10.06.2019 (The Borneo Post) - IMF forecasts the GDP growth for China will be lowered to 6.2 per cent in 2019 from 6.3 per cent recorded in the previous year. The impact of trade war is expected to wipe out US$455 billion off the global GDP next year.

Last week, the US President Donald Trump ended his three-day visit to UK and assured that US will cut a trade deal with the UK Government. On the other hand, sources say US is preparing to make a US$2 billion sale of military weapons to Taiwan, escalating tensions with China.

Trump announces a deal has been reached with Mexico while the import tariff with Mexico has been averted. On separate case, President Trump says tariff on Chinese imports could raise by another US$300 billon benchmark if necessary.

The American payroll added 75,000 in May, triggering an increased expectation of a rate cut in the coming FOMC meeting. Unemployment rate is at 3.6 per cent. Dow benchmarks closed 260 points higher on Friday.

The US treasury yield curve has turned inverted as the 10Y Bond yield declined to a 19-month low at below 2.084 per cent on Friday. Traders are now forecasting a possible rate cut in June as inflation wanes and signs of recession resurfaces.

China issued a new whitepaper claiming US to be an untrustworthy negotiator and backtrack on the proposed deal. Beijing Government also warns its citizens from travelling to US country.

Last week, China’s President Xi Jinping visited Russia for a three-day visit and called President Vladmir Putin as his best friend and colleague. Xi also cited US will remain a strong allied country to China.

The European Central Bank president Mario Draghi pushes backward on the possibility of a rate hike due to uncertainty of a trade war tension and fear of a global recession.

Technical forecast

US dollar/Japanese yen has been trading sideways last week in consolidation. The trend is threading in a tight range from 107.50 to 108.50. Our next targets will be 106.00 or 109.50 upon breaking beyond the aforementioned range.

Euro/US dollar surged last week and closed at 1.1330 on Friday. This week, we forecast the trend will consolidate at 1.1250 area before climbing higher. Temporary target is identified at 1.14. The dollar index will play an essential role for the direction of the euro.

British pound/US dollar trade has been mild. This week, we reckoned the range will be limited from 1.2650 to 1.28 while waiting for more fundamental news.

Gold prices closed at US$1,340 per ounce on Friday. This week, it is very likely to see a surge on the upside due to the potential fall of the dollar. Initial range is expected to be contained from US$1,325 to US$1,350 per oz. Piercing above US$1,350 per oz will probably reach higher at US$1,380 per oz.

WTI Crude prices dipped below US$51 per barrel last week. This week, we predict the trend will be trading in a small range from US$50 to US$54 per barrel amidst mixed sentiment. No clear direction is seen yet though the dollar is weakening. Breaking beneath US$50 per barrel needs to control your risk before fishing for a lower bottom after mid-June.

Crude Palm Oil (FCPO) Futures on Bursa Derivatives traded in consolidation last week.

The ringgit strengthened against the dollar as the US dollar/ringgit might fall further in the range 4.12 to 4.17 this week. August Futures closed at RM2,027 per MT on Friday. This week, we foresee the trend will be supported at RM2,000 per MT and likely recover. The topside resistance will emerge at RM2,100 per MT area.