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Dow Jones Benchmark Climbs to New High

A guest post written by DAR Wong

Currency Market Observations – 13 February 2017

Fundamental Outlook

The U.S. trade deficit nears to highest in 4 years while Dow Jones market closes at all tie high again. China jumps in trade surplus amid economic expansion. Germany maintains steady growth in small industrial production but large manufacturers shrink.

The U.S. trade deficit in December fell 3.2 percent to USD44.2 billion, almost highest since 2012. Weekly jobless claims dropped to 234,000 as of end 4 February and to 43-year low record.

The U.S. prelim consumer confidence filed by University of Michigan rises to 95.7 in current month. Dow Jones benchmark closed at 20,269 on Friday and maintains as historical record high.

China’s Caixin services index grew to 53.1 in January, lower than forecast but still signalling growth above 50.0 benchmark. Another major report reveals the national trade surplus expanded RMB355 billion in January and above forecast.

Japan’s leading indicators expanded 105.2 percent in December and maintained growth as expected. Core machinery orders gained 6.7 percent in December and twice the jump of forecast.

Another separate report on prelim machine tool orders grew 3.5 percent in January from a year ago. Producer prices grew 0.5 percent on annualized rate in January.

Germany factory orders expanded 5.2 percent in December and best record in past 5 years, reversing from minus 3.6 percent in previous month. Industrial production, including mines and utilities, contracted 3.0 percent after grew 0.5 percent in November.

British manufacturing production gained 2.1 percent in December and best record in past 8 months. Trade balance contracted GBP10.9 billion but still better than forecast.

Technical Forecast

USD/JPY bounced off 111.50 bottoms and closed at 113.00 region for weekend. This week, we foresee the market will thread sideways from 112.50 – 114.00 range but piercing above the resistance might drive up to 116.00 target.

EUR/USD has shown the beginning of correction in prices. This week, the trend may consolidate sideways initially from 1.0600 – 1.0700 range. Decline beneath the support will likely drive lower at 1.0500 area. Euro is rather sensitive to many remarks covering debt crisis and election in media. Be wary in your risk control.

GBP/USD has been trading in tight uncertainty within 1.2400 – 1.2600 range. This week, we reckon the news on BREXIT impact will continue to be market focus while investors observe the potential impact. Breaking beyond the aforementioned range in either direction could travel another 200 pips easily.

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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