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Hillary Leads Market Confidence after Debate

A guest post written by DAR Wong

Currency Market Observations – 04 October 2016

Fundamental Outlook

The U.S. consumer confidence rises to record high in 2016. FED Yellen says there is no fixed time table to increase interest rate judging from current economy. Hillary leads market confidence after first leg debate with Trump. Japan slides into slowdown again in low inflation. OPEC Saudi agrees to lead in supply cut before official meeting in November.

The U.S. new home sales gained 609,000 in August versus revised 659,000 in previous month. The Conference Board of Consumer confidence rises to 104.1 in September and charts record so far in this year, much higher than 101.8 revised in August.

The U.S. core durable goods order slid 0.4 percent in August after rose 1.3 percent revised in July. In the Congress meeting, FED chair Yellen says there is no fixed time table for adjusting rates after recent FOMC meeting outcome maintained status-quo.

The U.S. pending home sales slid 2.4 percent in August, worst in 3 months and after 1.2 percent revised gains. Another report on jobless claims ended 24 September poised steady at 254,000 and better than forecast. Personal spending stagnated at flat growth in August after grew 0.4 percent in July.

The open debate between Presidential candidates Donald Trump and Hillary Clinton ended first leg with the latter party leading higher confidence from voters. Next debate will be held on 9 October.

China’s Caixin manufacturing index rose to 50.1 in August before going for long holiday in early October. Chinese Yuan has officially been added into IMF’s Special Drawing Basket as of 1 October as one of the major reserve currencies beside Dollar, Yen, Euro and Pound.

Japan’s retail sales fell 2.1 percent in August from a year ago and worst record in a year. Japan’s household spending slid 4.6 percent in August and worst in past 5 months. Consumer prices in Tokyo city stays sluggish at minus 0.5 percent in September while unemployment rose to 3.1 percent in August.

German Ifo business climate that measures investors’ sentiment rises to 109.5 and best record since May 2014. German prelim consumer prices rise 0.1 percent in September and higher than forecast. ECB governor Draghi defends his policy at maintaining negative rates after Deutsche Bank resurges in credit default risk.

Mortgage approvals for U.K. reports at 60,000 in August and in line with expectation. Net lending to individuals rose to GBP4.5 billion and higher than GBP3.8 billion in July. British current account deficit reports at GBP28.7 billion in Q2 ended June and better than forecast. Final GDP rose 0.7 percent.

OPEC members just ended meeting in Algeria to discuss the deal of cutting supply before the next official meeting takes place in November. Saudi Arabia agrees to cut annual supply down at 32.5 million barrels to 33 million barrels in help lift oil prices. Iran, a non-OPEC member, has not expressed its stance.

Technical Forecast

USD/JPY traded sideways last week while hovering around 101.00 levels. This week, we reckon the trend will fall while capped under 102.00 regions. In case of expected drawdown, first target will aim at 99.50 areas with deeper prices to be hit in coming weeks.

EUR/USD has been hovering 1.1200 areas while preparing to advance after new fundamental changes. This week, we predict the support will sit at 1.1150 levels. Resistance lies at 1.1300 levels which, piercing above here will drive up to 1.1450 targets.

GBP/USD rattled in uncertainty for the whole of last week. Market seems to be supported at 1.2900 for time being while possible to re-attempt in advancement to 1.3400 levels. Technically, we presume the crossing above 1.3000 will effectively begin a recovery in price trend if Dollar recedes.

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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