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London Attacked by Terrorism Claimed by IS

A guest post written by DAR Wong

Currency Market Observations – 18 September 2017

Fundamental Outlook

The U.S. inflation shows sign of recovery that may lead to rate hike this week. China stays on track of inflation with resilient consumer prices. U.K. is attacked by terrorism for the fifth time that injured 29 casualties. North Korea indulges in defiance again by firing a new missile test over Japan.

The U.S. producer prices rose 0.2 percent in August from prior month and highest in 4-month record. Consumer prices rose 0.4 percent in August and best in 7 months. Excluding food and energies, core prices grew 0.2 percent and matched forecast.

American claims for unemployment benefits declined to 284,000 ended9 September and lower than forecast. Another report on retail sales slid 0.2 percent in August while core sales expanded 0.2 percent, both were below forecast.

China’s consumer prices rose 1.8 percent in August on year basis and highest in 7 months. Another report on producer prices stayed high at 6.3 percent gains for same month on year, both marking robust inflation.

China’s industrial production grew 0.6 percent in August from year ago. Fixed asset investment by Government rose 7.8 percent in August and consecutively dropped for fifth month. Another report on retail sales expanded 10.0 percent in August on annualized rate and lower than previous month.

Japan’s producer prices gained 2.9 percent on annualized rate in August and attains best record for past 3 years. Revised industrial production slid 0.8 percent in July and matched forecast.

U.K. consumer prices grew 2.9 percent in August from a year ago and better than annualized 2.6 percent in July. Producer prices input on monthly comparison also rose 1.6 percent and best record in past 6 months. Another report on retail prices index shot 3.9 percent in August in annualized rate and highest in past 5 years’ record.

U.K. reports average earnings in the 3-month period ended August rose 2.1 percent and matched forecast. Claimant counts for jobless benefits dropped 2800 in August and beat consensus. Unemployment rate poised steady at 4.3 percent in July. Bank of England holds interest unchanged but policymakers say interest rate may raise in coming months.

Last Friday morning in London, a bomb explosion attacked Parsons Green station and made 29 injured. Islamic State has claimed responsibility for the attack. The U.S. President Trump reassures they will continue to help U.K. in thwarting terrorism. This is the fifth terrorism attack in London this year.

Before the weekend, North Korea fired a ballistic missile again across North Japan and landed into the seas. South Korea retaliated by firing a missile but embarrassed in the malfunction of conducting the test.

Technical Forecast

USD/JPY shot up to 111.30 on Friday and slid in swinging trend. Resistance is seen at this current high as confluent to EMA200 line. This week, we forecast the trend will move from 109.30 – 111.30 range as the trend swings in whipsaw while waiting for FOMC outcome.

EUR/USD is moving into correction after receding from the top almost touching 1.2100 high. This week, we reckon the trend will swing from 1.1850 to 1.2100 range as market attention will watch Dollar policy in leading the trend. Beware of breaking beyond the aforementioned range for leading into a new direction.

GBP/USD shot up last week especially on Friday. Market has reacted to higher to Pound due to unchanged policy in Bank of England. This week, the trend may begin to slide into correction as investors respond to London attack. Market has an immediate resistance at 1.3600 and probably will re-test 1.350 support. Selling pressure is expected at 1.3600 – 1.3650 region.

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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