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U.S. Non-Farm Payroll behind Forecast

A guest post written by DAR Wong

Currency Market Observations – 05 September 2016

Fundamental Outlook

The U.S. economy reveals mixed sentiment with payroll figure decline. China poises for manufacturing recovery in government and private reports. Japan is prone to falter in growth as retail demand and manufacturing slow. U.K. rattles in consumer confidence but steadies in manufacturing.

The U.S. consumer spending rose 0.3 percent in July after gaining revised 0.5 percent in June. The Conference Board of consumer confidence gained 101.0 in August after revised 96.7 growth in previous month.

American pending home sales rose 1.3 percent in July and best record in 3 months. Weekly crude inventory increased 2.3 million barrels and put pressure on oil prices. Unemployment claims for the week ended 27 Aug at 263,000 and met the averaging forecast.

The Institute for Supply Management reports July manufacturing index dropped to 49.4, first time below 50.0 benchmarks in last 6 months. The U.S. nonfarm payroll for August reports at 151,000 versus revised 275,000 and blow forecast, deterring speculation of imminent rate hike. Unemployment rate at 4.9 percent and same as July.

China’s manufacturing index stays high at 50.4 in July. Another separate report by private source from Markit Caixin says manufacturing steadies at 50.0 levels and matched forecast.

Japan’s household spending slid 0.5 percent from a year in July and improved from 2.3 percent contraction in June. Unemployment stays at 3.0 percent. Retail sales on annual basis wound down 0.2 percent in July and better than 1.3 percent contraction in June.

Japan reports flat growth for prelim industrial production in July, after 2.3 percent revised gains in June. Housing starts grew 8.9 percent from a year ago and better than forecast.

Japan’s capital spending by business corporations shows 3.1 percent gains in the quarter ended June and worst in past 6th quarter-months. Final manufacturing in August at 49.5 and unchanged from prelim data. Another data on consumer confidence on household survey rose to 42.0 and highest in 7 months, after 41.3 in July.

U.K. mortgage approvals in July was reported at 61,000 and lower than 64,000 revised in June. Gfk consumer confidence rose to minus 7 from minus 12 in July.

Markit in London says manufacturing remains in strength at 53.3 in August despite BREXIT gradually takes effect. Another separate report on construction index gained at 49.2 in August and best record in past 3 months.

Technical Forecast

USD/JPY has begun to make short-term recovery last week. Technically, we expect the trend to top off this week though the target can be random between 104.00 – 106.00 regions. Kuroda’s speech on Monday can be influential in pulling the prices higher before it declines after mid-week. Support lies at 101.50 levels in case of drawdown.

EUR/USD has been hovering around EMA200 averaging line on day-chart. This week, we reckon the trend will trade from 1.1050 – 1.1250 while waiting for more fundamental news to lead a new trend extension. Trade cautiously with risk management in this sideways trend.

GBP/USD traded higher last week as Pound appreciates in value. Technically, we predict the Pound has potential to advance higher in coming 2-3 weeks while aiming at 1.3550 regions. Support leis at 1.3130 areas in case of drawdown though travelling north is higher probability.

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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