US non-farm payroll rose 467,000 in January, beating forecast despite the surge in Omicron cases. However, unemployment also gained four per cent, higher than the previous month’s 3.9 per cent.
The eurozone reported its highest inflation at 5.1 per cent in January on a yearly comparison. Due to the ongoing Russia-Ukraine tension, oil supply might be disrupted if war breaks out in Ukraine and fuel prices are expected to increase in Europe if this occurs.
The European Central Bank has kept key interest rates unchanged despite the rise in inflation. The central bank’s benchmark refinancing rate remains at zero per cent. The marginal lending rate stayed at 0.25 per cent and the bank’s deposit rate has been kept at negative 0.5 per cent.
Bank of England increased rates by 25 basis points for the first time since 2004, bringing it to 0.5 per cent to combat the rising inflation. UK inflation rose to a 30-year record high in December at 5.4 per cent annualised rate.
OPEC+ members have agreed to increase 400,000 barrels daily production from March onwards to moderate the rising oil prices. This has defined pressure by US and India to further increase global production.
WTI Crude prices settled above 90 level before the weekend, reaching the benchmark for the first time since October 2014. The Russia-Ukraine crisis has pushed oil prices higher.
US dollar/Japanese yen traded sideways last week but the dollar index (USDX) fell. We forecast the market will head downwards and reach 113.50. Resistance could emerge at 115.50 in case of a pull-up. Risk control is reminded for sellers.
Euro/US dollar bounced from 1.1150 to 1.1450 as the dollar waned. We expect the trend to consolidate from 1.13 to 1.15 as some profit-taking might occur. Beware of a break through 1.15 which could drive up to 1.16 before sellers emerge again.
British pound/US dollar turned downwards from the 1.36 resistance. We reckoned the trend could encounter strong selling pressure above 1.3550 and dive further. The bears might reach downwards to test 1.335 support again. Abandon your short-view in case the trend pierces above 1.36.
WTI Crude prices settled above US$92 per barrel on Friday, the highest since 2014. This week, we predict the market will rise further and reach US$90 per barrel support. The bulls could jump to US$100 per barrel within a week. Restrategise if prices reach below US$90 per barrel.
Crude Palm Oil (FCPO) Futures on Bursa Derivatives moved higher, gradually. Demand is rising following the trend in crude prices. The rise in Omicron cases could also put a dent in palm oil labour. April Futures contract settled at RM5,621 per metric tonne on Friday. We initiate a first window range from RM5,500 to RM5,700 per metric tone. Beware of diving beneath the RM5,500 per metric tonne that might lead to RM5,400 per metric tonne as our secondary support.
Gold prices recovered and settled above US$1,800 per ounce on Friday. We target the range to swing within the US$1,795 to US$1,825 per ounce. Strong buying interest has been identified at the bottom area but we reckoned the bulls have to pierce above US$1,850 per ounce level in order to confirm a new bullish trend.
Silver prices traded in small sideways trend last week while the market’s attention remained on the gold market. This week, we foresee the support could stay strong at US$22 per ounce and the market will likely recovery. Topside target is identified at US$23.50 per ounce with growing interest from investors.
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 [email protected]