22 per ounce. We expect the silver market to be uncertain until the trend breaks away from this consolidation. Observe the USDX as a lead factor to gold and silver in the coming weeks.
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.