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U.K. Faces Exit Bill from European Commission

A guest post written by DAR Wong

Currency Market Observations – 27 March 2017

Fundamental Outlook

The U.S. new home sales improve while labor market tightens on more claims. U.K. continues to exhibit firm economic growth despite impending BREXIT. Terrorism launches in London and causes 5 dead, alarming British government on high guard.

The U.S. current account deficits narrowed to USD112 billion in January and lesser than forecast, compared to USD118 billion in previous month. Existing home sales grew 5.48 million in February and lowest in past 3-month record. Weekly crude inventories expanded 5 million barrels last week and higher than expectation.

The U.S. new home sales rose back to 4-month high at 592,000 amid steady growth in housing demand. Jobless claims unexpectedly jumped to 258,000 though labor market is still strong. Another report on order for core durable goods, excluding transport equipment, rose 0.4 percent in February from par in previous month.

The current account surplus in Eurozone rose EUR24.1 billion in January, lowest in 6 month record and compared to EUR30.8 billion in previous month.

U.K. consumer prices jumped 2.3 percent unexpectedly in February from a year ago and best record in past 3 years. Producer prices on monthly basis shrank 0.4 percent and indicated slowdown in production.

British net borrowing on public sector grew GBP1.1 billion in February and lesser than forecast. Retail sales expanded 1.4 percent in February and best record past 4 months.

Last week, London suffered from terrorist attack near House of Parliament, resulting 5 dead and 50 casualties. British government stands on high alert while ISIL terrorist group has claimed responsibility to the attack.

European Commission reiterates there will be an “exit bill” for the U.K. before it leaves the European Union. This is controversial to U.K. government that has refused multiple times. The bill, which has been calculated by EU officials and it includes the UK’s share of debts, pensions and unpaid bills, is estimated to be about EUR60 billion.

Technical Forecast

USD/JPY traded in bear trend last week but made small rebound on Friday. Market still supports at 110.50 region while tend to consolidate at 112.50 level this week. We foresee the trend will move in mixed sentiment and might short-cover for a while.

EUR/USD has been resisted at 1.0820 region as rising trend slows down. This week, we reckon the trend will be resisted at 1.0850 in case of continual rising. Falling back could land at 1.0650 support if Dollar rebounds. Market investors are watching closely at U.S. tax-reform policy that could lead Dollar new trend.

GBP/USD traded in gradual uptrend last week and not much affected by London attack. This week, we predict the trend will be range bound from 1.2350 – 1.2650 region without sure clue to the direction. Investors are still not leading the market direction as BREXIT execution is about to begin.

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

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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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