Dow Jones Benchmark Falls More Than 600 Points
- 5 February 2018
Fundamental Outlook The U.S. indicators point to inflation pressure before new Federal Reserve Chief Jerome Powell comes on board o this week. Traders fear of rate hike that may come too soon that trigger Dow Jones benchmark falls more than 600 points before weekend. Chinese Yuan advances as Dollar weakens for many weeks.
American consumer spending rose 0.4 percent in December after the previous month was revised to 0.8 percent gains. The Conference Board of consumer confidence rose 125.4 in January and higher than previous month.
The U.S. pending home sales rose 0.5 percent in December and matched forecast. Another report on ISM manufacturing index rose 59.1 in January. Unemployment claims lowered to 230,000 for the week ended 27 January and below forecast.
Monthly U.S. non-farm payroll rose 200,000 in January and above expectation. Jobless rate at 4.1 percent without much change. Dow Jones benchmark shed more than 600 points on Friday as trader took profit in market.
China’s Caixin manufacturing index steadied at 51.5 in January. Chinese Yuan has been rising for more than a month and challenges the high against Dollar that was created in August 2015.
Japan’s retail sales grew 3.6 percent in December from a year ago and highest in 3-1/2-year record. Household spending contracted 0.1 percent on year.
German retail sales declined 1.9 percent in December. Eurozone consumer prices grew 1.3 percent in January on year basis and matched forecast. Another report on Eurozone GDP for Q4 seasons expanded 0.6 percent.
U.K. net lending to individuals 5.2 billion in December and best in past 3 months. Mortgage approvals at 61,000 and lower than 65,000 in November.
Markit in London reports manufacturing index dropped to 55.3 in January and below December 56.2. Construction index grew at slower pace 50.2 in January versus 52.2 in previous month.
Technical Forecast USD/JPY recovered last week after failed to break below 108.00 level. This week, we reckon the trend will stay sideways from 109.00 – 111.00 range amid mixed sentiment. Traders are advised to adopt proper risk control in case the trend extends beyond the aforementioned range.
EUR/USD traded in small range on the upside last week. This week, the trend is resisted at 1.2560 in case of further rise. Support is temporarily identified at 1.2360 region, which failing beyond this level will drive down to 1.2160. Dollar policy has become a strong influence against Euro trend for the time being.
GBP/USD has begun to slow down in ascension as traders observe the impact of BREXIT and ongoing negotiation. This week, Bank of England will hold meeting to decide monetary policy. We predict the range will be contained from 1.3960 – 1.4360 region. However, beware of extension beyond this range that needs to be controlled with risk management.
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DAR Wong is a registered fund manager in Singapore with 27 years of global trading experiences. You may reach him at email@example.com