UK’s economy remains firm despite Brexit
Fundamental outlook UK’s economy remained healthy despite the start of the Brexit policy. US weekly claims for jobless benefits were consistent but monthly payroll expanded at a slower pace. China’s manufacturing sector stayed robust.
The US Conference Board of consumer confidence rose to 122.9 in August, which was better than expectations. Prelim GDP for 2Q rose three per cent, better than the 2.6 per cent recorded in the previous quarter.
US weekly claims remained at 236,000 in the week ended August 26. Personal spending grew 0.3 per cent, the highest three months. Pending homes sales slid 0.8 per cent, falling short of a positive forecast.
US non-farm payroll was below expectations in August at 156,000 after a revised 189,000 recorded in July. Unemployment rate stayed consistent at 4.4 per cent.
The Institute of Supply Management’s manufacturing index strengthened to 58.8 in August compared with 56.3 recorded in the previous month.
China’s manufacturing index stayed resilient in August at 51.7 while services index was at 53.4. China’s Caixin manufacturing index stayed strong at 51.6 in September.
Japan’s household spending unexpectedly contracted 0.2 per cent in July against a positive forecast. Unemployment rate steadied at 2.8 per cent. Retail sales grew 1.9 per cent in July on a yearly comparison, the highest recorded in five months. The eurozone’s consumer prices in August rose 1.5 per cent on a yearly basis, supported by strong demand while core consumer prices advanced 1.3 per cent compared with a year ago.
UK net lending to individual grews 4.8 billion pound in July compared with a revised 5.5 billion pound recorded in June. Mortgage approvals rose 69,000 in July, the best recorded in six months. Markit reported that the UK’s manufacturing index rose 56.9 in August after the July was revised to 55.3. Technical forecast US dollar/Japanese yen traded in short-covering last week after it bounced off the 108.40 bottom. This week, the trend should continue to trade firmer with support rising at 109.50 level. Topside target is at 111.20, in case of bullish factors. However, this could be resisted at EMA200 line on the day-chart.
Euro/ US dollar traded in sideways trend last week after it topped off a 1.2070 high. The market strengthened due to the weakening dollar.
This week, we forecast the trend will consolidate from 1.1750 to 1.2000 range. However, beware of breaking through this resistance as it might lead to the trend climbing higher to 1.225 area.
British pound/US dollar traded in a small range before the weekend, in mixed sentiments.
This week, we reckoned the market behavior would continue while moving from the 1.285 to 1.305 range. Market traders are staying alert on the pound movement as the Brexit effects have not affected the market trend yet.
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 27 years of global trading experiences. You may reach him at dar@ pwforex.com.