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U.K. Improves in Job Growth

A guest post written by DAR Wong

Currency Market Observations – 22 August 2016

Fundamental Outlook

The U.S. FOMC minutes favor to rate hike before year-end. Japan reports flat growth for Q2 seasons. Eurozone led by Germany shows maintains steady pace in recovery while U.K. improves in job growth and inflation.

The U.S. building permits grew 1.15 million in July and matched forecast. Consumer prices show flat growth while core prices, excluding food and energies, rose 0.1 percent after 0.2 percent gains in June. Housing starts grew 1.21 million in July and best record for this year.

The U.S. FOMC minutes reveals policymakers favor to rate hike before year-end. Crude inventories contracted by 2.5 million barrels in the week ended 13 August that put oil prices on firm demand. OPEC members are discussing on supply cut to lift prices.

American jobless claims lowered to 262,000 in the week ended 13 Aug, at best record in past 4 weeks. The Philadelphia manufacturing index advances to 2.0 index in August from minus 2.9 in July.

Japan’s growth for prelim GDP on quarterly basis ended June stays flat after Q1 gained at revised 0.5 percent. Industrial production in June has been revised at 2.6 percent gains. Trade surplus grew JPY320 billion in July versus JPY340 billion in June.

German ZEW economic sentiment on investors’ index measures at 0.5 index in August and higher than minus 6.8 last month. Trade balance for Eurozone among 19 countries reports at EUR23.4 billion surplus in June and matched forecast.

Another report on current account of Eurozone reports at EUR28.2 billion surplus in June and lower than EUR31.8 billion in prior month. Final consumer prices rose 0.2 percent from a year ago in July and matched forecast.

In U.K. economy, consumer prices on year basis grew 0.6 percent in July. Another set of data on producer prices shows input cost of raw materials rose 3.3 percent and higher than precious month while, output rose 0.3 percent at regular pace. Profit margin narrows for manufacturers.

U.K. claimant counts for jobless benefits dropped 8600 in July and better than forecast, after the claims rose 900 cases in June. Unemployment rate remains steady at 4.9 percent. Average earnings on quarterly basis ended June rose 2.4 percent and higher than 2.3 percent ended May. Retail sales climbed 1.4 percent in July and best in 6-months’ record.

Technical Forecast

USD/JPY might have reached temporary support at 99.60 after trading lower for weeks. Technically, there could be possibility in testing 101.50 resistances in coming week if Dollar recovers. However, breaking below 99.50 levels may trigger new selling pressure to reach 96.00 regions.

EUR/USD has shown recovery signs for bullishness from technical appearance. This week, we reckon the trend will be supported at 1.1230 in case of quick drawdown. Range is expected to move from 1.1230 – 1.1460 regions with upbeat sentiment.

GBP/USD revealed an initial recovery sign last week. This week, we foresee the trend will be supported at 1.2950 for consolidation with a potential to reach 1.3350 targets. Long traders must control position in case of breaking beneath 1.2900 levels.

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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