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US Payroll Slumps Despite Jobless Rate Lowest since 1969

A guest post written by DAR Wong

Currency Market Observations – 8 October 2018

Fundamental Outlook

The US jobs opening fall despite unemployment rate at 49-year low record. Trump administration reaches a trade deal with Canada and Mexico rebranded under USMCA title. UK sees a slowdown on economic growth from previously exceeding most forecast benchmark, probably due to BREXIT challenge.

The US ISM manufacturing index grew 59.8 in September and matched forecast. Another report on US ISM services index rose 61.6 in September, beating forecast and highest since June 2007.

The US unemployment claims for the week ended 29 September sank to 207,000, better than revised 215,000 in previous week. The long-awaited monthly non-farm payroll dropped to 134,000 in September and lower than forecast.

Unemployment rate at 3.7 percent and lowest since 1969, while average hourly earnings stays at 0.3 percent gains on monthly comparison. FED chair Powell signals the interest rates is still far from neutral level and hints more rate hike to come.

US Defense Secretary James Mattis cancels trip to China in end October as trade tension rises. The US Government has reached a trade deal with Canada and Mexico, rebranding the NAFTA deal into new name as USMCA deal. The agreement is mainly focused on changing provisions in auto-making industries and dairy products.

China’s Caixin manufacturing index rose at 50.0 benchmark and slowest since June 2017. China is celebrating the week-long vacation for national day and market has been closed.

Japan’s Tankan report ended September on quarterly seasons grew to 19 and worst in 5 consecutive quarters. Final manufacturing index at 52.5 in September and beats forecast.

German retail sales dropped 0.1 percent in September. Euro falls to 6-week low at 1.1500 as Dollar climbs higher.

Markit reports UK manufacturing index gained 53.8 in September and beat forecast. Net lending to individuals at GBP4.0 billion versus revised GBP3.88 billion in August.

Markit in London says the construction index rose 52.1 in September versus 52.9 in previous month. Another report on services index gained 53.9 in September and matched expectation.

Technical Forecast

USD/JPY has hit 114.50 resistance last week. The market may begin to consolidate sideways with support rising at 112.60 level. We expect some whipsaw in mixed trading from 112.60 – 114.50 region as traders’ focus will shift to Euro currency.

EUR/USD falls to 6-week low and will probably continue to slide further in coming week. Technically, we foresee the market is well resisted at 1.1570 level with strong selling forces. Sinking below 1.1450 will open the bearish trend to test 1.1300 area.

GBP/USD has seen a support emerging at 1.2920 area last week. This week, the trend may move into consolidation from 1.2920 – 1.320 range as traders adjust positions in mixed trading. However, long-term outlook for Pound is not optimistic in market as BREXIT remains as an obstacle before the British Government could reach a deal with EU officials.

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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