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America Improves in Housing Sales

A guest post written by DAR Wong

Currency Market Observations – 27 February 2017

Fundamental Outlook

The U.S homes sales rise in optimism amid caution of possible rate hike. The U.S. Treasury Secretary aims to implement tax reform before August. Net borrowing of U.K. public sector shrinks in slower pace while business investment falls.

Markit reports the U.S. manufacturing index expands to 54.3 after revised 55.0 gains in January. FED policymakers are prone to rate hike in March meeting.

The U.S. existing home sales hit 10-year high record in January by increasing 5.69 million. Another separate report on new home sales rose 555,000 units in January compared to 535,000 in December.

American weekly claims rose to 244,000 in the week ended 18 February. Treasury Secretary Steven Mnuchin says that he wants to see “very significant” tax reform passed before Congress’ August recess.

In Japan, manufacturing index reaches 53.5 in February and hits 35-month high. Another report on all industries activity contracted 0.3 percent in December, going into negative zone for the first time since 7 months.

German ifo business climate report shows expansion to 111.0 compared to revised 109.9 in January. Another report on German consumer climate gains at 10.0 reading, below forecast and lower than 10.2 in January.

U.K. public sector net borrowing shrank GBP9.8 billion in January and fell short of median forecast, after December increased GBP4.2 billion. Prelim business investment report for final quarter contracted to minus 1.0 percent after gained at revised 0.4 percent in Q3 season. The second estimate for GDP for Q4 grew 0.7 percent and matched forecast.

Technical Forecast

USD/JPY threaded in uncertainty within our expected range listed last week. The trend became prone to fall on Friday after Gold surged higher. This week, we reckon the range should be supported above 111.50 and recovers to 114.00 area. Breaking beneath 111.50 major support should be guarded with risk control.

EUR/USD also moved in our expected range while supported above 1.0480 level. This week, the trend might dip lower if it could not recover above 1.0660 resistance. Danger of piercing below 1.0480 will open the southern journey at 1.0350 region before bargain-hunting returns.

GBP/USD continues to thread sideways as it narrows down in movement. Tight range is seen from 1.2400 – 1.2600 region amid uncertainty. We advise traders to continue the observation until the trend extends into either direction as new headway.

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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