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Chinese Yuan Recovers in Gradual Pace

A guest post written by DAR Wong

Currency Market Observations – 16 January 2017

Fundamental Outlook

The U.S. economy reveals slight growth in inflation through consumer retail sales and producer prices. China trade surplus expands at slower pace while Yuan gradually recovers. U.K. maintains domestic growth despite export slows down.

The Energy Information Administration reports that weekly Crude inventories increased 4.1 million barrels and much higher than forecast. The weekly unemployment claims dropped to 247,000 in the week ended 7 January.

The U.S. retail sales jumped 0.6 percent in December after revised 0.2 percent gains in November. Core retail sales, excluding automobiles, grew slower at 0.2 percent after November gain was revised at 0.3 percent. Another report on producer prices rose 0.3 percent during last month.

China’s consumer prices grew 2.1 percent in December from a year ago versus 2.3 percent annual growth in previous month. Another report on producer prices gained 5.5 percent on annualized rate and best in past 12 months.

China’s trade surplus grew CNY275 billion in December and lowest in past 3 months. Chinese Yuan begins to recover against U.S. Dollar and offshore USD/CNH trades at 6.83 region.

Japan’s leading indicators comprising 11 economic indicators gained 102.7 percent in November and matched forecast. Another separate report on bank lending to consumers and businesses rose 2.6 percent in December from a year ago.

Current account surplus expanded JPY1.8 trillion in December and better than forecast. Japanese Yen begins to recover as USD/JPY trades lower at 114.50 from 118.00 level since early January.

German industrial production grew 0.4 percent in November and below forecast. Trade surplus gained EUR21.7 billion and highest in past 3 months record.

In U.K. release, manufacturing production increased 1.3 percent in November and jumped 2 times above forecast. Another report on trading deficits widened to GBP12.2 billion in November after exports slid.

Technical Forecast

USD/JPY has been sliding last week. Technically, we foresee support will emerge at 112.50 – 113.00 region and move the trend into sideways. This week, resistance will act unto 116.00 area and lead the prices leaning to bearish sentiment.

EUR/USD traded firmer last week but resistance is expected to emerge at 1.0750 area in near term. This week, market may trade in range bound movement from 1.0500 – 1.0750 region. Risk control is advised in case the trend shoots beyond the aforementioned range due to unforeseen circumstances.

GBP/USD has been trading in range bound movements for many months. Market has not really seen impact of BREXIT while investors do not see good reasons to buy Pound. This week, we reckon range trading will continue its sentiment from 1.2050 – 1.2350 region. Short-term trading is preferred.

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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