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American GDP Grows at Fastest Pace in 3 Years

A guest post written by DAR Wong

Currency Market Observations – 4 December 2017

Fundamental Outlook

The U.S. GDP grows at fastest pace in 3 years and stokes expectation for rate hike this month. China’s manufacturing expands at slowest pace over past 5 months. North Korea fires another missile and raises alarm among the region.

The U.S. new home sales clocked 685,000 in October and highest in 10-year record. Another report on pending home sales rose 3.5 percent in October and highest in 8 months record.

American prelim GDP grew 3.3 percent in Q3 seasons and fastest pace in 3 years. Conference Board of consumer confidence rises to 129.5 in November and better than revised 126.2 in October.

The U.S. weekly claims for jobless benefits remain almost unchanged at 238,000 in the week ended 25 November. Consumer spending rose 0.3 percent in October and highest in past 3 months. The ISM manufacturing index rose to 58.2 and highest in past 4 months.

Federal Reserve chair Yellen expresses concern of national debt at USD20 trillion and still growing, She says that policymakers should continue to raise interest rate slowly until it raises to neutral level. Traders are expecting rate hike this month.

China’s manufacturing index rose to 51.8 while services index expanded to 54.8 in October. Both data matched forecast and have moved in steady pace of growth. Another report on Caixin manufacturing index rose to 50.8 but lowest in past 5 months, and below precious month reading.

Japan’s housing spending stayed flat in October on year basis but improved from negative reading in September. Unemployment steadies ay 2.8 percent. Core consumer prices in Tokyo also stays unchanged at 0.6 percent in October on year basis.

North Korea fired a missile test on Tuesday morning that travelled 1000 kilometers and landed in the Sea of Japan. Experts reckon the ballistic missile could reach to half of the U.S. continent. United Nation Security Council has condemned the random act while Russia blames U.S. President Trump for provoking the North Korea regime.

In Eurozone, consumer prices rose 1.5 percent in November while core prices, excluding food and energy, grew 0.9 percent. Both beat the forecast and show steady recovery in inflation. On the other hand, German prelim consumer prices rise 0.3 percent in November comparing to flat growth in October.

Technical Forecast

USD/JPY has been moving in our expected range predicted last week. The market closed at 112.10 on Friday and strongly resisted at 113.00 area. This week, we reckon the trend will be resilient at the aforementioned top level and prone to correct. Range is still expected to swing from 111.00 – 113.00 region for time being.

EUR/USD traded in small sideways last week while resisted beneath 1.1950 level. This week, we forecast the trend will go lower to test 1.1700 support. Overall range is expected to move in the target 250 pips region. Risk control is advised if the trend drives below 1.1700 support.

GBP/USD climbed in small pace last week but could be reaching the top area. The trend is currently resisted at 1.3550 and prone to fall back to test 1.3300 this week. Dollar may have a small upward reversal over short-term against European currencies. Short sellers should take control in case the trend pierces above 1.3550 unexpectedly.

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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