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American Payroll Falls Short of Forecast

A guest post written by DAR Wong

Currency Market Observations – 7 May 2018

Fundamental Outlook

The U.S. personal income increase but both manufacturing and services fall. Non-farm payrolls add 164,000 but misses expectation. Trade talk between U.S. and China yield no clear results on bilateral trade ties. U.K. shows slowdown in manufacturing amid falling consumer borrowings.

The U.S. personal income rose 0.4 percent in March and highest in 4 months, after previous month was revised at par. Weekly claims for jobless benefits for the week ended 28 April was at 211,000 and maintained at low record below forecast.

The U.S. ISM manufacturing index fell to 57.3 in April and lowest record since August last year. Another services index from the same institution expanded at 56.8 and lowest in 4 months, after gaining 58.8 in March.

The U.S. non-farm payroll added 164,000 jobs in April and higher than March but missed forecast 0f 190,000 cases. Average hourly earnings grew 0.1 percent and fell short of expectation.

China’s manufacturing index rose to 51.4 in April while services index grew at 51.8, both above 50 benchmark and in good growth. Another separate report released by Caixin services index rose 52.9 in April.

The trade talk between U.S. and China ended 2-day summit in Beijing on Friday while presented by Treasury Secretary Mnuchin and Vice Premier Liu He. The U.S. party has asked China to reduce trade surplus by USD200 billion before 2020.

Eurozone consumer prices rose 1.2 percent in April on year basis and below revised 1.3 percent gains in March. Excluding food and energies, core prices shrank at 0.7 percent gains from a year ago after rose 1.0 percent in March.

Markit reports that U.K. manufacturing index grew at 53.9 in April and down from previous month 54.9, also lowest record since November 2016. Another report on net lending to consumers in March at GBP4.2 billion and lowest since June 2016, showing an indirect sign of slowdown in consumers’ spending.

Technical Forecast

USD/JPY topped above 110.00 briefly last week and fell again. Technically, the trend is expected to encounter strong selling forces at 109.50 region while prone to trade sideways. This week, we forecast the range will be contained from 108.00 – 109.50 region.

EUR/USD is hovering at 1.1950 after falling for more than 2 weeks. The trend might begin to bounce for recovery soon as the prices are supported at EMA200 line. This week, we reckon the range will be supported at 1.1920 and prone to recover at 1.2130 level, resulting about 200 pips range.

GBP/USD has been falling for 3 weeks and encounter the EMA200 support at 1.3600 region. This week, we predict the range will trade in tight movement from 1.3500 – 1.3700 amid mixed activity. Basically, the Dollar is acting strong and will out a lid on Pound for the time being for quick recovery.

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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