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UK Parliament Faces Tough Challenge in BREXIT Deal

A guest post written by DAR Wong

Currency Market Observations – 19 November 2018

Fundamental Outlook

The US retail prices grow faster while President Trump aims to suppress inflation by keeping low oil prices. Eurozone slows down in trade surplus while Germany stagnates in growth. British Government faces tough challenge for negotiating BREXIT deal.

The US consumer prices rose 0.3 percent while core prices grew 0.2 percent, both matched the forecast. Another report on retail prices rose 0.8 percent in October, while core prices excluding transport equipment grew 0.7 percent. Both data are above forecast and signal inflation.

Saudi Arabia is cutting oil shipment to US with intention to squeeze stockpile shortage in Government’s storage, in return driving up demand prices. This action might rile President Trump who wants to contain inflation prices for Americans.

China’s industrial production including utilities and mines grew 5.9 percent in October on year basis. Another report on fixed asset investment rose 5.7 percent in October on a year-to-date compilation.

Japan prelim GDP slid 0.3 percent in Q3 season after the previous was revised at 0.7 percent gains. Revised industrial production slid 0.4 percent in September on monthly comparison.

German ZEW sentiment index falls 24.1 in November and becomes sluggish for 8 months in negative zone. Prelim GDP shrank 0.2 percent in Q3 season after 0.5 percent gains in prior quarter.

Among the 19 nations, trade surplus in Eurozone expanded EUR13.4 billion in September and lower than EUR16.8 billion in previous month. Consumer prices on year basis rose 2.2 percent in October and matched forecast.

UK average earnings on quarterly basis ended September rose 3.0 percent at 3-year record. Unemployment rate rose 4.1 percent and highest in 4 months.

Another separate report on consumer prices rose 2.4 percent in October from a year ago. Producer prices on monthly compilation expanded 0.8 percent in October and beat forecast.

British retail sale declined 0.5 percent in October after the previous month was revised at minus 0.4 percent. UK parliament is going through battle for negotiating BREXIT deal with European Commission. Divorce bill of GBP39 billion has to be settled before March 2019 for the separation while trade deals need to be revised before end 2020.

Technical Forecast

USD/JPY fell before weekend as Yen advanced. This week, we reckon the trend will test 112.00 bottom before moving into whipsaw pattern. Topside resistance will emerge at 113.50 region while overall movement is still contained in tight range.

EUR/USD bounced off 1.1220 bottom last week. Technically, we forecast the range is prone to swing sideways with resistance emerging at 1.1470 area. Sideways tends to be the likely pattern as Dollar might weaken slightly in coming week.

GBP/USD plummeted last week as traders lost confidence in BREXIT negotiation. Technically, the market is very resilient at 1.3000 benchmark should there be any recovery. This week, we expect whipsaw pattern from 1.2700 – 1.3000 region but falling beneath the aforementioned range will signal new bear forces in market.

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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