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American Payroll Rises above Expectation

A guest post written by DAR Wong

Currency Market Observations – 05 December 2016

Fundamental Outlook

The U.S. payroll rises while unemployment lowers to best record this year. China remains strong in manufacturing. OPEC group agrees to cut oil production from January onward to 32.5 million barrels per day. U.K. reports growth in mortgage borrowings and manufacturing.

The prelim GDP of U.S. economy in Q3 grew 3.2 percent and better than forecast. The Conference Board of consumer confidence gained to 107.1 in November and so far best record in this year.

The U.S. personal spending rose 0.3 percent in November but lower than revised 0.7 percent in October. Personal income grew 0.6 percent and beat 0.4 percent. Another report on pending home sales grew 0.1 percent in October and worst in past 4 months.

The U.S. Institute Supply Management reports manufacturing index rose to 53.2 in November and best in past 5 months. Unemployment claims for the week ended 26 November rose to 268,000 amid jobs tightening. Nonfarm payroll rose 178,000 in November and better than revised 148,000 in October. Unemployment rate unexpectedly dropped to 4.6 percent and best record for this year.

China’s manufacturing index rose to 51.7 in November and remains in growth above 50.0 benchmarks. Another report by Caixin manufacturing index beats the forecast at 50.9.

Japan’s household spending dropped 0.4 percent in October on annualized rate and better than expectation, after it declined 2.1 percent on previous month. Retail sales also improved to minus 0.4 percent on year basis after it contracted 2.1 percent in October. Unemployment rate stays at 3.0 percent.

OPEC meeting has agreed among 14 country members that supply cut will begin in January from daily production 33.8 million barrels to 32.5 million barrels. Crude prices recovered last week to USD50.00 regions.

Eurostat reports the consumer inflation for 19 nations in Eurozone rose 0.6 percent in November on year basis while core prices grew 0.8 percent. Both match the forecast study.

In Eurozone, final manufacturing index in November rose to 53.7 and stays healthy. Unemployment rate lowered to 9.8 percent last month.

U.K. central bank reports net lending to individual held steady at GBP4.9 billion in October. Mortgage approvals shows higher at 68,000 on month basis compared to revised 64,000 in September.

Market in London reports U.K. manufacturing rose to 53.4 compared to revised 54.2 in October. National construction index grew to 52.8 in November and gained for 4 consecutive months.

Technical Forecast

USD/JPY pulled up to fresh 9-month high record at 114.83 last week and receded. This week, we reckon the trend may lose its resilience and decline amid profit-taking. Range is expected to fall to 110.00 if the bears engulfs market. Resistance stays at 115.00 regions.

EUR/USD has been trading above 1.0600 levels at most market close last week. This week, we predict range trading from 1.0600 to 1.0800 regions while prone to recover phase. Risk control should be controlled at 1.0600 in case of unexpected decline.

GBP/USD has shown recovering strength in market after staying sideways for many weeks. Moving forward, the trend may climb higher while sitting on 1.2500 supports. The trend may aim at 1.2950 for recovery if Pound moves into short covering activity.

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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