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Japan Shows Best Unemployment Record

A guest post written by DAR Wong

Currency Market Observations – 3 April 2017

Fundamental Outlook

The U.S. consumer confidence and pending home both rise higher. China maintains growth in manufacturing and services sectors. Japan has lowest record on unemployment in more than 10 years. Britain shrinks in current account at best 5-year record.

The U.S. Conference Board of consumer confidence jumped to 125.6 in March very unexpectedly, better than forecast and after gaining revised 116.1 in February. Pending homes sales also rose 5.5 percent unexpectedly and above minus 2.8 percent in January.

The U.S. first time claims for jobless benefits fell to 258,000 for the week ended 15 March from previous weekly data of 261,000. Final GDP for Q4 grew 2.1 percent and above forecast. American consumer spending rose 0.12 percent in February and lowest in past 6 months.

Weekly Crude inventories increased 900,000 barrels moderately on previous weekend and below forecast, thus helped to lift crude demand in market. Transportation Secretary Elaine Chao says the Trump administration would unveil a USD1 trillion infrastructure plan later this year, but she has not offered details of funding for projects.

China’s manufacturing index increased to 51.8 in March and maintained growth. Another report on services index rose to 55.1 and best record in almost 3 years.

Japan’s retail sales rose 0.1 percent in February from a year ago, falling back to lowest among past 3 months. Another report on household spending contracted 3.8 percent in February from a year ago.

Tokyo consumer prices drop 0.4 percent in March on year basis. Unemployment rate declined to 2.8 percent in February, best record in more than 10 years.

German Ifo Business Climate advanced to highest record in 6-year at 112.3 in March. Prelim consumer prices in Germany rose 0.2 percent.

The U.K. report on net lending to individuals in February totaled GBP4.9 billion and matched forecast. New mortgage approvals expanded at 68,000 and slightly lower than 69,000 cases in January.

British current account deficits shrank GBP12.1 billion, narrower than last month and best record in past 5 years. Final GDP rose 0.7 percent and matched forecast.

Technical Forecast

USD/JPY bounced off 110.20 support last week and capped under 112.20 resistance. This week, we reckon the range will continue to move sideways until a breakaway in new direction. The Dollar will lead in directional trend towards this weekend after Trump meets Chinese President Xi.

EUR/USD could not stand above 1.0900 and fell last week to 1.0660 region. This week, we foresee bargain-hunting may arise at 1.0600 while topside resistance will emerge at 1.0800 level. Trade cautious with risk control in case of unexpected extension beyond the aforementioned range.

GBP/USD has shown sign of recovery on Friday as market closed at 1.2540 region. This week, we predict the trend will trade from 1.2300 – 1.2700 range with better chances of picking the bottom in case of draw down. Triggering of BREXIT now will be very tricky and cause an initial bear-trap in coming weeks.

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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