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American Has Best Growth in Past 2 Years

A guest post written by DAR Wong

Currency Market Observations – 31 October 2016

Fundamental Outlook

The U.S. housing demand grows moderately while quarterly GDP gains at highest record in 2 years. Eurozone maintains steady pace and U.K. observes BREXIT policy in coming 2017. British grows above forecast in recent quarterly report.

The U.S. Conference Board of consumer confidence drops to 98.6 from revised 103.5 in September. New home sales grew 593,000 in September after the previous month was revised down to 575,000. On separate report, pending home sales was up 1.5 percent in September and above forecast.

American weekly claims on jobless benefits marks at 258,000 in the week ended 22 October and lower than 261,000 revised in prior week. Core durable goods, excluding transport equipment, rose 0.2 percent in September versus minus 0.2 percent revised in August.

The U.S. GDP rose 2.9 percent in Q3 on quarterly basis and best growth in past 2 years, pressuring a possible rate hike before year-end. Market investors are still waiting for Presidential Election to check on monetary policy by the new President.

Japan’s household income contracted 2.1 percent in September on year basis and better than minus 4.6 percent in previous month. Tokyo core consumer prices declines 0.4 percent in current month and matches forecast. Unemployment rate improves at 3.0 percent.

Markit reports the Eurozone manufacturing index rose to 53.3 while services index climbs to 53.5 in September. The M3 money supply grew 5.0 percent in 19 countries on year basis and matched forecast, while investors observe the end of stimulus coming in Q1 2017.

In separate reports on Germany, consumer climate declines to 9.7 in current month and lowest in past months. Import prices gained 0.1 percent in September on monthly basis and matched forecast. However, German ifo business climate that measures business investors’ confidence marks at 110.5 and best since May 2014.

U.K. finance minister says will put financial services as central of talk for BREXIT issue, in order not to rattle confidence of investors and status of London as world financial center. The prelim estimate on GDP in Q3 reports at 0.5 percent growth and better than forecast.

Technical Forecast

USD/JPY attempted above 105.00 levels before weekend but closed below this benchmark. Technically, we observe the strength of metals and euros has grown and should put a lid on USD/JPY in coming week. Moving forward, we forecast the trend will correct and head down to 103.00 this week. Breaking above 105.50 resistances needs to abandon your short-view for time being.

EUR/USD has been well-supported at 1.0850 regions and closed at 1.0980 for weekend. This week, we reckon support will rise to 1.0920 and lift the trend higher at 1.1050 areas. Moving into 1.1050 – 1.1150 regions will encounter consolidation for short while before waiting for clearer fundamentals upon U.S. Election in another week.

GBP/USD is threading in small range of uncertainty. This week, we predict the initial range will be constricted from 1.2100 – 1.2320 regions while waiting to break into either direction. However, we forecast the Dollar strength will play as catalyst to lead the GBP/USD trend in coming weeks.

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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