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Dispute Between U.S. and North Korea Heats Up

A guest post written by DAR Wong

Currency Market Observations – 14 August 2017

Fundamental Outlook

The U.S. economy shows sluggish inflation. China keeps up the growing pace with strong trade surplus. U.K. manufacturing and trade deficit worsen after BREXIT begun.

The U.S. producer prices contracted at minus 0.1 percent in in July and at lowest in past 5 months. Excluding food and energy, core prices declined at 9-month lowest record with minus 0.1 percent.

Another report on U.S. weekly claims on jobless benefits at 244,000 ended 5 August. Consumer prices and core prices both rose 0.1 percent in July and below forecast.

Global stock markets are in tension after North Korea threatened to launch missile attack on military base situated in Guam islands. Trump’s Government expresses fury and rebukes in serious warning of retaliation.

China’s consumer prices rose 1.4 percent in July on year and lowest in past 3 months. Producer prices grew 5.5 percent in good pace. China’s trade surplus stayed high at USD46.7 billion in July.

Japanese bank’s lending remained in pace at 3.3 percent in July on year. Current account surplus grew JPY1.52 trillion and higher than precious month.

Japan’s core machinery orders slid 1.9 percent in June and against a positive expected gain. Producer prices grew 2.6 percent and best record since December 2014.

The U.K. Housing Price Index rose 0.4 percent in July against revised minus 0.9 percent in June. British manufacturing production was flat in June but still better than previous month at negative rate. Trade deficit for June widened to GBP12.7 billion and worst in past 3 months.

Technical Forecast

USD/JPY dropped to 109.00 support region as traders seek safe haven in Yen currency. This week, we expect the trend to be weak if tension persists in the dispute between U.S. and North Korea. Market may move to 108.00 area before bargain-hunting emerges. Topside resistance lies at 110.30 area.

EUR/USD has shown buying interest beneath 1.1700 level. The trend has bounced off on Friday as Dollar weakened. This week, we foresee the market might create double-top formation 1.1900 area and begins to fizzle. Probability lies at picking short trades with risk control for a foreseeable decline soon.

GBP/USD has shown good support at 1.2950 region after the market bounced off from this level on Friday. Sideways trend in mixed sentiment is expected to occur this week and move from 1.2950 to 1.3150 range. However, beware of dropping below 1.2950 support and may drive lower to 1.2750 target.

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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