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American Payroll Disappoints Market

A guest post written by DAR Wong

Currency Market Observations – 8 January 2018

Fundamental Outlook

The U.S. manufacturing stays on growing track. Payroll falls on year-end seasons probably due to holiday period. China soars in both manufacturing and services sectors. Britain tunes down in manufacturing but strengthens in services and consumer borrowing.

The U.S. ISM manufacturing index rose to 59.6 in December and highest in past 3 months. Weekly unemployment claims grew to 13-week high at 250,000 for the week ended 30 December.

American payrolls rose by 148,000 below forecast while unemployment rate stayed at 4.1 percent. Trade deficits expanded to more than 6-year high at USD50.5 billion in December.

Caixin release for China’s manufacturing index climbed to 51.5 in December and remains strong for growth. Another separate report on services index continues to soar at 3-year high at 53.9 from November.

Eurozone consumer prices grew 1.4 percent in December on year basis while core prices gained 0.9 percent. German retail sales gained 2.3 percent on monthly basis in December and best record since October 2016.

U.K. manufacturing index expanded 56.3 in December and lower than previous month. Markit in London reports the manufacturing index grew 52.2 and declined from November’s 53.1 reading.

U.K. services index grew higher at 54.2 in December after November rose 53.8 index. Another report on net lending to consumers rose GBP4.9 billion and higher than revised GBP4.7 billion.

Technical Forecast

USD/JPY has been supported at 112.00 region during the year0end seasons. This week, we reckon the trend will be trapped in range bound from 112.00 – 113.60 region while waiting to break in either direction. Dollar strength will be essential as a trigger factor in deciding the headway.

EUR/USD has been rising due to weakening Dollar for past weeks. Resistance is seen at 1.2100 area while the market may move lower this week. We forecast the range will move from 119.00 – 121.00 before taking a new headway direction. Risk control is advised once the trend extends beyond the aforementioned range.

GBP/USD is trading near to the current top around 1.3600 level. This week, we predict the trend will move into small correction with support emerging at 1.3450 level. However, the trend might move in unexpected direction in case it pierces above 1.3600 resistance.

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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