American Payroll Climbs Higher than Forecast
- 7 August 2017
Fundamental Outlook The U.S. economy reveals slight inflation on growth after home sales risen and firm payroll are consolidating. China maintains in good growing pace. Bank of England remains policy unchanged but expect 2 rate hikes in the coming 3 years.
The U.S. pending home sales rose 1.5 percent in June and jumped from minus 0.7 percent revised in May. Institute of Supply Management reports the manufacturing index for July grew to 56.3 and maintained in growth pace. Another separate report from the same source on services index grew to 54.7 in good rhythm.
American personal spending rose 0.1 percent in June and matched forecast, after May was revised at 0.2 percent growth. Jobless claims dropped slightly to 240,000 in the week ended 29 July from previous week 245,000.
Factory orders rose 3.0 percent in June and held best record in past 3 years. The U.S. payrolls grew 209,000 above forecast in July while unemployment dipped 4.3 percent.
China Government reports the manufacturing index at 51.4 in July and matched forecast. Another report on services index also stays in pace at 54.5.
On external side, the independent body on Caixin report says China’s manufacturing index rose to 51.1 in July and above forecast while Caixin services index grew 51.5 in July.
German retail sales rose 1.1 percent in July and climbed for 2 consecutive months. In Eurozone, consumer prices rose 1.3 percent while core prices up 1.2 percent on year basis, both moving in growing pace.
Among the 19 nations, Spanish manufacturing grew at 54.0 while German manufacturing rose to 58.1 in July, both in good growth. On overall in Eurozone, prelim GDP ended in Q2 grew 0.6 percent and in line with forecast.
Markit in UK reports the manufacturing index grew to 55.1 in July and better than revised 54.2 in previous month. Construction index dropped to 51.9 in July from 54.8 in June, showing sign of slowdown in housing demand. Services index rose 53.8 in July and matched forecast.
Bank of England holds interest rate unchanged at 0.25 percent. Policymakers forecast possibly 2 impending rate hikes in the coming 3 years. Asset purchase program maintains at GBP435 billion for government bonds and GBP10 billion in corporate bonds.
Technical Forecast USD/JPY recovered on Friday upon closing for profit. Market holds well at 109.50 – 109.80 region as firm support while aiming to consolidate this week. We forecast the trend will trade higher to 112.50 as recovery in mixed sentiment. Risk control should be managed in case of extension beneath 109.50 level.
EUR/USD was countered by selling forces on Friday as we expected last week. Trend has fizzled from 1.1870 tops and probably will begin profit-taking this week. This week, we reckon the trend will go lower but supported at 1.1550 – 1.1600 area. Sideways will be expected after that in mixed sentiment while waiting for more directional news.
GBP/USD failed to conquer above 1.3250 last week and fell. This week, we predict the trend will re-test 1.2850 bottom in confluence with EMA200 support. Range trading is expected unless the movement reverses and pierces above 1.3250 in case of unforeseen circumstances. Risk management should not be compromised.
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DAR Wong is a registered fund manager in Singapore with 27 years of global trading experiences. You may reach him at firstname.lastname@example.org