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Britain Sets to Leave EU in 2019

A guest post written by DAR Wong

Currency Market Observations – 24 September 2018

Fundamental Outlook

The US slaps trade tariff on China and threaten to add more tension into market. Dow Jones closes at record high as traders push the major stocks higher. China reduces in US Treasuries holding. UK is set to leave EU in April 2019 despite the country is at impasse with EU now.

The US housing starts grew 1.28 million in August and highest in 3 months. Another report on building permits rose at slower pace at 1.23 million comparing to revised 1.30 million in July.

The US existing home sale grew 5.34 million in August and matched forecast. Jobless claims fall to near 49-year low record when the data clocked 201,000 for the week ended 22 September.

The US President Trump imposes 10 percent tariff on USD200 billion worth of Chinese goods and threatens to imposed a new tariff on another USD267 billion of Chinese goods if the Chinese Government retaliates.

Towards weekend, Dow Jones benchmarks still makes historical high and closed at 26,743 reading. Traders disregard the market tension as component stocks push higher into rally.

China has reduced it holding on US Treasuries at 6-month low by cutting own to USD1,71 trillion. Market analysts reckon this action is probably a retaliation to trade war initiated by President Trump.

The final consumer prices for Eurozone grew 2.0 percent on year basis and matched forecast. Manufacturing index grows 53.3 in September and missed expectation. Services index gains 54.7 and matched forecast.

British consumer prices rose 2.7 percent in August on year basis. Producer prices edged up 0.5 percent on monthly comparison and stagnated in August.

Another report on retail prices index jumped 3.5 percent from a year ago and best in 6-month record. British retail sail rose 0.3 percent in August versus revised 0.9 percent gains in July. Public net borrowing jumped to GBP5.9 billion in August and highest in 4 months, worse than forecast.

British Prime Minister May says Britain and EU are at impasse now for BREXIT talk. Regardless of what ever situation, UK will leave EU in April 2019. Pound fell 1 percent on Friday.

Technical Forecast

USD/JPY traded higher last week as Yen weakened. This week, we foresee some selling resistance will emerge at 113.00 region as the trend loiters around at 112.50 level. However, the trend may trade in tight range from 112.00 – 113.00 region until the outcome of FOMC on Thursday wee morning might lead a new directional headway.

EUR/USD has tested the 1.1800 resistance while confluent with the EMA200 line. The mild recession in Dollar Index (USDX) has provided some demand in Euro last week. Technically, the trend is trapped within 1,1650 – 1.1850 range for time being. Watch out for the eventual breakout beyond this trend.

GBP/USD fell on Friday on BREXIT news while market resistance emerges at 1.3300 in line with EMA200 line. This week, we foresee the trend will be prone to bear trend despite an early sideways trend is possible. Overall range is expected to move from 1.3050 – 1.3300 region with built-up selling forces from topside.

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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