29 July 2019 (The Borneo Post) AMERICAN jobless claims fell to 206,000 in the week ended July 20 with data signalling strong employment market. US gross domestic product (GDP) for the second quarter (2Q) grew 2.1 per cent, beating forecast, compared with 3.1 per cent gains recorded in 1Q.

President Donald Trump agreed to give timely licensing approval to US chipmakers selling equipments to Chinese tech giant Huawei. Chinese importers have made an inquiry on prices from American agriculture exporters. This week, trade negotiators from US and China will meet to discuss on trade deals.

China’s industrial profit fell 3.1 per cent in June from a year ago to 601.9 billion renminbi, following a 1.1 per cent annualised gain in May. In the business sector, Alibaba Group is planning for a second listing in Hong Kong and other Chinese companies might follow suit.

IMF forecasts the global economy will grow 3.2 per cent in 2019 and risk continues to weigh on the downside due to the ongoing US–China trade war.

European Central Bank (ECB) policymakers kept interest rates unchanged. Mario Draghi said, more easing might follow if recession surfaces. In the eurozone, another trade war is heating up between US, Germany and France on automobile, wine and digital tariffs.

Boris Johnson won the election and is set to become UK’s next prime minister. The pound fell as analysts say Johnson is a believer of a no-deal Brexit which could lead to UK’s harsh separation from the EU in October.

Last Thursday, North Korea fired two short-range missiles and conducted its first test launch after conversations with Trump in June.

Leader Kim Jong-un said this was a warning to war-mongers from the South. US has not given any comment on it.

Technical forecast

US dollar/Japanese yen recovered from 107.30 after the dollar strengthened. This week, we forecast the range will be limited below 109.30 while the overall range will be contained above 107.30.

Euro/US dollar settled at the 1.11 support area on Friday as the dollar rose. There is a danger of plunging lower at 1.0850 region before bargain-hunting steps into market. On the other hand, upside potential is limited at 1.12 in case of a recovery.

British pound/US dollar fell after Johnson was announced as the new prime minister. Currently, market is very near to the 1.235 and may drive lower to test 1.21. In case of recovery, we foresee the resistance at 1.2. The pound is rather uncertain right now.

Gold prices have been trading in a small range amid uncertainties. For the time being, the market has lost its bullish steam but it is still well supported above US$1,410 per ounce. The range could be contained from US$1,410 to US$1,430 per ounce.

WTI Crude prices traded in small range last week. The trend is still contained from US$55 to US$57.50 per barrel. We foresee a potential in moving up as the dollar may begin to weaken in the near future.

Crude Palm Oil (FCPO) Futures on Bursa Derivatives traded higher last week following soybean oil rise. October Futures closed at RM2,065 per metric tonne on Friday and closed at an eight-week high record. Ideally, the US dollar/ringgit rate has to trade above 4.10 level in order to lead FCPO on continual recovery.