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UK Grows in GDP in Q4 Seasons

A guest post written by DAR Wong

Currency Market Observations – 29 January 2018

Fundamental Outlook

The U.S. lowers in home market but increases in order for durable goods. Japan remains unchanged in monetary policy. U.K. net borrowings in public sector reduces while GDP grows.

The U.S. existing home sales grew 5.57 million in December and lower than revised 5.78 million in previous month. New home sales increased by 625,000 and lower than November 689,000. Weekly claims for jobless benefits rose to 233,000 in the week ended 20 January against revised 216,000 in prior week.

The U.S. order for durable goods grew 2.9 percent in January and best record in past 6 months. Excluding transport equipment and auto sales, core durable goods expanded 0.6 percent. Another report on GDP rose 2.6 percent in Q4 seasons and below forecast.

President Trump imposes 30 percent import tax on all solar cell and upset wide market response. Analysts reckon this will jeopardise economic growth, raise electric bills and hurt environment.

Bank of Japan concluded a 2-day meeting and keep the short-term policy rate unchanged at negative 0.1 percent and the 10-year yield target around 0 percent.

German ZEW sentiment rises to 20.4 in January and highest in past 8 months. German manufacturing PMI rose 61.2 in January and below forecast.

Another report on German services index gained 57.0 and better than 55.8 in December. The ifo business climate that measures manufacturers and retailers is reported at 117.6 in January, in line with forecast growth.

U.K. public sector net borrowing dived to GBP1 billion in December, showing good sign of decline after GBP6.6 billion in November. GDP grew 0.5 percent in Q4 seasons and made best quarterly growth throughout 2017.

British claimant count increased 8,600 in December while unemployment rate held steady 4.3 percent in same month. Average earnings on quarterly basis ended November rose 2.5 percent and matched forecast.

Technical Forecast

USD/JPY traded lower last week as Dollar weakened. This week, we reckon the trend will decline to 107.00 before triggering bargain-hunting in market. Range might be larger than expected on the topside in case of rapid short-covering. Resistance will emerge at 111.00 area.

EUR/USD tampered 1.2500 resistance last week and fell. Dollar may look to recover after President Trump mentioned his favor in strong Dollar during Davos forum. This week, we foresee the resistance will be resilient at 1.2500 while prone to fall back at 1.2200 level. However, the unlikelihood of piercing above 1.2500 level needs abandon all short-view.

GBP/USD topped above 1.4300 and fell back quickly to 1.4050 before weekend. This week, we predict the range will trade from 1.3950 – 1.4250 region in favor of bear trend. Traders are prone to take profit from past weeks’ gains if the rise could not break above 1.4300 level again.

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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