U.S. Announces Pull-Out from Iran Deal
- 14 May 2018
Fundamental Outlook The U.S. inflation moves in sluggish trend from consumer and producer prices. Restoration of Iran sanction may spike oil prices in coming months. Bank of England remains monetary policy unchanged amid weak economic data.
American producer prices rose 0.1 percent in April and lowest in 4 months. Excluding food and energy, core prices gained 0.2 percent and matched forecast.
The U.S. consumer prices rose 0.2 percent in April but below forecast, though above previous month at minus 0.1 percent. Excluding food and energy, core prices gained 0.1 percent. Unemployment claims for the week ended 5 May at 211,000 and remained at healthy low level.
The U.S. President Trump announces the pull-out from Iran deal and restore sanction. European Union counterparts express unwillingness as they are major importers of Iranian crude. Market analysts reckon the impending rise in energy prices will benefit U.S. for the increased production of shale oil.
China’s trade surplus rose USD28.8 billion in April and above forecast. Another report on consumer prices gained 1.8 percent in April on year basis. Producer prices rose 3.4 percent from a year ago.
British Halifax home prices shed 3.1 percent in April and worst in 8 years’ record. Manufacturing production grew at minus 0.1 percent in March but better than previous month. Trade deficits widened in March at GBP12.3 billion and worse than forecast.
Bank of England holds benchmark rates unchanged at 0.5 percent and maintain asset purchase at GBP435 billion on monthly program. Weak economic data has fend off the rate hike expected in Q1 seasons.
Technical Forecast USD/JPY has been hovering from 109.00 – 110.0 range last week and prone to thread sideways within this zone. Technically, we reckon the prices are at high range and might decline this week once the bears engulf below 109.00 level. Our next target sets at 107.50 while resistance should not violate above 110.0 level.
EUR/USD bounced off 1.1821 bottom for about 100 pips before the weekend. This week, we forecast the trend may recover to 1.2100 area due to short-covering. However, support at 1.1800 may be tested but need to hold the trend in order to activate a strong recovery.
GBP/USD has been consolidating from 1.3500 – 1.3600 after declining for weeks. The market is prone to make a recovery at 1.3750 region this week. However, the trend should not pierce beneath 1.3450 support in case of triggering new panic selling. Risk control is advised on caution.
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DAR Wong is a registered fund manager in Singapore with 29 years of global trading experiences. You may reach him at email@example.com