Kim and Moon meet in historical moment
Fundamental outlook LEADERS of North and South Korea, Kim Jong-un and Moon Jae-in, attracted global media’s attention when they met face-toface in the South for historic talks on establishing peace between the two Koreas. US home sale continued to grow, signaling a possible inflation among property demand. The European Central Bank (ECB) retained its monetary policy.
US existing home sale rose to 5.6 million, recording a growth for the second consecutive month. New homes sale continued to grow in March at 694,000, the best recorded in four months.
US Conference Board of consumer confidence rose to 128.7 in April, higher than in March. Weekly Crude for the week ended April 21, saw supply rising 2.2 million barrels, marking the possible end of the rise in demand.
US durable goods rose 2.6 per cent in March. Excluding transport equipment, core durable goods stayed flat and below forecast.b US GDP for the first quarter (1Q) grew 2.3 per cent, exceeding forecast, and compared with the previous quarter’s revised 2.9 per cent gains.
On Friday, the leaders of North and South Korea met for the first time in history. Kim is the first North Korean leader to cross into South Korea’s territory since 1953.
German ifo business climate measuring confidence from manufacturers, wholesaler to retailers unexpectedly declined to 102.1 in April, the lowest recorded since December 2012. Markit reported that the eurozone’s manufacturing index rose to 56 in April while services index grew 55, both in-line with forecast.
ECB retained its monetary policy but President Mario Draghi has reassured an ultraeasy monetary policy. Analysts are more concerned about the tapering schedule of the stimulus as this could be the beginning of an interest hike.
UK public sector net borrowing dropped 300 million pounds in March, better than forecast. British GDP rose 0.1 per cent in 1Q, falling short of expectation. Technical forecast US dollar/Japanese yen fizzled out at 109.50 last week and closed lower at 109 level. This week, the market might reverse for a correction and head down to 108. A sideways trend is expected due to the mixed sentiments seen in the market while the dollar is slightly firm but not robust.
Euro/US dollar been supported at 1.2050 region as the dollar rose. This week, we foresee the support will be firm at 1.20 in confluence with the EMA200 line. The market is likely to bounce into a correction while being contained in the 1.20 to 1.2250 region.
British pound/US dollar traded lower last week at 1.3750 level. This week, we forecast the trend might follow the euro into a sideways correction with demand rising from 1.37. Topside resistance will emerge at 1.40 in case of a recovery and the overall trend might be trapped in a mixed sentiment.
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 29 years of global trading experiences. You may reach him at dar@pwforex.com.