Fundamental outlook
THE US Federal Reserve announced that it will not make any rate adjustments but Fed chairwoman Janet Yellen noted that there could be a rate hike before year-end.
Stocks climbed but investors stayed on the sidelines pending the outcome of Hillary Clinton and Donald Trump’s political debate this week.
Japan abandoned its monetary base target and adopted a new framework to control it yield curve.
US building permits rose 1.14 million in August, similar to the previous month, indicating a slowdown in demand for housing.
Weekly jobless claims fell to 252,000 in the week ended September 17, better than 260,000 recorded in the previous week. In another report, existing home sales rose 5.33 million in August, below forecast and the lowest in the last six months.
During the Federal Open Market Committee (FOMC) meeting, policymakers held interest rates unchanged.
Yelled said there would be a possible rate hike before year end. The Dow Jones market climbed following the announcement while NASDAQ Composite Index reached an all-time high at 5,342 levels.
The Bank of Japan (BoJ) retained its rates at minus 0.1 per cent and it announced that it would modify its policy framework as its latest attempt to boost inflation.
Among the changes listed, the BoJ said it would introduce yield curve controls, eliminate the maturity range of its bond purchases, and abandon its monetary base target.
In Germany, producer prices shrank 0.1 per cent in August, the worst seen in eight months. In another report, German manufacturing index rose 54.3 in September, the best in the last three months, while services index dropped to 50.6, the worst recorded since June
2013.
Markit reported that manufacturing index in the eurozone gained 52.6 while services index advanced 52.1 in the current month, both in line with forecast.
A eurozone official report said that there is a contraction in the current account surplus at 21 billion euros, a decline from 29.5 billion euros recorded in June.
Technical forecast
US dollar/Japanese yen swung and declined last week after the BoJ announced its new policy. We reckon the market trend has begun to move into a new bearish phase. This week, resistance would likely emerge at 101 but the trend mohjy potentially slip to 99.00 bottoms. Euro/US dollar hovered around EMA200 but it might ascend if the dollar weakens.
This week, we forecast the trend might advance to 1.135, from 1.113 levels. Trade with risk control as the market might be volatile due to the upcoming debate among US’ presidential candidates.
British pound/US dollar held firm at 1.285 over the last two months but it was unable to advance higher.
This week, we predict the trend would trade from 1.285 to 1.335 range, depending on announcements of fundamental news. However, abandon your view in case the trend extends beyond the aforementioned range in either directions.
Disclaimer: This article was written for general information only. No liability by the writer or newspapers. Dar Wong is a registered fund manager in Singapore with 27 years of trading experience in global Derivatives & FX markets. He can be reached at [email protected].