China’s GDP grows 6.7 per cent

0

Fundamental outlook  

THE US labour market stayed strong on weekly claims but inflation was still sluggish. China grew 6.7 per cent in GDP, matching forecast. European Central Bank (ECB) president Mario Draghi vowed for more action despite no mention on details of a stimulus.

UK slacked in cost production despite an increase in consumer prices. US industrial output including utilities and mines rose 0.1 per cent in September from a minus 0.5 per cent revised in August.

Consumer prices rose 0.3 per cent, matching consensus’ forecast. Core prices, excluding food and energy, gained 0.1 per cent but was below the previous month’s record and forecast.

Weekly crude inventories dropped 5.2 million last week, lifting energy prices.

US building permits rose 1.23 million in September, the best in nine months after the previous month was revised at 1.15 million gains.

Housing starts increased 1.05 million, lower than 1.15 million in August. US weekly claims ended October 15 jumped to 260,000 but still signified a strong labour market. Philadelphia manufacturing index grew 9.7 in October, lower than 12.8 in the previous month. In another report, existing home sales gained 5.47 million in September, best in the last three months.

China reported that its third quarter (3Q) GDP ended September was at 6.7 per cent, matching forecast. Industrial production including manufacturers, utilities and mines rose 6.1 per cent on a yearly comparison, lower than 6.3 per cent annually in August. Based on another data, retail sales grew 10.7 per cent on a yearly basis in September, meeting forecast.

Revised industrial production in Japan grew 1.3 per cent in August. Bank of Japan’s Haruhiko Kuroda signaled that the timing for hitting inflation target might be delayed but vowed more easing and negative rates if needed to spike recovery.

ECB holds monetary policy unchanged. Draghi has not commented on tapering or continuing the stimulus after March 2017 but mentioned that the December data as factors to decide further action.

In UK, consumer prices grew one per cent in September on a yearly basis, the best since November 2014. Producer prices on manufacturers’ cost stayed flat in September on a monthly basis, the worst in eight months.

In a separate data, retail price index on goods and services purchased by consumers rose two per cent on a yearly basis in September.

UK claimant counts for jobless benefits changed by 700 filings, way below 7,100 cases in August. Average earning on quarterly basis ended August increased 2.3 per cent. Unemployment rate remained at 4.9 per cent ended August.

 

Technical forecast   

US dollar/Japanese yen has been trading in toppish sentiment, capped beneath 104.50 resistances. This week, we reckoned the trend would go lower and range from 102 to 104.5 regions. Abandon your short-view in case the bulls conquer above 104.5 levels. Euro/US dollar headed lower last week after ECB hinted more policy action if needed.

This week, we predict the trend would be supported at 1.08 and it would likely make a recovery to 1.11 areas. Take advantage of the range and pick low entries, accompanied with risk management.

British pound/US dollar has been threading around 1.22 in uncertainty for the past week. The longer it holds in consolidation indicates a possibility of a rebound in case the dollar corrects. This week, we forecast there is a support rising at 1.212 to 1.215 regions. Uptrend might aim at 1.245 targets if short-covering emerges.

 

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].