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Trump Succeeds as 45th President of United States

A guest post written by DAR Wong

Currency Market Observations – 23 January 2017

Fundamental Outlook

The U.S. consumer prices match forecast. Trump is sworn-in as 45th President of United States amid little market volatility. China grows slightly higher in Q4 from a year ago compared to September. European Central Bank remains unchanged in monetary policy. British Prime Minister Theresa May assures to begin her execution smoothly in executing BREXIT.

The U.S. consumer prices rose 0.3 percent in December while core prices, excluding fresh food and energies, gained 0.2 percent. Both matched forecast. Another separate report on industrial production, including utilities and mines, rose 0.8 percent in December and also matched forecast.

The U.S. building permit matched forecast in December by rising 1.21 million. Weekly claims for jobless benefits slid to 234,000 in the week ended 14 January. Philadelphia’s manufacturing index rises to 23.6 in January and best in more 2-year record.

Donald Trump has been successfully sworn-in as the 45th President of United States on Friday. He emphasizes on the re-distribution of wealth to middle class income and promises to put America and the people in first place.

China’s GDP growth for Q4 grew 6.8 percent on year basis. Industrial production, including utilities and mines, rose 6.0 percent in December from a year ago.

Japan’s machinery orders contracted 5.1 percent in November, worse than forecast and also worst in 7 months. Producer prices fell 1.2 percent in December from a year ago and better than minus 2.2 percent in November.

Eurozone trade surplus expanded EUR22.7 billion in November after the previous month was revised to EUR19.9 billion growth. In Eurozone, the monthly consumer prices in December rose 1.1 percent while core prices gained 0.9 percent. Both matched the forecast.

European Central Bank keeps monetary policy unchanged. German advocators expect rate tightening since annual inflation rates has grown from 0.6 percent to 1.1 percent. President Draghi argues the trend is not convincing enough for making such haste action.

U.K. consumer prices rose 1.6 percent in December from a year ago and best in more than 2 years. Producer prices on monthly basis expanded 1.8 percent compared to minus 0.6 percent revised in November. Prime Minister Theresa May says government will make the best deal by executing article 50 before end March, for BREXIT purpose.

In U.K., monthly claimant count dropped last month by 10,100 and better than expectation. Average earnings over 3 months ended November rose 2.8 percent and higher than consensus. Unemployment rate stays consistent at 4.8 percent.

Technical Forecast

USD/JPY has entered into neutral zone at 114.50 region. Trend will be dependent on Dollar direction in coming weeks under Trump’s policy. This week, we reckon the range will be moving from 113.00 – 116.00 range. Breaking beyond this range should be guarded with risk control.

EUR/USD looks toppish as it approaches 1.0700 area. We foresee the trend may correct lower at 1.0500 region this week as profit-taking occurs. Abandon your short-view in case the trend pierces above 1.0700 level. Following no changes in central bank’s policy, euro currency will be subject to Dollar direction till month end.

GBP/USD dipped beneath 1.2000 in early last week then followed by rebound. This week, uncertainty will continues to overshadow the market. Technically, we expect sideways trend from 1.2200 – 1.2400 range amid cautious trading. Short-term trading is preferred to limit your risk.

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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