Borneo Post Online (28/12/2020) –

Fundamental outlook

Before the weekend, the UK and European Union (EU) officials reached a post Brexit deal on ‘zero tariff – zero quota’ policy. The trade agreement still has to be ratified by parliaments on both sides in the coming days. The recent lockdown in UK poses serious effects on the supply chain in the country and region.

US Congress has approved a new Coronavirus Disease 2019 (Covid-19) relief package worth US$2 trillion, which includes the issuance of US$900 billion to aid Americans. President Donald Trump vetoed the proposal could disrupt the government into a shutdown over the year-end. Trump has not given explicit reasons for the objection but pushed for a direct payment of US$2,000 to every American instead of US$600.

UK reported a new strand of the Covid-19 causing the country to face a possible wider lockdown while more countries have imposed a ban on traveling to the UK. According to the World Health Organisation, the new variant has so far been identified in Denmark, the Netherlands, Northern Ireland and Australia.

Technical forecast

US dollar/Japanese yen recorded a small rebound from 103 to 103.50 last week. We project the market could be quiet during this year-end holiday seasons and overall movement is expected to be limited to 103 to 104. Beware of breaking beyond this consolidation.

Euro/US dollar narrowed into a flag formation last week as trading activity waned. We predict the trend will be contained from 1.21 to 1.2250 with little trading activity.

British pound/US dollar traded largely between 1.32 to 1.36 last week. We expect this market might remain volatile due to the outcome of the Brexit talk. Piercing above 1.36 resistance could lead to 1.38 and catch many traders unprepared. Otherwise, the trend should stay within 1.32 to 1.36 region in a whipsaw movement.

WTI Crude prices stayed within US$46 to US$50 per barrel last week. We retain out view that the market should be moving as before. There has been not much interest in the market for the past few months although prices have ascended slowly due to the falling dollar. Traders should be prepared of an unexpected movement in crude prices in January.

Crude Palm Oil (FCPO) Futures on Bursa Derivatives climbed higher during the holiday seasons. The market reached an 8-1/2 year high as sentiments improve for the rising commodity. March Futures settled at RM3,569 per metric tonne on Friday. We reckoned market movement could be limited due to quiet sentiments during the final week of the year. The range is expected to be contained from RM1,500 to RM3.600 per metric tonne. Beware of a breakout above RM3,600 per metric tonne level that could reach RM3,650 per metric tonne.

Gold prices have been trading sideways for many days. It should remain similar in the coming week. We foresee the market could trade from US$1,850 to US$1,900 per ounce. The dollar is still the main factor to influence the gold market in case of the successful issuance of the Covid-19 relief package.

Silver prices traded sideways around US$25.50 per ounce last week. The market will probably stay the same and limit to small trading activity. There is no clue to predict the forthcoming trend as the movement is mainly contained from US$25 to US$26 per ounce. Going beyond this range in either direction will probably stretch another dollar range.

Read more at https://www.theborneopost.com/2020/12/28/uk-eu-reach-a-post-brexit-deal/