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Dow Jones Climbs above 21,000 for the First Time

A guest post written by DAR Wong

Currency Market Observations – 06 March 2017

Fundamental Outlook

The U.S. weekly claims drop to 44-year low record. President Trump delivers his first speech to U.S. Congress and lifts Dow Jones to historical high. Japan stays weak in inflation prices. U.K. poises for growth in housing demand from approvals and construction index.

The U.S. orders for durable goods rose significantly in January by 1.8 percent, while core orders excluding transport equipment shrank 0.2 percent. Pending home sales dropped unexpectedly by 2.8 percent in January, lowest in a year record, compared to revised 0.8 percent gains in December.

The prelim GDP in U.S. economy gained 1.9 percent in final quarter and below forecast. Chicago manufacturing index rose to 57.4 in February, highest in 3-month record. Another report on Institute of Supply Management (ISM) reports the manufacturing index gained to 57.7 in February and highest in 2 years.

The U.S. consumer spending grew 0.2 percent in January and lower than forecast. Americans unemployment claims for the week ended 25 February fell to 223,000 at 44-year low.

Last week, President Trump delivered his first speech to Congress and Dow Jones benchmark breached 21,000 after his speech. Trump assures of efficient tax-reform to be announced by August, tighten immigration rule on merit-based system, cut health-care cost while creating more jobs by pulling back manufacturers, increase military build-up to fight terrorism.

China’s Caixin manufacturing index increased to 51.7 in February and stays strong in growth above 50.0 benchmark. Services index grew 52.6 in same month report and indicates growth above 50.0 benchmark.

Japan’s prelim industrial production shrank 0.8 percent in December after it rose 0.7 percent in previous month. Retail sales grew 1.0 percent in January from a year ago. Capital spending by big business rose 3.8 percent in Q4 from a year ago and best in last 3 quarterly seasons.

Japan’s household spending contracted 1.2 percent in January from a year ago and worse than forecast. Core consumer prices on nationwide rose 0.1 percent on annualized rates while the core prices in Tokyo shrank 0.3 percent from a year ago. Unemployment in January stayed unchanged at 3.0 percent.

Eurozone consumer prices rose 2.0 percent in February from a year ago and at 5-year high. Core prices, excluding food and energy, gained 0.9 percent on annualized rate. Another separate report on producer prices climbed 0.7 percent in January on monthly basis while unemployment rate stagnates at 9.6 percent.

Markit reveals manufacturing index in U.K. gained to 54.6 in February and lowest than previous month revised at 55.7. Mortgage approvals for home buyers stay strong at 70,000 in January and matched forecast.

Markit reports the U.K. construction index rose to 52.5 in February and maintains growth. Another separate report on services index expanded at 53.3 and lowest record in 5-months.

Technical Forecast

USD/JPY climbed in recovery as we predicted last week. This week, we foresee the trend will be moving sideways from 112.50 – 115.00 region while waiting for FOMC in mid-March. Control your risk in case the prices swing out of the expected range.

EUR/USD has stood well above 1.0500 support and moves into upward correction. This week, the aforementioned support will reinforce the demand while rising to 1.0700 is possible. Tight range is still expected until mid-March for observing a breakout in either direction.

GBP/USD edge down last week but supported at 1.2200 region. This week, we reckon tight range will be traded from 1.2200 – 1.2500 in mixed sentiment. However, be ready to act on risk control should the trend fall beneath 1.2200 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 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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