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UK Slows in Economic Progress amid BREXIT

A guest post written by DAR Wong

Currency Market Observations – 23 April 2018

Fundamental Outlook

The U.S. economy continues to progress as housing data hints to inflation. China stays on growing track after Q1 GDP grows 6.8 percent. U.K. falls in inflation and retail demand as BREXIT looms.

The U.S. retail sales rose 0.6 percent in March, above forecast and highest in past 4 months. Core retail sales, excluding automobiles, grew 0.2 percent. Industrial production including utilities and mines rose 0.5 percent in March.

American building permits rose 1.35 million in March on annualized rate. Another report on housing starts expanded 1.32 million and above forecast. The U.S. jobless claims for the week ended 14 April steadied at 232,000 cases.

The U.S. government issues new sanction and 7-year ban on Chinese smartphone maker ZTE, after the phone maker was caught shipping goods to Iran illegally and fined USD1.2 billion last year.

Mike Pompeo, U.S. Secretary of State, travelled to North Korea on Easter weekend and met Kim Jong Un, paving grounds for the Trump-Kim talk to take place soon. North Korea says they have suspended nuclear and long-range missile test.

China’s GDP for Q1 season grew 6.8 percent. Industrial production rose 6.0 percent in March on year basis and below previous month 7.2 percent.

German ZEW sentiment that measures institutional investors’ confidence slides to minus 8.2 in April and first time in negative zone since July 2016. The final consumer prices in Eurozone rose 1.6 percent from a year ago.

U.K. average earnings on quarterly seasons ended February grew 2.8 percent and steady. Claimant counts rose 11,600 in March, lower than revised 15,100 in February and also less than forecast. Employment rate almost unchanged at 4.2 percent.

British consumer prices grew 2.5 percent in March on year basis and lowest in past 12 months. Producer prices slid 0.1 percent on monthly comparison while retail price index grew 3.3 percent in March, both missed the expectation. Another separate report on retail sales dropped 1.2 percent in March and worst in 3 months.

Technical Forecast

USD/JPY traded slightly firmer last week but unable to pierce above 108.00 resistance. This week, the trend may encounter strong selling pressure at 108.30 before turning down. We reckon downside target lies at 106.50 area in case the bears engulf market. Abandon your short-view if the aforementioned resistance is violated.

EUR/USD has been trading from 1.2200 – 1.2450 range for past 2 months. The market has gone into a rather period of sideways trend with uncertainty due to the inactivity of Dollar movement. This week, we remain unchanged in the view unless the trend begins to break out of the sideways consolidation.

GBP/USD has fizzled out from 1.4377 level after forming double-top formation on day-chart. This week, we predict the resistance will emerge at 1.4120 area in case of initial pull-up retracement. Market is prone bias to decline further while support lies at 1.3820 level.

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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