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China Retaliates Import Tariff on U.S. Products

A guest post written by DAR Wong

Currency Market Observations – 9 April 2018

Fundamental Outlook

The U.S. weekly claims grows to highest in 12 weeks. Non-farm payroll grows 103,000 below forecast and shocked market. China raises import tariff on American goods as retaliation. U.K. sees a slowdown in building and services that could have been affected from BREXIT threat.

The U.S. ISM manufacturing index grew 59.3 in March and below forecast. Another separate report by the same institution on services index rose 58.8 in March and matched consensus.

The U.S. weekly claims increased to 242,000 for the week ended 31 March. The U.S. non-farm payroll added only 103,000 in March and surprised market that compared to revised 326,000 in previous month. Unemployment rate at 4.1 percent.

China’s Caixin manufacturing index maintained in growth at 51.0 reading in March, above 50.0 benchmark. Another report on Caixin services index rose 52.3 in March and lowest record in 4 months.

China announces the retaliation of increasing import tariff on 106 American products worth USD50 billion. President Trump immediately responds by adding another USD100 billion tax tariff on Chinese imports. Trade war has erupted between U.S. and China that worries many American farmers for their forthcoming production and sales.

Japan’s Tankan manufacturing index for Q1 seasons rose to 24 reading, below forecast and compared to 26 reading in Q4 seasons. Consumer spending grew 0.1 percent in February on year basis and lower than previous month.

Eurozone consumer prices gained 1.4 percent in March on year basis and stagnated. Excluding food and energies, core prices grew 1.0 percent from a year ago and below forecast.

U.K. manufacturing index grew 55.1 in March and in-line with expectation. Markit reports British construction expanded at 47.0 that is lowest in 20-month record, signaling a slowdown in building industry. Another separate report on services index expanded at 51.7 and lowest in 20-month record.

Technical Forecast

USD/JPY traded in small recovery last week but was resisted at 107.40 area. The market may be prone bias to fall this week while testing the 105.50 support again. Range is expected to be contained in the aforementioned range until the trend breaks beyond in either direction.

EUS/USD has been trading in tight range from 1.2200 to 1.2330 region. The market will depend on Dollar strength to determine the next directional headway. This week, we forecast a higher probability in climbing higher to 1.2450 level provided the support at 1.2200 must be guarded well. Abandon your long-view if this support is compromised.

GBP/USD has been constricted from 1.3950 – 1.4200 range. The support is very crucial since breaking beneath here will initiate new selling trend. This week, we prefer to observe and adopt a cautious risk control since the trend may travel in either direction.

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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