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Dollar Falls while Euro Surges on Expected Inflation

  • DAR Wong
  • 11 September 2017

Fundamental Outlook   The Dollar falls amid resignation of Vice Chairman of Federal Reserve. Jobless claims increase to 2-1/2 high signaling slow recovery in job market. European Central Bank holds policy unchanged while President Draghi emphasizes on inflation growth. U.K. faces slowdown in housing output.

The U.S. factory orders fell 3.3 percent in July and worst since December 2014. Trade deficits narrowed to USD43.7 billion in July and better than consensus.  

The U.S. Institute of Supply Management says the services index expanded to 55.3 in August against 53.9 in July. Another report on weekly claims for jobless benefits rose to 298,000 for the week ended 2 September.

The U.S. Congress has passed a bill to provide USD8 billion aid to relief Hurricane Harvey and extend debt limit till 15 December. The deal was proposed by Democrats and approved by President Trump despite many objections by GOP senators.  

Vice Chairman of Federal Reserve Stanley Fischer resigns due to personal reasons ahead of his term supposedly to end in June 2018. Dollar fell after the news and spiked Gold prices higher to 1-year high record.

China’s Caixin services index rose to 52.7 in August and maintained good growth in past 3 months. Trade surplus shrank in August at USD42 billion gains and lowest in past 3 months.

Japan’s final GDP rose 0.6 percent in Q2 ended June. Current surplus rose JPY2.03 trillion in July and highest in past 5 months.

German factory orders slid 0.7 percent in July after revised 0.9 percent in June. Industrial production stayed flat in July and below positive expectation. In Eurozone, revised GDP grew 0.6 percent in Q2 ended June.

European Central Bank remains unchanged in monetary policy. ECB President says that necessary stimulus will be added if needed but remains dovish on timeline to initiate tapering. Instead, Draghi focuses his speech on inflation growth that trigger a rise in Euro currency.

U.K. services index reported by Markit stayed strong at 53.2 in August without much change from previous month. Manufacturing production grew 0.5 percent in July and best record in past 7 months. Construction output slid 0.9 percent against minus 0.1 percent in June, indicating waning confidence in housing demand,

 

Technical Forecast   USD/JPY has broken below 108.20 level as Dollar falls. This week, we reckon the trend will continue to fall till 105.20 if it could not recover above 108.50. Market has turned into bearish sentiment as traders seek safe haven in Yen after defiance of North Korea.

EUR/USD climbed last week after Draghi’s speech refrained from stating the details on tapering. This week, market may ascend further as traders take flight out of Dollar into Euro. Support lies at 1.1950 in case of drawdown while bullish trend might reach up to 1.2250 target.

GBP/USD surged last week mainly due to weakening Dollar. Market has climbed above 1.3000 benchmark and heads up to 1.3200 without correction. This week, there could be a resistance emerging at 1.3250 region while support rises at 1.3000 level. Piercing above 1.3250 resistance may drive up to 1.3400 area.

 

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 27 years of global trading experiences. You may reach him at dar@pwforex.com


About the Author
DAR Wong (Singapore)
An international speaker with 27 years of trading experience in the global financial markets, DAR is a Market Master and author of “Living Daylight in Stock Market: Monetizing Your Profits in 8 Days”.

DAR Wong is an active market trader, registered fund manager, educator and author.He began his career in 1989 as an institutional Futures trader with Bank of America. DAR Wong specializes in trading global derivatives and financial markets. He has 26 years of experience accumulated through tenure with Bankers Trust, Barclays Bank, Citigroup (Smith Barney Shearson Inc) and as an independent trader.

DAR is the author of “8 Ways to Invest in China’s Emerging Market” and contributes frequently to regional media, including financial TV/Radio programmes, newspapers and magazines for professional traders and active investors.

He is a popular and sought after international speaker who has presented to financial professionals and investors throughout the region including Singapore, Malaysia, Indonesia, Thailand, Hong Kong, China, Cambodia, Myanmar, Philippines, Sri Lanka, India, South Korea, Laos, Vietnam, United Kingdom and Middle East (UAE).

DAR is registered with NASD (now known as FINRA) series 3 and 5 as approved by National Futures Association (NFA) of USA and holds a current portfolio as Fund Strategist and Advisor with Dektos Investment registered with Monetary Authority of Singapore.

DAR is profiled as “One of the most successful traders – Market Masters” in Brent Penfold’s bestselling book “The Universal Principles of Successful Trading “. In January 2015, DAR was honored with Outstanding Award for International Financial Market Analysis granted by ASEAN Commerce (Thailand).

DAR is the author of "8 Waysto Invest in China's Emerging Market" and contributes frequently to regional media, including financial TV/Radio programmes, newspapers and magazines for professional tradersand active investors.1

He is a popular and sought after international speaker who has presented to financialprofessionals and inverstors throughout the region including Singapore, Malaysia, Indonesia, Thailand, Hong Kong, China,Cambodia, Myanmar, Philippines, Sri Lanka, India, South Korea, Laos, Vietnam, United Kingdom and Middle East(UAE).2


Year
2003 - Set up ASPRI to provide hedging advisory for corporate clients and training for financial professionals
2009 - Released first book “8 Ways to Invest in China’s Emerging Market”
2010 - Profiled as “one of the most successful traders – Market Masters” in Brent Penfold’s bestselling book “The Universal Principles of Successful Trading” along with Larry Williams, Andrea Unger, Michael Cook, and Daryl Guppy etc
2011 - Received “Spirit of Enterprise”awarded by Singapore Management University in Singapore
2012 - Honored with Individual Diamond Career (Thailand) awardedby Royal Privy Council of Kingdom of Thailand
2013 - Appointed Vice Chairman of ASEAN-China Commerce Association and led a delegationtothe annual China-Asean Expo in Guangxi Province, China
2014 - Fund Manager cum Director in Dektos Investment Corporation registered with Monetary Authority of Singapore
2015 - Released new book “Living Daylight in Stock Market - Monetizing Your Profits in 8 Days” in January
2015 - Honored with Outstanding Award in International Financial Market Analysis awarded by ASEAN Commerce (Thailand)
2016 - Honored with Medal of Integrity by Royal Councilin Palace of Palembng, Indonesia

References

1.TV programs on ChannelNewsAsia (Singapore);Radio on 95.8 Capital (Singapore); Newspapers such as The Borneo Post (Malaysia), 资汇报 (Malaysia); Regional financial magazines such as The Analyst (India), 东盟商界(ASEAN, China), 资本杂志 (Malaysia).

2.Spoke at events for CME Group, Euronext LIFFE, Tokyo Commodity Exchange, Singapore Exchange, Korea Exchange, Bursa Malaysia, Thailand Futures Exchange, Jakarta Futures Exchange, Indonesia Commodity and Derivatives Exchange, Tokyo Commodity Exchange, Interactive Brokers, Xinhu Futures, Hangzhou Money Fair, China (Shenzhen) International Finance Expo, China (Guangzhou) International Finance Expo, Euromoney, CIMB, Maybank, RHB, UOB Bank, Asia Trader & Investor Convention, Global Rubber Conference, International Rubber Conference, Malaysia Rubber Board, International Rubber Research and Development Board,Malaysia Ministry of Agriculture, Rubber Industry Smallholders Development Authority, Vietnam Rubber Association, Cambodian Rubber Association, Bureau of Agriculture Research Philippines, Myanmar Rubber Planters & Producers Association etc.


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