Dow Jones Market Falls to 16-Week Low
- 29 October 2018
Fundamental Outlook The U.S. GDP grows in Q3 season amid stock fall. Policymakers express more rate hike will come despite President Trump contests it. European Central Bank stays unchanged in monetary policy and expects inflation to pick up before year-end. Crude prices decline in flat demand.
The U.S. new home sale expanded at 553,000 in October and lowest since January 2017. Report on GDP rose 3.5 percent in Q3 season on annualized rate and better than forecast.
The U.S. orders for durable goods rose 0.8 percent in October and against negative forecast. Another report on core durable goods, excluding transport equipment, expanded 0.1 percent and missed forecast.
Weekly jobless claims at 215,000 for the week ended 21 October and stayed flat. Dow Jones benchmark dipped to 16-week low record and traded lower on weekly closing while settled at 24,685 on last Friday.
American President Trump chides FED chair Powell for rate hike that has damaged economic recovery. FED officials comment that credit tightening is appropriate and more hike will follow through for soft landing.
Markit reports Eurozone manufacturing index in October rises to 52.1, at slowest pace since September 2016. Germany manufacturing index also grew at 52.3 and lowest for past 1-1/2 year.
European Central Bank remains unchanged in monetary policy and President Draghi expects inflation to pick up by year-end. He also comments the difference between Rome and European Commission will resolve soon.
WTI Crude prices started in October by reaching to 4-year high but falls to 3-month low as of last week, due to sell0off in stock market and slower growth in global demand.
Technical Forecast USD/JPY traded slightly lower last week and closed at 111.80 region on Friday. In overall, the market stays in the range from 111.50 – 113.50 as we expected and will remain unchanged this week. We shall observe the trend to break beyond this range before we could forecast a new direction.
EUR/USD traded lower as Dollar advanced higher last week. The trend is supported at 1.1330 level currently and tend to recover in coming week. We forecast the range will move from 1.1330 – 1.1530 region in technical recovery as traders might close some profits in this week.
GBP/USD is facing bear forces rising from BREXIT pressure and stronger Dollar. This week, we reckon the trend will be resisted at 1.2930 – 1.2950 region in case of recovery. Downside support at 1.2750 level is viewed as temporary to hold the trend but piercing beneath here will lead more selling potential to test 1.2600 area.
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DAR Wong is a professional in financial industry based in Singapore with 29 years of global trading experiences. The expression is solely at his own. You may reach him at email@example.com