US GDP grows 2.9 per cent for 4Q

Fundamental outlook

US gross domestic product (GDP) grew 2.9 per cent for the fourth quarter of 2017 (4Q17). The market was quiet throughout last week due to the Good Friday holiday. US weekly claims for jobless benefits fell to a four-week low. UK trade deficits narrowed while GDP grew in line with expectations.

The US Conference Board of consumer confidence in March grew 127.2 but was lower than forecast. Consumer confidence also declined from the previous month’s revised 130 reading. Pending home sales rose 3.1 per cent in February, the highest in four months. Final GDP for 4Q grew 2.9 per cent.

US consumer spending grew 0.2 per cent in February, matching forecast. Jobless claims fell to 215,000 in the week ended March 24. It was also the best recorded in four weeks.

Japan’s retail sales grew 1.6 per cent in February on a yearly basis. Core consumer prices in Tokyo rose 0.8 per cent in March. Unemployment rate remained steady at 2.5 per cent in February.

German preliminary consumer prices rose 0.4 per cent in March, missing expectations. Spanish consumer prices rose 1.2 per cent in March from a year ago.

UK trade deficit shrank in 4Q to 18.4 billion pounds compared with minus 19.2 billion pounds recorded in the previous quarter. Final GDP grew 0.4 per cent in 4Q.

Technical forecast

US dollar/Japanese yen pulled up last week to 106.93. We are still carrying a short-view on the market with resistance expected at the 107 area. This week, we forecast the trend will decline to 105 and trade sideways for a while. Risk control needs to be observed at 107.

Euro/ US dollar has been trading sideways from 1.228 to 1.245 last week. Technically, the trend is still making consolidation with no clear direction. This week, we reckoned the trend will be contained from 1.223 to 1.245 until it breaks beyond either direction. Observe the dollar trend and fundamental news in the European region.

British pound/US dollar was prone to bears after mid-last week. Technically, the trend is weak but it might make a small pull-up this week due to short-coverings. We predict the range will be contained from 1.39 to 1.415. Swinging trend is expected for early part of 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 dar@pwforex.com.