Fundamental outlook
TURKEY’S lira took a plunge after US President Donald Trump doubled tariffs on Turkey. US retained its inflation growth while producer prices and consumer prices matched forecast. China’s inflation growth rose while trade surplus declined. British housing prices continued to register gains.
US producer prices stayed flat in July, down from 0.3 per cent recorded in the previous month. Excluding food and energy, core prices grew 0.1 per cent, below forecast.
US consumer prices rose 0.2 per cent in July. Excluding food and energy, core prices grew 0.2 per cent, matching forecast. Weekly claims were at 213,000 for the week ended August 4, lower than the previous week.
President Trump announced plans to hike tariffs on Turkey’s metals by 20 per cent for steels and 50 per cent for aluminum. Turkish lira tumbled to a new record low by more than 40 per cent this year. The act by US’ Government is a warning to NATO allies for disagreeing to the defence policy and the detention of American pastor Andrew Brunson.
China’s consumer prices climbed 2.1 per cent in July from a year ago, the highest in four months. Producer prices rose 4.6 per cent on a yearly basis. Trade surplus declined to US$28.1 billion in July, lower than the previous month’s US$41.6 billion.
Japan’s GDP grew 05 per cent in 2Q. Producer prices advanced 0.7 per cent in July from a year ago, the best recorded in seven months.
Japan’s household spending slid 1.2 per cent in May from a year ago. Leading indicators from 11 economic data, increased 105.2 per cent, matching forecast.
British Halifax housing price rose 1.4 per cent in June, beating forecast. Britain released a new monthly GDP report ended June which saw an increase of 0.1 per cent.
The 2Q quarterly GDP grew 0.4 per cent, matching forecast. Manufacturing production in June gained 0.4 per cent after revised data rose 0.6 per cent in May.
Technical forecast
US dollar/Japanese yen traded in a slightly weak trend last week. This week, we reckoned the trend would continue to sink while being supported at 109.50. Resistance could emerge at 111.50 in case of a recovery. Risk control is reminded for selling from topside entry.
Euro/US dollar dipped on Friday after the dollar advanced on imposing tariffs on Turkey’s export. This week, we foresee the trend could be bearish while driving lower to test the 1.13 level. Stop orders may be triggered if the sentiment remains southward. Resistance will stay resilient at 1.1550 in case of a recovery.
British pound/US dollar remained bearish with the euro;s trend. Technically, the trend is supported at 1.2750 with another secondary support lying at 1.26 in case of a further decline. We have identified the resistance at 1.2950 level in case of a recovery this week.
Disclaimer: This article is written for general information only. No liability by the writer, publisher or any third party involved in the distribution of this work. Dar Wong is a registered fund manager in Singapore with 29 years of global trading experiences. You may reach him at [email protected].