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American GDP Revises Down to 2.2 Percent

A guest post written by DAR Wong

Currency Market Observations – 02 March 2015

Fundamental Outlook

The US inflation slides amid lower Crude prices and home recovery threads in fatigue. Growth has been revised down while Federal Reserve policymaker promises to give enough time for reaction to rate hike. Japan slows down in recovery with contracting inflation in-lieu of high expectation in market to see another new stimulus. European region stagnates.

The US existing home sales grew 4.82 million annualized rates in January after revised annualized rate hit 5.07 million in previous month. Another report by Conference Board of Consumer Confidence retreated to 96.4 in February from prior revised 103.8 reading.

Last week, Federal Reserve Yellen mentioned timetable for interest rates is flexible while employment data is not growing enough to hike rates. She promised plenty of time will be given to notify markets while no immediate need of rate tightening now.

American weekly applications for jobless claims rose 31,000 to a seasonally adjusted 313,000, in the week ended 21 February and also at highest record in past 6 weeks. Consumer Prices fell 0.7 percent in January, the largest decline since December 2008, after slipping 0.3 percent in December and making the third straight month of decline.

Another report on US durable goods orders jumped 2.8 percent, above expectations for 1.7 percent, reversing a sharp drop of 3.4 percent in the December. New homes sales in America grew 481,000 in January after advanced 482,000 revised data in prior month. Pending home sales rose 1.7 percent in January after contracted 1.5 percent in prior month.

The US Gross Domestic Product expanded at a 2.2 percent annual pace in final quarter, revised down from the 2.6 percent pace estimated last month.

Japan’s consumer inflation eased for a sixth straight month in January. Report shows growth at 2.2 percent from the year-ago period, after rising 2.5 percent in December. Unemployment rate surged to 3.6 percent in January while household spending contracted 5.1 percent from a year ago, versus minus 3.4 percent annualized rate in December.

German Ifo business climate for February stays at 106.8 and not much change from 106.7 in January. Business confidence remains gloomy in lieu of debt resurgence in Euro nations. Gross Domestic Product grew 0.7 percent in final quarter of last year while matching the forecast.

German prelim consumer inflation grew 0.9 percent in February and above forecast, while import prices slid 0.8 percent in last month. Euro currency fell to below 1.1200 on weekend on weaker outlook in economic recovery.

UK second estimate for GDP in final quarter grew 0.5 percent and unchanged from previous quarter ended September. Another report on prelim business investment fell 1.4 percent in final quarter and worst than forecast.

Technical Forecast

USD/JPY closed at 119.57 in firm sentiment for weekend. The market has been sitting well on 118.50 supports and looks set to challenge 120.00 benchmarks this week. Technically, we reckon the range might surge to 121.00 targets as European currencies prone to weaken further. Abandon your long-view if the trend falls below 118.50 levels.

EUR/USD dipped down to close at 1.1191 on Friday. This week, we forecast the trend may deepen its fall while strong selling pressure will emerge at 1.1300 regions in case of reversal. Technically, the bears might drawdown below 1.1100 and reach 1.1000 grounds as new year-low.

GBP/USD reached 1.5552 highs last week and probably has completed the bullish correction. This week, market may turn down with strong resistance emerging at 1.5550 – 1.5600 regions. Technically, we expect the trend to move sideways from 1.5320 – 1.5550 ranges before going for another extension in near future. Risk control is advised before the trend moves beyond the aforementioned range.

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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