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WTI Crude Falls to 7-Week Low

A guest post written by DAR Wong

Currency Market Observations – 26 November 2018

Fundamental Outlook

The US has a short week due to Thanksgiving holiday. Crude prices plunge into 2-month low as supply increases. UK is facing tough challenge as moving towards BREXIT deadline.

The US housing starts rose 1.23 million in October while building permits expanded 1.26 million. Both matched the forecast.

Another report on American orders for durable goods slid 4.4 percent in October. Excluding transport equipment, core orders rose 0.1 percent. Both data are below forecast. Weekly claims increased to 224,000 in the week ended 17 November.

Last Wednesday, President Trump has released a press note stating the importance of maintaining bilateral ties with Saudi Arabia on current business relationship. The message hints the protection of national interest between the 2 countries over the murder of reporter Khashoggi which may involve Saudi’s royal family.

WTI Crude prices have fallen more than 30 percent since early October and hit USD50 /barrel before the weekend. President Trump has openly favored lower oil prices to capture inflation. The OPEC conglomerate will meet in Vienna on 6 Decembers and investors expect the leaders will discuss on curtail production.

German manufacturing index rose to 51.6 in November and slowest record since March 2016. Among the 19 nations, Markit reports the manufacturing index also slid to 51.5 gains, making a four months of consecutive decline.

Focus is laid on BREXIT negotiation between UK and European Commission which will finalize the major deal this week. So far, Prime Minister May is not getting support from opposition Labour party that criticizes her inefficiency in negotiation.

Technical Forecast

USD/JPY traded in V-pattern last week amid uncertainty. Technically, we have identified a very strong resistance at 114.00 – 114.50 area. This week, we reckon the trend is still prone to fall while target lands at 111.50 region.

EUR/USD has shown bear sentiment after topping off 1.1400 level last week. The trend is prone to decline further In coming week if the aforementioned resistance can remain intact. Downside target lies at 1.1200 with some bargain-hunting activity to be expected.

GBP/USD traded in flat patterns below 1.29 benchmark last week as traders watch the coming BREXIT outcome. This week, we expect some whipsaw due to erratic market movements with resistances identified at R1 – 1.2900 and R2 – 1.3100 region. Downside support lies at 1.2700, which failing to hold the bears will open to a new selling rush in market.

Dar Wong

This post is contributed by OPF Guest Blogger, DAR Wong.

DAR Wong is a registered fund manager in Singapore with 26 years of global trading experiences. You may reach him at dar@pwforex.com

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DISCLAIMER: This post is written for general information only. The author, publisher and/or any third party involved in the distribution of this work assume no legal responsibilities and shall have no liability whatsoever for any direct or consequential losses, costs or expenses arising from the use of the information contained herein.

 







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