Stronger U.S. Payrolls Offset Trade Worries
- 9 July 2018
Fundamental Outlook The U.S. manufacturing and services indexes improve in both sectors. Payrolls increase and lifts stock market. China maintains in growth track as reported by Caixin report. U.K. construction and housing reports fare strong and relieves worries of Brexit threats.
The U.S. ISM manufacturing index rose to 60.2 in June and highest in past 4 months. Another report on the services index from the same institution grew to 59.1 and best record since February. Jobless claims for the week ended 30 June expanded by 231,000 and highest in 7 weeks.
America added 213,000 payrolls in June and above forecast. Average hourly earnings grew 0.2 percent and missed expectation. Unemployment rate climbed back to 4.0 percent after 3.8 percent in May. Dow market reacted bullish after the data release as payrolls project growth in job market.
China’s Caixin manufacturing index grew to 51.0 in June and matched forecast. Another report on Caixin services index rose to 53.9 in June and maintained in growing track for 4 months.
Japan’s quarterly Tankan report on large manufacturer’s index expanded to 21 reading as of end June, below forecast and lower than 24 in previous quarter. Markit reports final manufacturing at 53.0 and matched June’s expectation.
Eurozone producer prices rose 0.8 percent in May and better than forecast. Another report on retail sales remained flat in similar month.
Markit reports U.K. manufacturing at 54.4 in June and matched forecast. Another report from the same institution says the construction index at 53.1 in June and highest in 7 months.
Halifax housing price index rose 0.3 percent in June and matched forecast, after the previous month revised 1.7 percent gains. Pound climbs fairly higher in firm sentiment as outlook for construction and housing are steady.
Technical Forecast USD/JPY has been consolidating last week but fails to close above 111.00 benchmark. This week, we reckon the trend is prone to fall while support might rise at 109.50 region. Range will probably be contained in the aforementioned region and continue to move sideways.
EUR/USD has ascended as we forecast last week. The market will sit tight on 1.1650 support while continue to climb higher in coming week. Technically, we shall not be surprised to see the trend reaches up to 1.1850 though the overall range might be small. Risk control is recommended in case the trend reverses beneath 1.1650 level.
GBP/USD traded in firm sentiment as we predicted last week. The market stands above 1.3100 support and likely to safeguard this benchmark in near future. This week, we foresee the market is prone to climb higher with target preset at 1.3400 area. Range bound will be contained from 1.3100 – 1.3400 range.
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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