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American Job Data Falls in Pessimism

A guest post written by DAR Wong

Currency Market Observations – 09 Apr 2012

Fundamental Outlook

The US weekly claims continue to fall in optimism but payroll creation for March plunged to worst record in past 5 months. The Japan’s quarterly Tankan report showed economy has stalled in Q1 and policymakers discuss for new "proactive measures". Eurozone sinks in debt woes while employment rises.

The US Institute for Supply Management’s factory index increased to 53.4 in March from prior month 52.4. Another service index from this same institution fell to 56 from a 1-year high of 57.3 in February.

Another separate report showed US factory orders rose 1.3 percent in February after a revised 1.1 percent decline in prior month. Weekly jobless claims ended on 31 March slid 6,000 to 357,000 though it proved healthy signs in job markets.

On Friday, The US Labor Department reported non-farm payroll in March increased 120,000 and less than the most pessimistic estimate, compared to revised 240,000 gain in prior month. The unemployment rate fell to 8.2 percent from 8.3 percent as people left the labor force. The falling job numbers worry investors as warned by FED Chairman 2 weeks ago on bumpy recovery.

In Japan, the quarterly Tankan index for Q1 was unchanged from minus 4 in last December. Sentiment among Japan’s largest manufacturers failed to improve in March as business entrepreneurs feared the resurge in yen that will hurt exports. Lawmakers have called for expanding stimulus this month as "proactive measures" in monetary policy can prevent dip amid economy recovery.  

Unemployment in Eurozone rose to 10.8 percent in February from prior 10.7 percent. That’s the highest since June 1997 and close to the record of 10.9 percent. A manufacturing gauge by Markit Economics dropped to 47.7 in March from 49, signaling slow down in demands.

German industrial output fell more than economists forecast by 1.3 percent in February as cold weather kept workers off construction sites. The Spanish bonds plunged and rattled investors of another new wave in debt woes.

UK construction expanded at the fastest pace in 21 months in March. A gauge of building activity rose to 56.7 from 54.3 in February. Another report on manufacturing output fell 1 percent in Feb from prior month, making uneven road to recovery.

Technical Forecast

USD/JPY plunged on Friday after non-farm payroll released and closed at 81.62. This week, the technical resistance will cap at 82.50 levels while further sinking is possible to reach 80.50 regions. We prefer to adopt short-view from pull-up retracement in early week.

EUR/USD was supported at 1.3035 and closed at 1.3089 on Friday. We reckon the market might retrace higher to 1.3200 regions in coming week as technical correction. Breaking below 1.3030 will slide to 1.2970 regions before we see bargain-hunting. We prefer to adopt short-view from higher prices after the technical recoil in early week.

GBP/USD could not break the 1.5800 support last week and thus, will move into technical correction this week. This week, we reckon the trend will recover to 1.5930 – 1.5950 regions before it turns down again. Breaking below 1.5800 will initiate new round of selling forces in market till 1.5600 regions. Abandon your short-view if the trend settles above 1.5950 levels.

Dar Wong

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

Wong is the founder and Principal Consultant of and holds a professional
qualification in NASD series 3 and 5 approved by National Futures Association (USA).


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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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