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Spain Faces Country Turmoil with Catalonia

A guest post written by DAR Wong

Currency Market Observations – 22 October 2017

Fundamental Outlook

The U.S. shows record low of jobless claims with growing existing homes sales. China stays on track of growth with stead inflation gains. Europe faces Spanish crisis in rout. U.K. remains on inflation track amid BREXIT negotiation.

The U.S. industrial production rose 0.3 percent in September and highest in 3 months. Building permit grew 1.22 million while housing starts gained 1.13 million in September, both missing the forecast.

The U.S. jobless claims was at 222,000 for the week ended 14 October, at lowest record and probably signals a hint for impending rate hike on job market recovery. A separate report on existing homes sales rose 5.39 million in September and higher than previous month.

China’s consumer prices rose 1.6 percent in September from a year ago and matched forecast. Another report on producer prices expanded 6.9 percent on annual basis and highest in 6 months.

China’s GDP grew 6.8 percent in Q3 seasons amid the 19th National Congress and revived investors’ confidence. Industrial production, including utilities and mines, rose 6.6 percent in September and matched forecast.

German ZEW sentiment based on institutional confidence gains 17.6 in October in good growth. In Eurozone, consumer prices grew 1.5 in September from a year ago in good recovery pace. Trade surplus in the 19 nation’s bloc rose EUR21.6 billion in August after previous report was revised to EUR17.9 billion gains.

Spain faces domestic turmoil as Catalonia has not surrendered the bid for independence. Central Government is prepared to execute Article 155 of the Constitution to remove the autonomous power from Catalan Government.

U.K. consumer prices expanded 3.0 percent in September on annual basis and best in more than 5 years. Retail prices index rose 3.9 percent on year in September.

British average earning on quarterly seasons ended August rose 2.2 percent in strong pace. Claimant counts for jobless benefits rose 1700 and matched forecast. Unemployment rate at 4.3 percent without change from August. Another report on retail sales declined 0.8 percent in September on monthly report.

Technical Forecast

USD/JPY traded higher last week as Yen devalued towards election on 22 October. Market closed at 3-month high on Friday and probably sets to climb higher this week. The bulls may ascend to 114.50 – 114.80 tops if the demand stays in strength. Drawdown will meet the support at 112.00 – 112.20 region.

EUR/USD has been trading sideways as Dollar strengthens. The trend will loiter from 1.1700 – 1.1850 region until we hear the European Central Bank President Draghi comments on his tapering program on this Thursday. The directional influence of Dollar also acts as a catalyst influence for this market.

GBP/USD traded slight lower last week amid strong economic data. This week, we reckon the trend will be supported at 1.3050 and prone to recover with target aimed at 1.3300 level. In times of uncertainty, breaking beneath 1.3050 may test 1.2950 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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