Dow Jones reaches 21,000 for the first time
US weekly claims dropped to a 44-year low record. President Donald Trump delivered his first speech to the US Congress, lifting the Dow Jones to a historical high.
Japan inflation prices stayed weak. UK is poised for growth as housing demand and approvals for construction indexes showed signs of improvements.
US orders for durable goods rose significantly in January by 1.8 per cent, while core orders excluding transport equipment shrank 0.2 per cent. Pending home sales dropped unexpectedly by 2.8 per cent in January, the lowest in a year, compared to a revised 0.8 per cent gains in December.
The prelim GDP in US economy gained 1.9 per cent in the final quarter, below forecast. Chicago manufacturing index rose to 57.4 in February, the highest in three months.
The Institute of Supply Management (ISM) reported that the manufacturing index gained to 57.7 in February, the highest in two years.
US consumer spending grew 0.2 per cent in January, lower than forecast. US unemployment claims for the week ended February 25 fell to 223,000, 44year low.
Last week, Trump delivered his first speech to Congress and Dow Jones benchmark breached 21,000 after his speech. Trump assured of efficient tax-reform to be announced by August, stricter immigration rule on a merit-based system, health-care cost cut, an increase in jobs via pulling back manufacturers in the country, and an increase in military to fight against terrorism.
China’s Caixin manufacturing index increased to 51.7 in February and stayed strong in growth above 50 benchmark.
Services index grew 52.6 in the same month, indicating growth above 50 benchmark.
Japan’s prelim industrial production shrank 0.8 per cent in December after it rose 0.7 per cent in the previous month. Retail sales grew one per cent in January from a year ago. Capital spending by big businesses rose 3.8 per cent in the fourth quarter (4Q) from a year ago, the best in the last three quarters.
Japan’s household spending contracted 1.2 per cent in January from a year ago, worse than forecast. Core consumer prices on nationwide rose 0.1 per cent on an annualised rate while core prices in Tokyo shrank 0.3 per cent from a year ago. Unemployment rate in January stayed unchanged at three per cent.
The eurozone consumer prices rose two per cent in February from a year ago, at a five-year high.
Core prices, excluding food and energy, gained 0.9 per cent on an annualised rate. Producer prices climbed 0.7 per cent in January on a monthly basis while unemployment rate stagnated at 9.6 per cent.
Markit revealed that manufacturing index in UK reached 54.6 in February, lower than the previous month’s revised 55.7. Mortgage approvals for home buyers stayed strong at 70,000 in January, matching forecast.
Markit reported that the UK construction index rose to 52.5 in February, maintaining growth. Services index expanded to 53.3, the lowest in five months. Technical forecast US dollar/Japanese yen climbed in recovery as we predicted last week. This week, we foresee the trend would move sideways from 112.50 to 115 region while waiting for the Federal Open Market Committee (FOMC) meeting midMarch. Control your risk in case prices swing out of the expected range.
Euro/US dollar stood well above 1.05 support and moved into an upward correction. This week, the aforementioned support would reinforce the demand and there is a possibility of it rising to 1.07. Tight range is still expected until mid-March. Be aware of a breakout in either direction.
British pound/US dollar edged downwards last week but remained supported at 1.22. This week, we reckoned tight range would trade from 1.22 to 1.25 in mixed sentiment. However, be ready to act on risk control should the trend fall beneath 1.22 level.
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.