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America Improves in Job Creations

A guest post written by DAR Wong

Currency Market Observations – 09 March 2015

Fundamental Outlook

The US payroll adds 295,000 jobs with lowering unemployment rate. Manufacturing and consumer spending stagnate in America while jobless claims rise. European Central Bank has confirms the kick-off of new stimulus on this week to support covered bond purchase. UK economy shows steady recovery in housing demand with rising new mortgage loans.

The US Institute of Supply Management reports the manufacturing index slid to 52.9 in February and below expectation. Construction spending contracted 1.1 percent in January against prior month at positive 0.8 percent. Another report on personal income stagnated at 0.3 percent while the spending fell 0.2 percent from December.

The US Institute of Supply Management releases service index with growth at 56.9 in February after it rose to 56.7 previously. The weekly claims for jobless benefits rose to 320,000 in the week ended 28 February, rising to highest level in past 9 months.

American economy added 295,000 jobs in February while unemployment rate dropped to 5.5 percent, putting fear on imminent rate hike in coming mid-year. January trade deficit fell 8.3 percent to USD41.8 billion as both exports and imports dropped.

The Eurostat shows a surprised jump in retail sales among 19 nations in January at 1.1 percent versus 0.4 percent revised gains in prior month. Another separate report on consumer prices in February stay at minus 0.3 percent from a year ago after it contracted at 0.6 percent in previous month. Unemployment rate in the 19 nations remains at 11.2 percent without much change from December.

European Central Bank (ECB) will initiate EUR60 billion (USD66.3 billion) monthly stimuli in bond purchases from this Monday 9 March. Policymakers have also revised the inflation forecast for this year to 0 percent, down from its previous 2015 inflation forecast of 0.7 percent, but raised the 2016 forecast to 1.5 percent from 1.3 percent.

The Markit reports UK manufacturing index advanced to 54.1 in February and better than forecast. Mortgage approvals for housing loans was at 61,000 in January and maintained momentum in demand. Another report in construction index rose to 60.1 in February against previous month 59.1, underscoring a rising demand in housing demand.

The Markit releases UK service index for February stagnated at 56.7 and in-line with forecast. The national poll in UK will come on 7 May while investors are watching the outcome of vote to decide on economic recovery. However, analysts are debating on the worries of exit from European Union if the ruling party wins.

Technical Forecast

USD/JPY pierced above 121.00 after US job data and settled lower at 120.84 on Friday. The market has been surging gradually as we expected. This week, we reckon the trend will sit tight on 120.00 supports and rise to 121.80 tops as Dollar strengthens. Abandon your long-view in case the trend reverses beneath 120.00 supports.

EUR/USD broke below 1.1100 levels as we forecast last week while making this same level becoming a strong resistance now. Technically, the bears may drive lower this week at 1.0750 before bargain-hunting comes into market. Market sentiment will still be prone to weakness as Dollar continues to surge in US economic data recovery.

GBP/USD slid on Friday and settled at 1.5019 levels. This week, we reckon some technical recovery may follow as UK economy has shown steadfast recovery for past weeks. Resistance is expected to emerge at 1.5150 – 1.5200 regions in case of profit-taking from short traders. However, the continual weakness in market trend may also lead the prices down to 1.4950 targets first if Dollar strengthens across European currencies in early part of this week.

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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