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U.S. May Face Political Risk On Trump Investigation

A guest post written by DAR Wong

Currency Market Observations – 22 May 2017

Fundamental Outlook

The U.S. Department of Justice erects a new counsel to investigate President Trump after FBI chief James Comey was fired last week. China poises for steady growth while U.K. surges in inflation ahead of June poll.

The U.S. building permits expanded at 1.23 million in April and lower than median forecast. Another report on housing starts also dropped to 1.17 million from previous month 1.20 million.

The EIA reports on U.S. Crude inventory has been cut by 1.8 million barrels on weekly basis and spikes the oil prices. American jobless claims for the week ended 13 May reduced to 232,000 and better than forecast.

The U.S. may face political risk and resulted kneejerk in Dow Jones market on last week. The Department of Justice has appointed the former FBI director Robert Muelleras special counsel to investigate alleged ties between the 2016 presidential campaign of Donald Trump and Russian operatives.

North Korea has successfully launched a new missile that carries heavy warhead that could reach U.S. mainland and Pacific holding. Japan and South Korea express concern of security over North Korea’s military expansion and call it as intolerant act.

China’s industrial production expanded 6.5 percent in April from a year ago, below median forecast. Retail sales on annualized rate remained steady at 10.7 percent growth in April.

Japan’s core machinery orders, excluding ship and utilities, gained 1.4 percent in March and stagnated. Another report on industrial production, contracted 1.9 percent from February.

Japan’s prelim GDP for Q1 rose 0.5 percent on quarterly basis and above forecast. From a year comparison, the GDP contracted 0.8 percent.

The final consumer prices in Eurozone rose 1.9 percent on annual basis. Core prices, excluding fresh food and energy, gained 1.2 percent from a year ago.

U.K. consumer prices rose 2.7 percent in April on annual basis and best record since September 2013. Producer prices input on raw materials purchased by manufacturers stagnated at 0.1 percent from a year ago.

U.K. retail sales gained 2.3 percent in April and highest record since January 2016. U.K. will go for national polling on 8 June and most market analysts predict Conservative Part led by Theresa May will gain landslide victory.

Technical Forecast

USD/JPY drifted lower last week from neat to 114.00 top to 111.30 on Friday close. This week, we reckon the resistance will act upon 112.30 area while the trend may be prone to fall deeper at 109.50 bottom. Risk control is advised in case of reversal above 112.60 level.

EUR/USD surged higher last week as Dollar has been receding. Technically, we foresee a strong selling force at 1.1270 – 1.1300 region in coming week should the bulls climb higher. Support is identified at 1.1100 level and buying interest is expected to line up beneath this area. Use tight risk control to trade well in long view.

GBP/USD has climbed higher after responding to better data and anticipation of positive polling results in coming June. This week, we expect the bulls to ascend to 1.3250 from current region. Strong support is identified at 1.2850 area in case of drawdown. Uptrend is expected over next few weeks through the U.K. poll.

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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