Fed hints interest rate hike
THE US jobs claims declined to a 43-year low as manufacturing sees an increase. US Fed chairwoman Janet Yellen hinted on a possible schedule for a rate increment. Europe might fall deeper into a crisis as the reform constitution is set to be voted in Italy next month. Britain showed inflationary consumer prices and retail sales data.
US retail sales gained 0.8 per cent in October with core retail sales, excluding transport equipment, rising 0.8 per cent, the highest in the past six months. In another report, industrial production stayed unchanged in October versus minus 0.2 per cent revised in the previous month.
Producer prices also remained but it was below forecast. Core prices, excluding food and energy, fell 0.2 per cent, the first negative data seen in the last three months.
US jobless claims was at 235,000 for the week ended November 12, the lowest in 43 year. Consumer prices grew 0.4 per cent in October while core prices increased to 0.1 per cent. Building permits expanded 1.23 million in October, beating expectations.
US Fed chair Yellen hinted that rate hike could be relatively soon. Before the weekend, the Leading Economic Index (LEI) rose 0.1 per cent in October, slower than 0.2 per cent increase in September.
China’s industrial production rose 6.1 per cent in October on an annualised rate, matching forecast.
China announced the commencement of Shenzhen-Hong Kong Market Connect on November 21 which might attract global liquidity into the afore- mentioned equity markets.
Japan’s third quarter (3Q) GDP growth beats expectation by gaining 0.5 per cent compared with the revised 0.2 per cent growth recorded in 2Q. Japan’s Prime Minister Abe Shinzo is expected to meet US President-elect Donald Trump later this week to discuss matters concerning the possible dissolution of the Trans-Pacific Pact agreement signed under current US President Barrack Obama’s administration.
German preliminary GDP for 3Q grew 0.2 per cent, the lowest recorded this year, after the 0.4 per cent expansion seen in 2Q. In a separate report, German ZEW sentiment that measures institutional investors rose to 13.8 from 6.2 in October, the best recorded in the last five months.
On Friday, Italian banking stocks came under renewed pressure from growing jitters before the December 4 referendum on a constitutional reform which could unseat Prime Minister Matteo Renzi.
UK consumer prices gained 0.9 per cent in October from a year ago. Producer prices input on a monthly basis unexpectedly rose 4.6 per cent after it grew 0.1 per cent in September.
UK claimant count increased 9,800, higher than the revised 5,600 reported in September. Average earnings on a quarterly basis ended September grew 2.3 per cent in, matching expectation. Retail sales grew 1.9 per cent in October, the best recorded in the last nine months. Technical forecast US dollar/ Japanese yen rose more than 300 pips last week. The market might head to above 111 in the coming week before liquidation for profits occurs. Technically, we target 108.50 in case of a correction. An increase from there could mean 111.80 as the next target.
Euro/US dollar was down for past 10 market days without any correction seen. This week, we expect the support would emerge at 1.05 areas and reversal could head up to 1.075 levels in case of short-covering. Market has sunken into weak sentiment due to the rising dollar.
British pound/US dollar has shown bearish a pattern on Friday. This week, the trend might fall further if the prices could not escalate above 1.24 resistances. Technically, we predict the bear would move down inside the range of 1.21 to 1.24 regions. The market attention might switch from the euro to the pound for new selling 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.