European Central Bank to Announce Plan in Tapering
- 11 June 2018
Fundamental Outlook The U.S. Nasdaq Composite Index creates to new high amid other struggling stocks. China steadies in inflation growth while trade surplus slows down. European Central Bank (ECB) will plan to taper stimulus and hold press conference for details.
The U.S. ISM services index grew 58.6 in May and higher than previous month. Weekly jobless claims at 222,000 for the week ended 2 June and stayed in forecast range.
Last Tuesday, Nasdaq Composite Index closed at record high 7636.86 after Netflix and Amazon surged amid the other struggling stocks.
China’s Caixin services index rose 52.9 in May and stayed on growth track. Another report on trade surplus grew USD24.9 billion in May and below expectation. Consumer prices rose 1.8 in May from a year ago while producer prices expanded 4.1 percent on annual basis.
European Central Bank (ECB) will announce in a press conference on this Thursday on winding down the asset purchase program of EUR30 billion monthly. Euro has started to rebound against Dollar as market traders short-cover for profits.
Markit reports the U.K. construction index rose 52.5 in May and best in 5 months’ record. Another report on the services index rose 54.0 in May and best in 3 months’ record.
Halifax in U.K. reports the housing prices rose 1.5 percent in May and above forecast, after the previous month slid 3.1 percent.
Technical Forecast USD/JPY has been hovering at 109.50 region and confluent with EMA200 line. This week, we are anticipating the FOMC meeting and ECB conference to check on trend of Dollar and Euro. Hence, we forecast the USD/JPY trend will swing sideways in uncertainty from 108.00 – 111.00 range until a new force leads beyond it.
EUR/USD has shown recovery from recent bottom 1.1509 level. This week, we foresee the trend will bounce higher after initial pull back forces. Technically, the range is supported at 1.1650 area and likely to reach 1.1950 level if Euro strengthens after Thursday. Breaking beneath 1.1650 support needs to abandon your long-view.
GBP/USD also behaves like Euro sentiment and has reached a temporary neutral zone. This week, we reckon the trend will consolidate and move higher towards end of week. Range is expected to be contained from 1.3250 – 1.3550 region while aforementioned support must be well guarded.
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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 firstname.lastname@example.org