President Trump visits China, seals multiple deals
Fundamental outlook US President Donald Trump led an entourage to China for a state visit and signed multiple deals. China’s inflation saw an increase in growth. Saudi Arabia is undergoing an anti-corruption cleansing and has seized huge assets.
US Fed chair Janet Yellen will be replaced next February by Jerome Powell who was handpicked by President Trump. Currently, market economists are reviewing the Republican tax cut plan and say it could increase US$1.7 trillion in budget deficits over 10 years. Meanwhile, the House is looking for ways to neutralise the tax cut before the announcement of its implementation this month.
US jobless claims rose 239,000 for the week ended October 4, the highest in four weeks. President Trump visited China with 30 CEOs from American companies and has signed 37 deals, amounting to more than USD250 billion.
China’s trade balance rose 254 billion yuan in October, an estimated US$38.2 billion, higher than the previous month. Consumer prices grew 1.9 per cent in October from a year ago, the highest in nine months. Likewise, producer prices that measure manufacturers’ cost rose 6.9 per cent on an annual basis, the highest since April.
Saudi Arabia is undergoing an anti-corruption cleansing exercise. Crown Prince Mohammad Bin Salman has put 11 princes, officials and ministers under house arrest to be investigated. Sources reveal that an estimated US$800 billion of assets have been frozen.
UK manufacturing production expanded 0.7 per cent in September, the best in nine months. Trade deficits narrowed to 11.3 billion pound in September, the best recorded in seven months. Technical forecast US dollar/Japanese yen traded slightly in a correction small range. This week, the trend could stay strong if it could stand above 113. The range is expect to move from 113 to 114.50 region but abandon bullish view if the range goes under the 113 support.
Euro/US dollar traded in sideways last week amid uncertain trends. This week, we reckoned the trend will be resisted at 1.17 to 1.1750 region in case of an initial pull up. The prices are likely to fall after mid-week to 1.1450 bottoms. However, risk control is advised if it pierces above the 1.1750 resistance.
British pound/US dollar was uncertain as the pound is still influenced by the Brexit procedures that have yet to be ascertained. This week, we foresee the range will be supported at 1.3030 region while small recovery might be possible at the 1.33 target.
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 28 years of global trading experiences. You may reach him at dar@pwforex.com.