Fundamental outlook
US payroll rose while unemployment declined to best recorded this year. China’s manufacturing remained strong. The Organisation of Petroleum Exporting Countries (OPEC) agreed to cut oil production from January onwards to 32.5 million barrels per day. UK reported growth in mortgage borrowings and manufacturing.
The prelim GDP of US economy in 3Q grew 3.2 per cent which was better than forecast. The Conference Board of consumer confidence gained to 107.1 in November, the best recorded this year.
US personal spending rose 0.3 per cent in November but lower than the revised 0.7 per cent reported in October. Personal income grew 0.6 per cent. In another report, pending home sales grew 0.1 per cent in October, the worst reported in the last four months.
The US Institute Supply Management reported that manufacturing index rose to 53.2 in November, the best recorded in the past five months. Unemployment claims for the week ended November 26 rose to 268,000 amid jobs tightening. Nonfarm payroll rose 178,000 in November, better than the revised 148,000 reported in October. Unemployment rate unexpectedly dropped to 4.6 per cent, the best recorded for this year.
China’s manufacturing index rose to 51.7 in November, above the 50 benchmarks. In a separate report, Caixin manufacturing index beats the forecast at 50.9.
Japan’s household spending dropped 0.4 per cent in October on an annualised rate, beating expectations, compared with a decline of 2.1 per cent in the previous month. Retail sales also improved to minus 0.4 per cent on a yearly basis after it contracted 2.1 per cent in October. Unemployment rate stayed at three per cent.
OPEC has agreed that supply cut would begin in January from a daily production of 33.8 million barrels to 32.5 million barrels. Crude prices recovered last week to US$50 regions.
Eurostat reported that the consumer inflation in the eurozone rose 0.6 per cent in November on a yearly basis while core prices grew 0.8 per cent. Both matched forecast.
In the eurozone, final manufacturing index in November stayed healthy at 53.7. Unemployment rate lowered to 9.8 per cent last month.
UK central bank reported that net lending to individual held steady at 4.9 billion pounds in October. Mortgage approvals was higher at 68,000 on a monthly basis compared to a revised 64,000 recorded in September.
Markit London reported that UK manufacturing rose to 53.4 compared to a revised 54.2 in October. National construction index grew to 52.8 in November, resuming its continuous gain for the last four months.
Technical forecast
US dollar/Japanese yen pulled up to a fresh nine-month high record at 114.83 last week before receding. This week, we reckoned the trend might lose its resilience and decline amid profit-taking. The range is expected to fall to 110 if the bears engulf the market. Resistance might be at 115 regions.
Euro/US dollar has been trading on an average of above 1.06 levels before the market closed, last week. This week, we predict range trading from 1.06 to 1.08 regions while prone to recovery phase. Risk control should be controlled at 1.06 in in case of an unexpected decline.
British pound/US dollar saw strength recovering after staying sideways for many weeks. Moving forward, the trend might climb higher while sitting on 1.25 supports. The trend might aim at 1.2950 for recovery if the pound moves into short covering activity.
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]