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Pound Surges Upon Successful BREXIT Negotiation

A guest post written by DAR Wong

Currency Market Observations – 11 December 2017

Fundamental Outlook

The U.S. adds more jobs into economy and rate hike is expected to follow through next week. China maintains strong growth in services and trade. Britain succeeds in first round of negotiation in BREXIT and spike Pound.

The U.S. factory orders contracted 0.1 percent in October after revised 1.7 percent in previous month. Weekly claims ended on 2 December reported at 236,000 and matched forecast. Institute of Supply Management reports the services index grew 57.4 in November and lower from 60.1 in October.

On Friday, the Labor Department reported the economy has added 228,000 jobs in November and higher than forecast, after the October was revised to 244,000. Average hourly earnings of Americans rose 0.2 percent from minus 0.1 percent in prior month. The unemployment rate stays at 4.1 percent.

China’s Caixin services index rose 51.9 in November and best in 3 months record. Trade surplus grew RMB264 billion in November, estimated USD40.2 billion and highest in past 4 months. Consumer prices gained 1.7 percent on annual basis in November while producer prices grew 5.8 percent on year, both in growing pace.

Japan’s final GDP grew 0.6 percent in Q3 seasons. Current surpluses rose JPY2.44 trillion in October and highest in 10 years.

British construction index rose 53.1 in November and highest in past 5 months. Markit reports the British services index expanded 53.8 and down from 55.6 in October.

British Halifax on home price index rose 0.5 percent and better than 0.3 percent in November. U.K. manufacturing production gained 0.1 percent in October. Another report on trade deficits narrowed to GBP10.8 billion and best in 3 months.

A divorce settlement has been reached between U.K. and EU on the final payment before the BEXIT, citizens’ rights and Irish border. The two parties are set to move on to second round of negotiation top ensure smooth BREXIT. Pound regains in strength.

Technical Forecast

USD/JPY rose last week as Dollar gained in expectation of rate hike. The trend reached 113.50 before weekend and might attempt 114.00 before profit-taking arises this week. We predict the support will emerge at 111.50 in case of drawdown. Risk control is advised if the prices swing beyond the aforementioned range.

EUR/USD traded in progressive lower range last week. The trend is supported at 1.1700 area while it could recover at 1.1900 this week. Overall movement is expected to thread sideways as Dollar Index is still lingering from 92.00 – 94.00 range. The potential rate hike on this week by U.S. FOMC meeting might influence the Euro trend as an inverse instrument.

GBP/USD traded slightly higher after middle last week after successful negotiation on BREXIT procedures. The trend is likely to swing sideways while prone to higher price band near to 1.3550 level. The support is laid firm at 1.3300 – 1.3320 region in case of drawdown. Market traders are paying focus on this pair in-lieu of improved situation in BREXIT negotiations.

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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