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Tapering Program will Begin in Europe after December

A guest post written by DAR Wong

Currency Market Observations – 29 October 2017

Fundamental Outlook

The U.S. shows moderate sign of inflation wit steady jobless claims. European Central Bank announces the tapering program to start after December. Spain faces separatism after Catalonia declares for independence. Rate hike is expected in U.K. after steady growth.

The U.S. orders for durable goods rose 2.2 percent in September while core orders, excluding transport equipment, climbed 0.7 percent. Both are above forecast.

The U.S. pending home sales stays flat in September but better than negative numbers for past 2 months. Weekly claims at 233,000 in the week ended 21 September. GDP for Q3 seasons grew 3.0 percent and beat forecast.

Tokyo core consumer prices rise 0.6 percent from a year ago while national consumer prices gain 0.7 percent. Both data shows growth in highest record from more than 2 years.

Shinzo Abe leads the Liberal Democratic Party and has won control of the House of Representatives for another 4-year term. Nikkei stock index is flying at 20-year high despite his approval rating is still unpopular in market.

German flash manufacturing index soars high at 60.5 in October and maintains little change from last month. Another report on services index stays at 55.2 above 50.0 benchmark. Monthly ifo business climate covering the overall business confidence survey soars to historical high at 116.7 in October.

In Eurozone, manufacturing index climbs to 6-year high at 58.6 in October while services index expands to 54.9. European Central Bank President Draghi announces the cut in stimulus program from current EUR60 billion to EUR30 billion each month after December, but extending the support till September next year.

Catalonia declares independence from Spain. Central Government has allowed Madrid to execute article 155 for removing the autonomous power of Catalan Government. IBEX dropped 2 percent after the news report.

U.K. GDP grew 0.4 percent in Q3 seasons and above forecast. Market analysts reckon the rate hike possibility by Bank of England in November will be on course.

Technical Forecast

USD/JPY traded in a very slow and steady sentiment last week. Market is strongly resisted at 114.50 level and moving into correction this week. Technically, we reckon the range is likely to trade from 112.50 – 114.50 region while prone to head south.

EUR/USD fell after mid last week as Dollar climbed. This week, we foresee the resistance will strengthen at 1.1650 while prone to slide further. The bears might go down to 1.1400 region as Euro weakens. Long traders should control risk cautiously.

GBP/USD is trading sideways as support rises at 1.3050 area. The trend may swing from 1.3050 – 1.3250 range this week without a directional headway. We presume the breakout beyond this range will lead a new trend in due time. Traders are watching the Bank of England fir their November meeting.

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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