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American Home Market Slows in Recovery

A guest post written by DAR Wong

Currency Market Observations – 28 December 2015

Fundamental Outlook

The markets trades in quiet sentiment ahead of long holiday seasons. American homes sales expand in slower rate. Japan slows in consumer spending while unemployment rises. European market stays in low volatility due to Christmas seasons.

The U.S. existing home sales grew 4.76 million in November and slumped from revised 5.32 million in previous month, making worst growth in 9 months record. Final GDP for Q3 expanded 2.0 percent and better than expected.

American new home sales grew 490,000 in November and lagged below 500,000 benchmarks for third month. Core durable goods, excluding transport equipment, slid 0.1 percent after it grew 0.5 percent in October.

On separate report, the U.S. jobless claims for the week ended 19 December was down to 267,000, lowest in 4 weeks. Dow Jones benchmarks traded in short week ahead of holiday seasons and closed higher at 17,552 levels for the weekend.

Japan’s consumer spending in November slid 2.9 percent from a year ago and worst in 8 months record. Traders are still facing hangover from the recent stimulus announced by Bank of Japan on extending maturity period of purchased bond. Such policy may not help to stimulate recovery as reckoned by economists.

Japan’s consumer prices rose 0.1 percent on annualized rates and better than minus 0.1 percent in October. Unemployment rate increased to 3.3 percent in November from 3.1 percent in previous month.

German producer prices contracted 0.2 percent in November and better than 0.4 percent contractions in October. GfK consumer climate rose 9.4 in December and stays below 10.0 benchmarks for fifth month.

British current account deficits shrank to GBP17.5 billion in Q3 ended September, better than forecast. Final GDP expanded 0.4 percent in Q3.

Technical Forecast

USD/JPY hits the temporary support at 120.00 regions and tend to make small recovery. This week, we reckon the range will be small and trade slightly higher from 120.00 – 121.70 levels. Expect another short week as activity will shrink before year-end book closing for many institutional traders.

EUR/USD reduces in range movements as year-end approaches. This week, we expect range trading in this market from 1.0800 – 1.1050 regions in thin volume. Sentiment may be more prone to mild buying interest. Risk control is recommended to avoid unnecessary losses.

GBP/USD has been trading sideways while the major trend patterns are gradually declining. Technically, we foresee the prices will trade from 1.4800 – 1.5000 areas as more prone to short-covering. Low quiddity in market will be expected though some buying interest might be induced in market.

Dar Wong

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

DAR Wong is a registered fund manager in Singapore with 26 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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