Stronger American payrolls offset trade worries
Fundamental Outlook THE US manufacturing and services indexes improved in both sectors. Payrolls increased and lifted the stock market. China maintained its growth track as reported by Caixin report. UK construction and housing reports fared strong, relieving worries of Brexit threats.
The US ISM manufacturing index rose to 60.2 in June, reaching its highest in the past four months. Another report on the services index from the same institution grew to 59.1 and best record since February. Jobless claims for the week ended June 30, expanding by 231,000 and was the highest in seven weeks.
The US added 213,000 payrolls in Jun, above forecasts. Average hourly earnings grew 0.2 per cent and missed expectation. Unemployment rate climbed back to 4.0 per cent after 3.8 per cent in May. Dow market reacted bullish after the data release as payrolls project growth in job market.
China’s Caixin manufacturing index grew to 51.0 in June matching forecasts. Another report on Caixin services index rose to 53.9 in June and maintained in growing track for four months.
Japan’s quarterly Tankan report on large manufacturer’s index expanded to 21 reading as of end June, below forecast and lower than 24 in previous quarter. Markit reports final manufacturing at 53.0 and matched June’s expectation.
Eurozone producer prices rose 0.8 per cent in May and better than forecast. Another report on retail sales remained flat in similar month.
Markit reports UK manufacturing at 54.4 in June and matched forecast. Another report from the same institution revealed the construction index at 53.1 in June and highest in 7 months.
Halifax housing price index rose 0.3 per cent in June and matched forecast, after the previous month revised 1.7 per cent gains. Pound climbs fairly higher in firm sentiment as outlook for construction and housing are steady. Technical Forecast US dollar/Japan yen has been consolidating last week but fails to close above 111.00 benchmark. This week, we reckon the trend is prone to fall while support might rise at 109.50 region. Range will probably be contained in the aforementioned region and continue to move sideways.
Euro/US dollar has ascended as forecasted last week. The market will sit tight on 1.1650 support while continue to climb higher in coming week. Technically, we shall not be surprised to see the trend reaches up to 1.1850 though the overall range might be small. Risk control is recommended in case the trend reverses beneath 1.1650 level.
Pound/US dollar traded in firm sentiment as we predicted last week. The market stands above 1.3100 support and likely to safeguard this benchmark in near future. This week, we foresee the market is prone to climb higher with target preset at 1.3400 area. Range bound will be contained from 1.3100 to 1.3400 range.
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.