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China Slows in Manufacturing since End 2016

A guest post written by DAR Wong

Currency Market Observations – 26 February 2018

Fundamental Outlook

The U.S. home sales slide and durable goods order fall. President Trump raises tariff on industrial metal and spooks global stock markets. China slows in manufacturing pace in more than 1 year. U.K. grows moderately in expected range amid BREXIT struggle.

The U.S. new homes sales expanded 593,000 in January and lower than revised 643,000 revised in previous month. . Another report on pending home sales disappoints the market by falling 4.7 percent in January against a positive forecast.

American Conference Board of consumer confidence rose to 130.8 and much above forecast, after the January report was revised to 124.3 reading. Durable goods order slid 3.7 percent in January while core orders, excluding transport equipment, contracted 0.3 percent. Both were under forecast.

The U.S. prelim GDP grew 2.5 percent in final quarter ended December. The Institute of Supply Management’s manufacturing index grew 60.8 in February, at highest reading in 5 months’ record. Another report on weekly claims for jobless benefits came down to 210,000 for the week ended 24 February, lowest record since 1969.

American President Trump announces new import tariff on increasing 25 percent on steel and 10 percent on aluminium, causing the market to fear in loss of confidence. Stock market fell across Asia and Europe before weekend.

China’s manufacturing index slowed down in February after the index grew at 50.3, dropping below 51.0 benchmark for the first time since November 2016. Services index maintains strength at 54.4 reading.

Japan’s prelim industrial production fell 6.6 percent in January after gained revised 2.9 percent in December. Another report on retail sale also slid 1.6 percent on annual basis compared to 3.6 percent gains in December.

Eurozone M3 money supply grew 4.6 percent in January from a year ago and matched forecast. Consumer prices grew within expectation at 1.2 percent on annual basis in February. Core prices, excluding food and energy, gained 1.0 percent.

U.K. manufacturing index was at 55.2 for February and matched forecast. Net lending to individuals grew by GBP4.7 billion in January and lower than GBP5.1 billion revised in December. Markit reports U.K. construction index for January grew 51.4 versus 50.2 in December.

Technical Forecast

USD/JPY traded in down trend last week as Yen strengthened. This week, we foresee the trend will be resisted at 107.50 in case of recovery. The closing price on Friday is very near to the current support at 105.00 area. Range is pretty tight but beware of breaking beneath this support that could drive lower to 103.00 level.

EUR/USD traded in sideways trend that supported at 1.2150 last week. Technically, we reckon the range will trade from 1.2150 – 1.2450 region this week before finding a new directional headway. Risk control is advised in case the trend extends beyond this target range.

GBP/USD has an immediate support at 1.3700 that needs to be observed this week. We forecast the range will trade from 1.3700 – 1.3900 region until we see a breakthrough in either direction. The technical pattern is prone to fall once the support is broken at 1.3700 level.

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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