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Bank of England Urges Flexibility in Financial Regulations

A guest post written by DAR Wong

Currency Market Observations – 24 April 2017

Fundamental Outlook

The U.S. housing markets show sign of recovery while Treasury Secretary reassures a positive tax-reform is in the pipeline. France suffers another terrorist attack before Presidential election starts in May. U.K. begins to see gradual slowdown as BREXIT commences while central bank urges flexibility in suiting the economic changes.

The U.S. building permits rose 1.26 million in March and higher than revised 1.22 million in prior month. Another report on housing starts expanded 1.22 million and dipped to lowest in 4-month record.

According to weekly inventories, U.S. crude storage cut down by 1 million barrels on week ended 15 April and matched forecast. Weekly jobless claims were reported at 244,000 remains steady. Existing home sales rose 10-year high in March with 5.71 million growth.

Philadelphia manufacturing index grows at 22.0 index in April while it dips to lowest record in 4 months. Treasury Secretary Steven Mnuchin comments a major tax reform will be announced soon and may be earlier than August. Stock rose 150 points on closing bell on Thursday after his remarks.

China’s industrial production jumped 7.6 percent unexpectedly in March and highest in 2 years. Another report on GDP grew 6.9 percent in Q1 and matched forecast.

Japan’s trade surplus rose JPY170,000 billion in March after taking a slide from revised JPY61,000 billion in February. Markit reports the manufacturing index rises to 52.8 in April.

Eurozone consumer prices rose 1.5 percent in March from a year ago and matched forecast. Another report on trade balance expanded EUR19.2 billion in surplus on February.

Paris has suffered from a terrorist attack after a man claimed alleged to be from ISI killed a police man while 2 others were wounded. France government is on high alert before the presidential election starts in May.

U.K. retail sales posts 1.8 percent decline in March. The data has clocked highest slide on quarterly basis since 2010. On Thursday, Bank of England Governor Mark Carney told bankers that financial regulations devised in post-crisis of 2008 must remain flexible enough to deal with unintended consequences and unexpected gaps.

Technical Forecast

USD/JPY has begun to reverse up as Dollar strengthens. Market has seen bottoming out from 108.10 support and probably will climb higher this week. We expect range consolidation from 108.00 – 111.00 in following weeks while trading in mixed sentiment.

EUR/USD has shown toppish pattern after the bulls failed to conquer above 1.0770 level. This week, we predict narrow range to follow through but prone to go lower inside the range from 1.0570 – 1.0770 region. Risk control is advised in case of trend moving beyond the aforementioned range.

GBP/USD has reached a recent 6-month top and uncertain of ascending or receding from current prices. This week, we prefer to observe the range from 1.2700 – 1.2800 area which moving in either direction will initiate a new breakaway trend. Topside secondary target is viewed at 1.3150 in case of rising Pound.

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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