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China Grows 6.7 percent in GDP

A guest post written by DAR Wong

Currency Market Observations – 24 October 2016

Fundamental Outlook

The U.S labor market stays strong on weekly claims but inflation still sluggish. China grows 6.7 percent in GDP that matches forecast. European Central Bank President Draghi vows for more action despite no mention on stimulus details. U.K. slacks in producing cost despite consumer prices increase.

The U.S. industrial output including utilities and mines rose 0.1 percent in September from a minus 0.5 percent revised in August. Consumer prices rose 0.3 percent and matched consensus. Core prices, excluding food and energy, gained 0.1 percent but below previous month and forecast.

Weekly crude inventories dropped 5.2 million last week and lifted the energy prices. American building permits rose 1.23 million in September and best in 9-months record after the previous month was revised at 1.15 million gains. Housing starts increased 1.05 million and lower than 1.15 million in August.

The U.S. weekly claims ended 15 October jumped to 260,000 but still signifies strong labour market. Philadelphia manufacturing index grows 9.7 in October and lower than 12.8 in previous month. Another report on existing home sales gained 5.47 million in September and best in past 3-month record.

China reports GDP in Q3 ended September at 6.7 percent growth and matched forecast. Industrial production including manufacturers, utilities and mines rose 6.1 percent on year comparison and lower than 6.3 percent annually in August. Another data on retail sales grew 10.7 percent on year basis in September and matched forecast.

Revised industrial production in Japan grew 1.3 percent in August. Bank of Japan’s Kuroda signals the timing for hitting inflation target may be delayed but vows more easing and negative rates if needed to spike recovery.

European Central Bank holds monetary policy unchanged. Draghi has not commented on tapering or continuing the stimulus after March 2017 but mentions the December data as factors to decide further action.

In U.K. economy, consumer prices grew 1.0 percent in September on year basis and best since November 2014. Producer prices on manufacturers’ cost stayed flat in September on monthly basis and worst in 8-monts record. Another separate data on retail price index on goods and services purchased by consumers rose 2.0 percent on year basis in September.

U.K. claimant counts for jobless benefits changed by 700 filings and way below 7,100 cases in August. Average earning on quarterly basis ended August increased 2.3 percent. Unemployment rate remained at 4.9 percent ended August.

Technical Forecast

USD/JPY has been trading in toppish sentiment and capped beneath 104.50 resistances. This week, we reckon the trend will go lower and range from 102.00 – 104.50 regions. Abandon your short-view in case the bulls conquer above 104.50 levels.

EUR/USD headed lower last week after European Central Bank hints more policy action if needed. This week, we predict the trend be supported at 1.0800 and likely to make recovery 1.1100 areas. Take advantage of the range and picking low entry needs to be accompanied with risk management.

GBP/USD has been threading around 1.2200 in uncertainty for past week. The longer if holds in consolidation indicates a possibility to rebound in case Dollar corrects. This week, we forecast there is a support rising at 1.2120 – 1.2150 regions. Uptrend might aim at 1.2450 targets if short-covering emerges.

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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