BoE retains interest rate policy
Fundamental outlook US retail sales declined which triggered partial fear of a rate hike in the coming week. Japan’s growth remained sluggish as policymakers refrained from introducing more stimulus. The Bank of England (BoE) retained its interest rate policy.
US retail sales slumped to a five-month low, clocking in a 0.3 per cent decline while core retail sales, excluding automobiles, contracted 0.1 per cent in August, better than the revised 0.4 per cent decline recorded in the previous month. Producer prices remained flat compared with a 0.4 per cent slide in July.
In another report, US weekly jobless claims for the week ended September 10, saw little change at 260,000.
In a separate report, consumer prices rose 0.2 per cent in August, on a monthly basis, compared to flat data recorded in July. Core prices, excluding food and energy, rose 0.3 per cent, the best recorded in months.
China showed steady output in its industrial production as August data rose 6.3 per cent, on a yearly basis, compared with six per cent gains reported in the previous month. The Chinese market had a short week as the nation celebrated the mid-autumn festival.
Japan’s producer prices were sluggish, contracting 3.6 per cent in August compared with a year ago. Core machinery orders, excluding shipping and utilities, rose 4.9 per cent in July on a monthly basis, down from 8.3 per cent gains recorded in the previous month.
German ZEW Economic sentiment on institutional investors rose slightly to 0.5 in September. In another report, final consumer prices, on a monthly basis, in August remained the same. The eurozone industrial production declined 1.1 per cent in July, compared with a revised 0.8 per cent gains reported last month.
UK consumer prices gained 0.6 per cent in August, on a yearly basis. In another report, producer prices input, based on purchase cost of producers, gained 0.2 per cent compared with 3.1 per cent gains in July, indicating a slowdown in manufacturing. Former UK Prime Minister David Cameron has officially announced his resignation as a member of parliament.
UK’s average employee earnings ending July rose 2.3 per cent on a quarterly basis, lower than 2.5 per cent gains reported previously. In another report, clamant count gained 2,400 in August after declining 3.6 per cent in July.
BoE kept the interest rates unchanged at 0.25 per cent. All nine officials voted for no rate hike. The asset purchase programme remained at 435 billion pounds on a monthly basis. Technical forecast US dollar/Japanese yen hovered sideways last week at around 102 regions. This week, we reckoned the trend would trade lower and potentially trade lower to 99.50 areas. Resistance should remain at 103 as strong selling pressure continues.
Euro/US dollar dipped on Friday, closing at 1.1157 levels. This week, we forecast the trend would be supported at 1.11 areas but some selling pressure might emerge earlier during the week. Resistance could potentially remain strong at 1.125 until more fundamental news are announced by the European Central Bank.
British pound/US dollar slipped unexpectedly to below 1.3 on Friday. This week, we expect the trend to be supported at 1.285 levels while trading sideways, below 1.325 resistances. Trade cautiously with risk control as the pattern might see a lot of buying interest.
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 27 years of trading experience in global Derivatives & FX markets. He can be reached at dar@pwforex.com.