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President Trump De-Certifies Iran Deal

A guest post written by DAR Wong

Currency Market Observations – 16 October 2017

Fundamental Outlook

The U.S. weekly claims for jobless benefits decline while inflation poises for slow growth. China slides in trade surplus while U.K. trade deficits widens to record high from fear of BREXIT effects.

The U.S. weekly claims ended 7 October dropped to 243,000 at 6-week lowest record. Producer prices rose 0.4 percent in September and better than last month. Core prices, excluding food and energies, also grew 0.4 percent and best in 5-month record.

The U.S. consumer prices for September rose 0.5 percent while core prices grew 0.1 percent, both below forecast. Another set of report on retail prices grew 1.6 percent while core prices, excluding automobiles, rose 1.0 percent.

American President has de-certified Iran’s nuclear deal and working on a new deal to contain Iran. Crude prices traded higher before weekend closed as traders reckoned production supply will reduce on global basis.

China’s Caixin services index grew at 50.6 in September and lowest since January last year. China’s trade surplus grew CNY193 billion in September and slid to lowest in 6-months. Foreign direct investment grew 1.6 percent from a year ago.

Japan’s current account surplus stays positive in August at JPY2.27 trillion and best in 11-year record. Core machinery orders rose 3.4 percent and higher than consensus. Lending to businesses and consumers rose 0.3 percent in September from a year ago, making steady growth. Another report on producer prices also matched the forecast at 3.0 percent.

German industrial production including utilities and mines, rose 2.6 percent in August and in good growth rate. On Eurozone in 19 nations, this data also rose 1.4 percent and highest in 3 months.

U.K. manufacturing production maintains good growth in August by rising 0.4 percent above forecast. However, trade deficits widened to record high at GBP14.2 billion at worst situation.

Technical Forecast

USD/JPY traded lower as Yen has been strengthening gradually. This week, the trend may swing sideways by testing 111.00 support before mild recovery. Range is expected to move tightly from 111.00 – 112.50 region while waiting for Japan’s election on 22 October.

EUR/USD has slowed down in activity as Spain simmers down in Catalan fiasco. This week, we predict the trend will move in sideways without huge extension. Range might stretch from 1.1750 – 1.1950 region amid mixed sentiment.

GBP/USD has met resistances at 1.3320 after U.K. failed in negotiating for a 2-year extension for BREXIT with European Union. While traders are still hoping for best outcome, we reckon the trend will thread sideways this week from 1.3100 – 1.3350 in narrow range until clearer directional view is identified.

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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