US 3Q GDP rises, beating expectations
Fundamental outlook
US’ economy grew 2.9 per cent in 3Q, exceeding forecast. Pending home sales fell to minus 4.6 per cent in October, compared with 8.7 per cent decline in the previous month.
US nonfarm payrolls increased 263,000 in November while the unemployment rate was at 3.7 per cent. The average hourly earnings jumped 0.6 per cent and 5.1 per cent annually.
The inflation rate in eurozone rose 10 per cent in November from a year ago compared with the revised 10.6 per cent gains in the previous month. Core inflation, excluding fresh food and energy, rose five per cent.
OPEC+ group are considering more production cut in addition to a sanction on Russia’s exports. Crude prices have been hovering at US$80 per barrel as demand waned from weaker sentiments in China and global buyers.
Technical forecast
US dollar/Japanese yen fell last week. We target the trend might drop to 130 before bargain hunters come into the market. The overall range might be contained from 130 to 136. Traders are advised to control risk in case the trend breaks beyond the aforementioned range.
Euro/US dollar reversed from 1.03 bottoms and turned bullish. We believe the trend will continue to rise until 1.08. Observe the dollar index (USDX) that might lead to lower trade this week and push the euro higher. The overall range is expected to move from 1.03 to 1.08.
British pound/US dollar rose above EMA200 line and exhibited a bullish trend. We predict the trend could reach 1.26 if the prices stand above 1.215. Traders are reminded to stay prudent in case the market movements fall beneath the aforementioned support.
WTI Crude prices exhibited strong footing at US$76 per barrel support and settled above US$80 per barrel on Friday. The market trend will likely to trade from US$78 to US$85 per barrel. The OPEC+ members favour more production cut to help to support higher crude prices. Hence, the dollar is prone to wane for a while.
Crude Palm Oil (FCPO) Futures on Bursa Derivatives dropped last week after failing to reach above RM4,300 per metric tonne. February 2022 Futures contract closed at RM3,958 per metric tonne on Friday.
There is support at RM3,900 per metric tonne and we reckoned the trend will likely regain this week. Target range is expected from RM3,900 to RM4,300 per metric tonne from growing demand. Breaking above RM4,300 per metric tonne will lead higher to RM4,450 per metric tonne.
Gold prices rose last week as the dollar weakened. We foresee the gold market will likely stay on US$1,780 per ounce and continue to climb to US$1,840 per ounce. Demand is rising and strong buying interest will likely remain in December.
Silver prices stood on US$21 per ounce support last week and broke above US$22 per ounce. We forecast the bulls will continue to lead higher while the range is expected to move from US$22 per ounce to US$24.50 per ounce. Both gold and silver prices are expected to be bullish until the end of the year.
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.