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American New Home Sales Firms Up

A guest post written by DAR Wong

Currency Market Observations – 2 July 2018

Fundamental Outlook

The US GDP grows at slower pace while jobless claims rises. Japan climbs in housing starts amid consumer prices improve. As largest economy in Eurozone, Germany slowdown in pace and worries investors.

The US new home sales rose 689,000 in May and higher than previous month. Conference Board of consumer confidence grew 126.4 in June and lower than forecast, after May expanded at revised 128.8.

The US durable goods shrank 0.6 percent in May and improved from minus 1.6 percent revised in April. Excluding transportation, core durable goods slid 0.3 percent and first time falling into negative zone in 4 months. The final GDP for Q1 seasons rose 2.0 percent and below forecast.

American jobless claims climbed to 227,000 in the week ended 23 June and higher than previous week. Personal income stayed flat at 0.4 percent in May while consumer spending grew 0.2 percent, below expectation.

Japan’s core consumer prices climbed 0.5 percent in June on year basis and in-line with May data. Another report on retail sale rose 0.6 percent in May on year basis and lowest record for past 7 months.

Japan’s housing starts rose 1.3 percent in May from a year ago, above forecast. Tokyo core consumer prices expanded 0.7 percent in June and highest in 3 months.

German ifo business climate grows 101.8 in June, dropping for 5th consecutive month. Prelim consumer prices missed forecast and grew 0.1 percent, lowest in 5 months’ record. Another report on retail sales slid 2.1 percent in May and against positive forecast, after April registered 1.6 percent growth.

British current account deficits narrowed to GBP17.7 billion in April from GBP19.5 billion in previous month. Final GDP grew 0.2 percent in Q1 seasons and performed better than consensus.

Technical Forecast

USD/JPY climbed higher last week after tested the support at 109.50 area. This week, we foresee the market may test 111.50 resistance before moving back into consolidation. Range bound trading is expected but breaking beyond the aforementioned range needs proper risk control if the trend is adversity to your position.

EUR/USD has shown firm support at 1.1530 region after tested few rounds. This week, we reckon the trend might recover after past weeks of falling sentiment. Range is projected to reach 1.1830 in case of continual short-covering in market. Caution is advised if the trend whipsaws without clear direction.

GBP/USD reversed on Friday from 1.3050 bottom. The market is expected to climb higher in coming week in-line with Euro. Technically, we predict the resistance will emerge at 1.3350 region in case of recovery. The signal of recovery in Euro and Pound may indicate Dollar receding in near future.

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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