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American Economy Leans to Inflation

A guest post written by DAR Wong

Currency Market Observations – 19 February 2018

Fundamental Outlook

The U.S. consumer prices beat forecast while retail prices fall. Housing report are recovering on inflation demand. Eurozone GDP grows in line with forecast. Britain leans to inflation from the consumer report while retail prices remains good growth.

The U.S. consumer prices grew 0.5 percent in January while core prices, excluding food and energies, gained 0.3 percent on monthly basis. Retail prices slid 0.3 percent and core prices, excluding automobiles, was flat in January.

American jobless claims expanded to 230,000 for the week ended 10 February. Industrial production slid 0.1 percent in January that was worst in past 5 months. Another report on producer prices grew 0.4 percent and core prices, excluding food and energy, also gained 0.4 percent.

The U.S. building permit rose 1.40 million in January. Another report on housing starts gained 1.33 million, both data were above forecast and indicates inflation growth.

Japan’s producer prices rose 2.7 percent in January on year basis and matched forecast. Preliminary GDP for final quarter grew 0.1 percent.

Eurozone industrial production, including utilities and mines, gained 0.4 percent in December. GDP for final quarter seasons grew 0.6 percent.

British consumer prices grew 3.0 percent in January on year and beat forecast. Producer prices rose 0.7 percent from a year ago and higher than 0.6 percent in January.

U.K. retail sales rose 0.1 percent in in January after previous month was revised at minus 1.4 percent. Another report on retail prices rose 0.4 percent from a year ago.

Technical Forecast

USD/JPY has shown bear trend on week-chart. This week, we reckon the market might conduct a upward retracement for short-term consolidation. Resistance is identified at 107.50 area while support rises at 105.00 level. Overall trend is leaned to bearish sentiment in coming weeks.

EUR/USD is trapped in a sideways pattern from 1.2200 – 1.2550 region. This week, it is important to observe the Dollar trend because an unexpected weakening in greenback value will spike the Euro higher after piercing above 1.2500 resistance. However, we are still uncertain until the trend breaks beyond in either direction.

GBP/USD has met strong resistance at 1.4100 – 1.4150 region that will stay consistent this week. This week, the trend may fall and test 1.3750 support as traders adjust their position in mixed sentiment. Either direction is possible in market due to uncertainty factors while traders are advised to trade with controlled risk.

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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