US GDP grows fastest in three years
Fundamental outlook THE US GDP grew at its fastest pace in three years, stoking expectations of a rate hike this month. China’s manufacturing expanded at its slowest pace in over five months. North Korea fired yet another missile which raised alarms among countries in the region.
US new home sales was at 685,000 in October, the highest in 10 years. Pending home sales rose 3.5 per cent in October, the highest in eight months.
US prelim GDP grew 3.3 per cent in the third quarter (3Q) seasons, the fastest pace in three years. Conference Board of consumer confidence rose to 129.5 in November, better than the revised 126.2 in October.
US weekly claims for jobless benefits remained almost unchanged at 238,000 in the week ended November 25. Consumer spending rose 0.3 per cent in October, the highest recorded in three months. The ISM manufacturing index rose to 58.2, the highest in four months.
Federal Reserve chair Janet Yellen has expressed concerns over the national debt at US$20 trillion which is also still growing.
She pointed out that policymakers should continue to raise interest rate slowly until it is raised to a neutral level. Traders expect a rate hike this month.
China’s manufacturing index rose to 51.8 while services index expanded to 54.8 in October. Both data matched forecast and have moved in steady growth pace. Caixin manufacturing index rose to 50.8 but it was the lowest in five months, and below the previous month’s reading.
Japan’s housing spending stayed flat in October on a yearly basis but improved from the negative reading in September. Unemployment steadied at 2.8 per cent. Core consumer prices in Tokyo also stayed unchanged at 0.6 per cent in October on a yearly basis.
North Korea fired a missile test on Tuesday morning that travelled 1,000 kilometers and landed in the Sea of Japan.
Experts reckoned the ballistic missile could reach to half of the US continent. United Nation Security Council has condemned the random act while Russia blames US President Donald Trump for provoking the North Korea regime.
In the eurozone, consumer prices rose 1.5 per cent in November while core prices, excluding food and energy, grew 0.9 per cent. Both exceeded forecast and showed steady recovery in inflation.
On the other hand, German prelim consumer prices rose 0.3 per cent in November compared to a flat growth in October. Technical forecast US dollar/Japanese yen has been moving in our expected range, as predicted last week. The market closed at 112.10 on Friday, strongly resisted at the 113 area.
This week, we reckoned the trend would be resilient at the aforementioned top level and prone to correction. The range is still expected to swing from 111 to 113 region for the time being.
Euro/US dollar traded in small sideways last week, resisted beneath the 1.1950 level.
This week, we forecast the trend will go lower to test 1.17 support. Overall, range is expected to move in the target of 250 pips region. Risk control is advised if the trend drives below the 1.17 support.
British pound/US dollar climbed slightly last week but it could be reaching the top area. The trend is currently resisted at 1.3550 and prone to fall back to test 1.33 this week.
The dollar may have a small upward reversal over the short-term against European currencies. Short sellers should take control in case the trend pierces above 1.355, unexpectedly.
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.