US payroll falls short of expectations
Fundamental outlook US personal income saw an increase but both manufacturing and services fell while non-farm payrolls’ 164,000 missed expectations. Trade talks between US and China yielded no clear results on bilateral trade ties. UK’s manufacturing slowed down as consumer borrowings declined.
US personal income rose 0.4 per cent in March, the highest in four months. Weekly claims for jobless benefits for the week ended April 28 was at 211,000, maintaining a record low and missing expectations.
US ISM manufacturing index fell to 57.3 in April, the lowest recorded since August last year. Services index from the same institution expanded at 56.8, the lowest in four months, and after gaining 58.8 in March.
US non-farm payroll added 164,000 jobs in April, higher than March but missed the forecast of 190,000 cases. Average hourly earnings grew 0.1 per cent, fallling short of expectations.
China’s manufacturing index rose to 51.4 in April while services index grew at 51.8, both above the 50 benchmark. Caixin services index rose 52.9 in April.
Trade talks were held between US and China during a two-day summit in Beijing on Friday with Treasury Secretary Mnuchin and Vice Premier Liu He as representatives of both countries. US has asked China to reduce trade its surplus by US$200 billion before 2020.
The eurozone consumer prices rose 1.2 per cent in April on a yearly basis, below the revised 1.3 per cent gains recorded in March. Excluding food and energies, core prices shrank at 0.7 per cent from a year ago after it rose one per cent in March.
Markit reported that UK manufacturing index grew at 53.9 in April, a decline from the previous month’s 54.9, and it was also the lowest recorded since November 2016. Net lending to consumers in March was at 4.2 billion pounds, the lowest since June 2016. This could indicate a possible slowdown in consumers’ spendings. Technical forecast US dollar/Japanese yen moved beyond 110 briefly last week and fell again. From a technical point of view, the trend is expected to encounter strong selling at 109.50 and it could be prone to trade sideways. This week, we forecast the range will be contained from 108 to 109.50.
Euro/US dollar hovered at 1.1950 after falling for more than two weeks. The trend might begin to bounce into recovery soon as the prices are supported at the EMA200 line. This week, we reckoned the range will be supported at 1.1920 and prone to recover to 1.2130, resulting about 200 pips range.
British pound/US dollar has been on a decline for three weeks and it has encountered the EMA200 support at 1.36. This week, we predict the range will trade between 1.35 to 1.37 amid mixed activity. The dollar is acting strong and will out lead the pound for the time being for a quick recovery.
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.