Fundamental outlook

THE British government faces an uphill battle negotiating the Brexit deal. US retail prices grew faster while President Donald Trump aims to suppress inflation by keeping oil prices low. The eurozone’s trade surplus growth slowed down while economic growth in Germany stagnated.

US consumer prices rose 0.3 per cent while core prices grew 0.2 per cent, both matched forecast. Retail prices rose 0.8 per cent in October, while core prices excluding transport equipment grew 0.7 per cent. Both data were above forecast and signalling an inflation.

Saudi Arabia is cutting oil shipments to US with the intention to squeeze stockpile shortage, and in return, driving up demand prices. This action might rile President Trump who wants to contain inflation prices for Americans.

China’s industrial production including utilities and mines grew 5.9 per cent in October on a yearly basis. Fixed asset investment rose 5.7 per cent in October on a year-to-date basis.

Japan prelim GDP slid 0.3 per cent in 3Q after the previous revised 0.7 per cent gains. Revised industrial production slid 0.4 per cent in September on a monthly comparison.

German ZEW sentiment index fell 24.1 in November, continuing its sluggish growth for 8 months in the negative zone. Prelim GDP declined 0.2 per cent in 3Q after 0.5 per cent gains in the previous quarter.

Among the 19 nations, trade surplus in the eurozone expanded 13.4 billion euros in September, lower than 16.8 billion euros recorded in the previous month. Consumer prices on a yearly basis rose 2.2 per cent in October, matching forecast.

UK’s average earnings on quarterly basis ended September rose three per cent, three-year record. Unemployment rate rose 4.1 per cent, the highest in four months.

Consumer prices rose 2.4 per cent in October from a year ago. Producer prices on a monthly basis, expanded 0.8 per cent in October, beating forecast.

British retail sale declined 0.5 per cent in October after the previous month’s revised 0.4 per cent decline. UK’s parliament is going through a tough time negotiating the Brexit deal with the European Commission. The divorce bill of 39 billion pounds has to be settled before March 2019 for the separation while trade deals need to be revised before the end of 2020.

Technical forecast

US dollar/Japanese yen fell before the weekend as the yen advanced. This week, we reckoned the trend will test 112 bottoms before moving into a whipsaw pattern. Topside resistance will emerge at 113.50 region while overall movement is still contained in a tight range.

Euro/US dollar bounced off the 1.1220 bottom last week. Technically, we forecast the range is prone to swing sideways with resistance emerging at 1.147. Sideways movements will be the likely pattern as the dollar might weaken slightly in the coming week.

British pound/US dollar plummeted last week as traders lost confidence in the Brexit negotiation. Technically, the market is very resilient at the 1.30 benchmark should there be any recovery. This week, we expect whipsaw pattern from 1.27 to 1.30 but falling beneath the aforementioned range will signal new bear forces in the market.

Dar Wong is a professional in the finance industry based in Singapore with 29 years of global trading experiences. The expression is solely his own. You may reach him at [email protected]