Trump temporarily ends US government shutdown

Fundamental outlook

THE US Senate and House unanimously passed a bill to temporarily end the weeks-long government shutdown, after which President Donald Trump signed the bill into law. He stresses this was not a concession and the shutdown will be reinforced after February 15 if no deal has been reached. Trump’s associate Roger Stone was arrested and charged with seven criminal counts relating to the Robert Mueller investigation and Russian operatives link.

US leaders cancelled trade talk meetings with after an disagreement to reinforce intellectual property regulations. Trump cited that it would reinstate the punitive tariffs on imports if no agreement has been reached by March 1.

China’s GDP grew 6.4 per cent in 4Q, matching forecast. Industrial production rose 5.9 per cent on a yearly basis in December. Global leaders are worried about the trade impact of the slowdown in China.

European President Mario Draghi warned of rising global risk after formally ending the 2.6 trillion euros stimulus programme in December. He assured of keeping interest rates at present low level until summer, or longer if necessary. Bank of England’s President Mark Carney said policymakers predicted a hard Brexit. No deal has been reached within the Parliament while Prime Minister Theresa May was denied further negotiations with the European Commission.

Technical forecast

/Japanese yen saw resilient selling interest at 110, closing at this benchmark on Friday. This week, we forecast the trend will range from 108 to 110 with possibility of a whipsaw movement. However, overall trend is prone to head southward.

Euro/US dollar is supported at 1.13 and a technical recovery is possible from this level. This week, we foresee the trend to range from 1.13 to 1.15 with some short-covering expected. Mixed trading is expected as the dollar fell before the market closed.

British pound/US dollar advanced above the EMA200 line on the day-chart. Market closed at 1.32 on Friday as traders ignore the Brexit risk. This week, we predict the support will stay strong at 1.305. The trend will likely continue to climb with initial target at 1.33 and secondary target at 1.35.

prices made a strong ascend on Friday before the market closed as the dollar fell. This week, we presumed the will trade higher but also encounter strong selling pressure at 1,310 to 1,320. Demand will temporarily support the market. Downside support lies at 1,295.

WTI Crude prices traded in small sideways throughout the week and climbed higher on Friday. We expect the correction to be supported at US$51 per barrel. Ultimately, it will depend on the inverse relationship of the dollar’s strength to determine the crude trend this week.

Silver prices stood well at US$15.20 per ounce. This week, we project strong demand at US$15.50 per oz and it will likely advance higher to US$16 per oz. However, we are still uncertain if this is a long-term bullish recovery or short-term bull-trap.

Crude Palm Oil (FCPO) Futures on Bursa Derivatives closed on Friday with its fourth consecutive week of high prices. The production cut helped to lift the demand in the market amid the weak ringgit. April delivery contract settled at RM2,292 per MT on Friday. This week, we expect strong profit-taking activity to emerge at RM2,300 to RM2,310 per MT. Downside support lies at RM2,200 per MT.

Dar Wong has 30 years of trading and hedging experiences in the global financial markets. The opinion is solely his own. He can be reached at

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Source: Borneo Post Online

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