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Market Sentiment Slows Down on Regional Base

A guest post written by DAR Wong

Currency Market Observations – 14 May 2018

Fundamental Outlook

The US housing growth slips while jobless claims improve slightly. China grew at slowest pace for fixed asset investment in non-rural sectors. Britain declines in earnings and claims for jobless benefits increase.

The US retail sales gained 0.3 percent in April and down from revised 0.8 percent in March. Excluding automobiles, core prices also grew 0.3 percent but below expectation.

American building permit expanded 1.35 million in April compared to revised 1.38 million in previous month. Another report on housing starts rose 1.29 million and below forecast.

Industrial production including utilities and mines grew 0.7 percent after rose 0.6 percent in March. Jobless claims at 222,000 in the week ended 12 May and best in 4 weeks average.

China’s industrial production rose 7.0 percent in April from a year ago and higher than previous month. Fixed asset investment gained 7.0 percent on year basis and lowest in historical record.

Japan’s producer prices rose 0.2 percent in April from a year ago and matched forecast. Preliminary GDP for Q1 seasons contracted 0.2 percent and worse than forecast. Revised industrial production grew 1.4 percent in March and highest in 3 months.

German preliminary GDP for Q1 seasons grew 0.3 percent and lower than forecast. Another report on ZEW sentiment report on institutional investors contracts to minus 8.2 in May and stay sluggish.

Flash GDP for Eurozone comprising 19 countries rose 0.4 percent in Q1 seasons. Final consumer prices in April grew 1.2 percent from a year ago. Core prices rose 0.7 percent on annual basis.

The averaging earnings of UKcitizens grew 2.6 percent on quarterly seasons ended March, lowest in 3 months’ record. Claimant counts for jobless benefits increased to 31,200 in April and twice higher than forecast. Unemployment rate stays at 4.2 percent.

Technical Forecast

USD/JPY advanced last week but resisted at 111.00 region. This week, we reckon the trend will encounter strong bears at 111.00 – 111.50 region and depend on Dollar Index USDX to lead the directional headway. Tight range is expected since support is laid at 110.00 level unless the trend pierces beyond either direction.

EUR/USD is almost hitting the support at 1.1750 region as it closed on Friday. Market is constricted to 1.1750 – 1.1900 range in case there is a recovery this week. The sentiment is starting to become mixed and traders are observing the Dollar Index (USDX) to decide the potential of Euro now.

GBP/USD is slowing down in selling trend as the market approaches 1.3450 area. Technically speaking, the market is prone to make a rebound at 1.3750 level in case of short-covering among traders. Though we foresee the range to be temporary sideways from 1.3450 – 1.3750 region, risk control must be managed if the bears engulf below 1.3450 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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