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China Boosts Trade Balance to Highest Record this Year

A guest post written by DAR Wong

Currency Market Observations – 15 August 2016

Fundamental Outlook

The U.S. economy slows down in general demand though job markets stabilizes. China boosts in trade balance due to weakening Yuan. German report on first projection in Q2 shows growth. U.K. fluctuates in performance as investors still observe post effect of BREXIT till year-end.

The U.S. wholesale inventories climbed 0.3 percent in June and higher than previous month 0.2 percent gains, signalling slowdown in demand. Weekly claims for jobless benefits for the week ended 6 August was at 266,000, slight improvement from forecast.

The U.S. retail sales was flat in July while core retail prices slid 0.3 percent against positive forecast. Producer prices fell 0.4 percent in weak sentiment, worst in this year. Core prices, excluding food and energy, slid 0.3 percent.

China trade balance rose to CNY343 billion and highest in 6 months. Industrial production rose 6.0 percent in July from a year ago and in-line with forecast.

Consumer prices rose 1.8 percent in July from a year ago and better than forecast. Another report on producer prices contracted 1.7 percent from a year ago but projected best record in July since this year.

Japan’s current account in June rose JPY1.65 trillion and best in past 3 months’ record. Core machinery orders rose 8.3 percent in June and almost 3 times the expectation. Another data on producer prices slid 3.9 percent and matched forecast.

German trade balance rose EUR21.7 billion and lowest in past 4 months. Prelim release for German GDP grew 0.4 percent in Q2 and better than expectation. Another report on wholesale price index rose 0.2 percent and matched forecast.

U.K. manufacturing production slid 0.3 percent in June on monthly basis, after the data improved from minus 0.6 percent slump in May. The Conference Board in U.K. reports the leading indicators dropped 0.3 percent in June. Construction output also slid 0.9 percent in the same month after June contracted 2.0 percent.

Technical Forecast

USD/JPY has been weak for past 2 weeks. We reckon the market may begin to fall soon in coming week if the trend fails to surpass above 103.00 resistances. Technically, market may be entrapped inside 100.50 – 103.00 ranges but prone to break beneath 100.00 benchmarks in due time.

EUR/USD traded in mild bullish sentiment last week and closed at 1.1163 for weekend. This week, we predict the trend will hover sideways from 1.1100 – 1.1250 ranges and prone to move higher towards the weekend. Piercing above 1.1250 will climb to 1.1400 as our next target.

GBP/USD traded in weak demand below 1.3000 levels last week but has refrained from falling deeper. This week, the market might form double bottom at 1.2900 regions and reverse higher into 1.3150 areas for recovery. Track the Dollar strength that will inversely affect Pound and Euro.

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

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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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