The WTO Arbitration will be Finalized on Monday
- 30 September 2019
CURRENCY MARKET OBSERVATIONS – 30 September 2019
Fundamental Outlook The process of impeachment on President Trump has started on his intention to influence the 2020 election. Trump administration has called for a block on all Chinese investment and could be a market diversion to his supporters. The WTO arbitration on U.S. and European Governments will be finalised on Monday 30 September on a 15-year old dispute.
The U.S. Treasury Secretary Mnuchin says he has called for the Chinese delegation to skip the visit to Montana farmers on 20 September, so as to avoid further confusion since the Chinese counterpart has agreed to make purchase for farm products. President Trump is surprised and unaware of this arrangement beforehand.
The U.S. Lower House has called for the inquiry of impeachment on President Trump for abusing power to influence the 2020 election. An investigation has been opened based on the transcript of tele-conversation on 25 July between Trump and President Zelensky of Ukraine. In the conversation, Trump instigated Zelensky to investigate his political peer Joe Biden, former U.S. Vice President, and his son.
On Friday, Trump administration made public release to block all investment of U.S. companies into Chinese entities, resulting price fall in Alibaba and Baidu shares.
The U.K. Supreme Court has ruled the order for suspension in Parliament by PM Johnson to be unlawful. Lawmakers are calling for Johnson to resign and most Parliament members are expecting the BREXIT to have no deal in end October.
The WTO arbitrators are reviewing a 15-year old case brought up by United States against the European Governments on providing financial aids to Airbus Corporation. If the dispute case is won by U.S. litigators, America will be allowed to impose billions of tariffs that could hit the EU Governments. However, the European Union has also its similar case underway on accusing U.S. Government for aiding Boeing.
Technical Forecast USD/JPY traded in our target range last week. This week, we remain almost unchanged in our view that the trend will be contained in tight movement from 107.00 – 109.00 region. Due to the uncertainty of Dollar direction, there is no clue on USD/JPY trend until we see a breakout of the aforementioned range in either headway.
EUR/USD could not recover above 1.1000 due to strong Dollar trend. The market has submerged to our support below 1.0950 and might dive lower soon. This week, we forecast the bears will head down to test 1.0850 support while topside resistance emerges at 1.1000 region.
GBP/USD fell off 1.2500 level last week after negative news on unlawful suspension of U.K. Parliament and possible no deal BREXIT. Pound is facing strong headwind of bearish factors and probably will thread in weak uncertain trend ahead. This week, we foresee the range will be contained from 1.2200 – 1.2400 in mixed position as traders adopt a wait-and-see attitude on the Pound.
Gold prices closed below USD1500 /oz on Friday after the market topped off USD1535 /oz high last week. Technically, we have identified an initial consolidation range from USD1485 – USD1515 /oz among whipsaw trend. However, there is a likelihood of piercing below the support and test the next lower ground support at USD1450 /oz in October.
WTI Crude prices traded in slightly lower prices while the movements have been narrowing at USD55.00 /barrel support. This week, we reckon a possible reversal will occur and regain the market foothold at USD60.00 /barrel. However, bear in mind the support at USD55.00 /barrel is crucial and breaking beneath this level will expose the bear to USD52.00 /barrel region.
Silver prices have exposed the bear factor in market and likely to continue its fall in coming week. We forecast the trend will meet the next support at USD16.80 /oz if the trend slides further. Tight range is expected from USD16.80 – USD17.80 /oz for the time being while most attention will be focused in Gold trend.
Crude Palm Oil (FCPO) Futures on Bursa Derivatives traded lower on week chart but has been supported at RM2140 /MT area. Market drops to 6-week low due to weaker demand and fir output. December19 Futures contract closed at RM2150 /MT on Friday. This week, we reckon a mild recovery will occur in tight range from RM2140 – RM2200 /MT amid some short-covering. However, beware of breaking beneath the RM2140 /MT support that will lead to RM2100 /MT as our next possible level.
DAR Wong has 30 years of trading and hedging experiences in global financial markets. The opinion is solely at his own. He can be reached at email@example.com