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Euro Surges in-lieu of Rate Hike Expectation

A guest post written by DAR Wong

Currency Market Observations – 8 January 2018

Fundamental Outlook

The U.S. inflation slows down over year-end as Dollar weakens. China stays resilient in growth amid soaring trade surplus. Eurozone fears of rate hike after September as currency climbs.

The U.S. import prices posted smallest gain in past 5 months by 0.1 percent in December. American producer prices slid 0.1 percent in December and far below positive forecast. Core prices, excluding food and energy, also declined 0.1 percent and entered into negative region after past 4 months of positive growth.

American weekly claims for jobless benefits rose to 15-week high record at 261,000 for the week ended 9 January. Consumer prices rose 0.1 percent in December while core prices grew 0.3 percent at 11-month high. Another report on retail prices rose 0.4 percent. Core retail prices, excluding automobiles, expanded 0.4 percent after November was revised to 1.3 percent gains.

China’s consumer prices grew 1.8 percent in December on year basis. Another report on producer prices gained 4.9 percent from a year ago and highest in 12 months. China’s trade surplus increased at almost 2-year high by CNY362 billion in December.

German trade surplus increased EUR22.3 billion in November and best record since April 2016. German industrial production grew 3.4 percent in same month.

Eurozone retail sales rose 1.5 percent in December and higher than previous month. Euro surges against Dollar as market traders believe the monthly stimulus of EUR30 billion starting from January will end in September, then follow by rate hike.

U.K. Halifax housing price index slid 0.6 percent in December, contracting for first time in past 6 months. Manufacturing production rose 0.4 percent in November. Trade deficits widened GBP12.2 billion and worse than forecast, compared to GBP11.7 billion deficits in October.

Technical Forecast

USD/JPY closed below 111.00 on Friday. Market is expected to meet the support at 110.70 region while resistance will emerge around 112.00 in case of rebound. This week, the trend will remain clueless until it breaks in either direction beyond this range led by Dollar trend.

EUR/USD has shown strong bullish trend as it surged on Friday close. This week, we forecast a possibility of huge uptrend while sitting on 1.2050 area. On continual rise, the extension might reach 1.2550 in near future. However, beware of falling beneath 1.2050 support lest long-view needs to be abandoned.

GBP/USD has a very strong surge on Friday as trend reversed to 19-month high. This week, we forecast the trend will be well supported at 1.3650 region. Upside target may aim at 1.4000 as we foresee an impending bull run is highly possible.

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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