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BoE Reiterates Confidence in BEXIT Impact

A guest post written by DAR Wong

Currency Market Observations – 22 October 2018

Fundamental Outlook

The U.S. housing data slide in building permit and existing home sales. China maintains in GDP as expected. Bank of England reiterates confidence in cushioning BREXIT impact.

The U.S. building permit rose 1.24 million in September and lower than revised 1.24 million gains in August. Housing starts expanded within limit of 1.20 million and below forecast.

The U.S. existing home sales declined for sixth month in September by expanding 5.15 million. American jobless claims for the week ended 13 October at 210,000 and improved from prior week 215,000.

China’s consumer prices rose 2.5 percent in September on year basis. Another report on producer prices grew 3.6 percent from a year ago. Both matched forecast.

China’s retail sales grew 9.2 percent in September from a year ago and above forecast. Another report on industrial production slid 5.8 percent on year basis versus 6.1 percent in August. GDP in Q3 season grew 6.5 percent and worset since financial crisis in 2008.

German ZEW economic sentiment slides to minus 24.7 in October and worse than expectation. Eurozone consumer prices rose 2.1 percent in September from a year ago. Core prices expanded 0.9 percent on year. Both matched expectation.

British average earning on quarterly compilation ended August grew 2.7 percent and beat consensus, best in past 7 serial quarters. Unemployment stays unchanged at 4.0 percent.

British consumer prices rose 2.4 percent in September on year basis and lowest in 3 months. Producer prices stayed strong at 1.3 percent gains and higher than 1.2 percent in August. Another report on retail prices index climbed 3.3 percent and missed expectation.

Bank of England Governor Mark Carney says U.K.’s banking system is prepared to handle a much worse outcome from Brexit than is likely to happen.

Technical Forecast

USD/JPY bounced off 111.50 ground last week as we expected. This week, we reckon the trend will continue to consolidate from 111.50 – 113.50 range in sideways. Traders will adjust position in mixed trading until the trend will show a clear direction by moving beyond the aforementioned range.

EUR/USD traded lower as Dollar rose last week. Technically, the support at 1.1450 looks firm and tend to recover this week. Tight range is expected to move from 1.1450 – 1.1600 region. Risk control is advised once the prices step out beyond the aforementioned range.

GBP/USD slid in same trend as Euro last week. This week, the Pound is likely to trade in small recovery as traders speculate in mixed trading. We forecast the range will move from 1.3000 – 1.3250 region as market is still uncertain of forthcoming trend. Comment of Carney might help to support Pound for short-term trend.

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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