Trump succeeds as US’ 45th President
Fundamental outlook US consumer prices matched forecast. Donald Trump was sworn-in as the 45th President of US amid little market volatility. China grew slightly in the fourth quarter (4Q). European Central Bank (ECB) retained its monetary policy. British Prime Minister Theresa May assured that the Brexit would be executed without a hinge.
US consumer prices rose 0.3 per cent in December while core prices, excluding fresh food and energies, gained 0.2 per cent. Both matched forecast. Industrial production, including utilities and mines, rose 0.8 per cent in December, matching forecast.
US building permit matched forecast in December by rising to 1.21 million. Weekly claims for jobless benefits slid to 234,000 in the week ended January 14. Philadelphia’s manufacturing index rose to 23.6 in January, the best recorded in more than two years.
Trump has been successfully sworn in as the 45th President of US on Friday. He emphasized on the re-distribution of wealth to middle class income and promised to prioritise US and its people.
China’s GDP growth for 4Q grew 6.8 per cent on a yearly basis. Industrial production, including utilities and mines, rose six per cent in December from a year ago.
Japan’s machinery orders contracted 5.1 per cent in November, worse than forecast and also worst in seven months. Producer prices fell 1.2 per cent in December from a year ago, an improvement from minus 2.2 per cent reported in November.
The eurozone trade surplus expanded 22.7 billion euros in November after the previous month’s revised 19.9 billion euros growth. The monthly consumer prices in December rose 1.1 per cent while core prices gained 0.9 per cent. Both matched forecast.
ECB retained its monitory policy. German advocators expected rate tightening since annual inflation rates has grown from 0.6 per cent to 1.1 per cent. ECB president Mario Draghi argued that the trend was not convincing enough to make such hasty action.
UK consumer prices rose 1.6 per cent in December from a year ago, the best recorded in more than two years. Producer prices, on a monthly basis expanded, 1.8 per cent compared to minus 0.6 per cent in November. Prime Minister May said the British government would make the best deal by executing article 50 before the end of March.
In UK, monthly claimant count dropped last month by 10,100, beating expectations. Average earnings over three months ended November rose 2.8 per cent, higher than consensus’ expectations. Unemployment rate stayed consistent at 4.8 per cent. Technical forecast
US dollar/Japanese yen entered a neutral zone at 114.50. The trend would be dependent on the dollar’s direction in the coming weeks under Trump’s policy. This week, we reckoned the range would move from 113 to 116. Practice risk control if the trend breaks beyond this range.
Euro/US dollar approached 1.07 area. We foresee the trend might correct lower at 1.05 region this week as profit-taking occurs. Abandon your short-view in case the trend pierces above 1.07. The euro currency will be subjected to the dollar’s direction until the end of the month.
British pound/US dollar dipped beneath 1.20 early last week, followed by a rebound. This week, uncertainty could continue to overshadow the market. Technically, we expect sideways trend from 1.22 to 1.24 range amid cautious trading. Short-term trading is preferred to limit your risk.
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 28 years of trading experience in global Derivatives & FX markets. He can be reached at dar@pwforex.com