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America Business Index Slows Down

A guest post written by DAR Wong

Currency Market Observations – 16 February 2015

Fundamental Outlook

The US economy worries global investors as job market highlights looming recovery after the payrolls slowed down in January. Eurozone hopes to buff up after stimulus has been introduced while Greece will reach debt deadline in early March. UK stays flat in manufacturing from recent production data.

The US wholesale inventories was up 0.1 percent in December and lower than 0.8 percent in previous month, indicating better sales volume over year-end seasons. The small business index fell in January 97.9 and lower than forecast, underscoring the looming sentiment from slower consumer spending.

The US retail sales dropped 0.8 percent in January and below forecast. Excluding autos, core retail sales slid 0.9 percent after making a similar 0.9 percent decline in December. Unemployment claims rose in the week ended 7 January to 304,000 from revised 279,000 in previous week, showing a tough journey to recover in job markets.

German trade surplus advanced to EUR21.8 billion in December after rising EUR17.9 billion in prior month. In the 19 nations of Eurozone, focus has returned to the debt crisis as both policymakers and investors are watching the austerity measures in Greece before bailout is discussed for March deadline.

The preliminary Gross Domestic Product (GDP) report in France for the final quarter grew 0.1 percent. German made 0.7 percent advancement in same period of 3-months ended December. After Eurozone has announced the stimulus in January that will last through 18 months, Euro currency slows down in its fall against US Dollar but yet to recover significantly.

UK manufacturing production contracted 0.2 percent and worse than expectation, affected by euro jittery and sovereign debt of small countries. Another report on manufacturing production in January also shrank by growing 0.1 percent compared to 0.8 percent gains in prior month.

Technical Forecast

USD/JPY reached 120.48 highs last week but slid back into 118.60 regions for weekend closing. The market needs to conquer above 120.00 benchmarks again if it aims to go northwards, This week, we target the estimated range will move from 118.00 – 120.00 regions but breaking into either direction beyond the aforementioned extremes will lead into new trend.

EUR/USD has been trading in small range last week while support has emerged at 1.1260 regions. This week, the bulls have to conquer above 1.1460 resistances to extend further on the upside potential. Otherwise, falling below 1.1260 supports is a sign of resumed weakness and might drive new selling forces into market.

GBP/USD surged after middle last week and has revealed bullish strength in market. This week, the market should sit above 1.5300 supports and move higher from weaker Dollar trend. We foresee the target might ascend to 1.5600 levels with good potential profit. Abandon your long-view in case of drawdown beneath 1.5300 levels.

Dar Wong

This post is contributed by OPF Guest Blogger, DAR Wong.

DAR Wong is an approved fund manager in Singapore with 25 years of global trading experiences. You may reach him at dar@pwforex.com

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DISCLAIMER: This post is written for general information only. The author, publisher and/or any third party involved in the distribution of this work assume no legal responsibilities and shall have no liability whatsoever for any direct or consequential losses, costs or expenses arising from the use of the information contained herein.

 






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