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Turkish Lira Tumbles Amid New US Tariffs

A guest post written by DAR Wong

Currency Market Observations – 13 August 2018

Fundamental Outlook

The U.S. stays put in inflation growth after producer prices and consumer prices matched forecast. President Trump imposes new tariffs on Turkey and bludgeons Lira. China’s inflation advances on growth while trade surplus reduces. British housing prices remain in gains.

The U.S. producer prices stayed flat in July and down from 0.3 percent gains in previous month. Excluding food and energy, core prices grew 0.1 percent and below forecast.

The U.S. consumer prices rose 0.2 percent in July. Excluding food and energy, core prices grew 0.2 percent and matched forecast. Weekly claims at 213,000 for the week ended 4 August and lower than previous week.

President Trump announces plan to hike tariffs on Turkey metals at 20 percent on steels and 50 percent on aluminum. Turkish lira has tumbled to new record low and more than 40 percent decline in this year. The act by U.S. Government is a warning to NATO allies for disagreeing to the defense policy and the detention of American pastor Andrew Brunson.

China’s consumer prices climbed 2.1 percent in July from a year ago and highest in 4 months. Producer prices rose 4.6 percent on year basis and remains vibrant. Another report trade surplus declined to USD28.1 billion in July and lower than previous month USD41.6 billion.

Japan grew 05 percent in GDP ended Q2 season. Producer prices advanced 0.7 percent in July from a year ago and best in 7 months.

Japan’s household spending slid 1.2 percent in May from a year ago. Another report on leading indicators containing 11 economic data rose 105.2 percent and matched forecast.

British Halifax housing price rose 1.4 percent in June and above forecast. Britain releases a new monthly GDP report ended June rose 0.1 percent. The quarterly GDP ended Q2 season grew 0.4 percent and matched forecast. Another report on manufacturing production in June gained 0.4 percent after revised data rose 0.6 percent in May.

Technical Forecast

USD/JPY traded in slightly weak trend last week amid small range. This week, we reckon the trend will continue to sink while supported at 109.50 level. Resistance will emerge at 111.50 region in case of recovery. Risk control is reminded for selling from topside entry.

EUR/USD dipped on Friday after Dollar advanced on imposing tariffs on Turkey’s export. This week, we foresee the trend will be prone bearish while driving lower to test 1.1300 region. Stop orders may be triggered if the sentiment remains southward. Resistance will stay resilient at 1.1550 level in case of recovery.

GBP/USD is bearish with the Euro trend. Technically, the trend is supported at 1.2750 area with another secondary support lying at 1.2600 in cased of further decline. We have identified the resistance at 1.2950 level in case of recovery this week.

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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