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American Jobs Grew in November

A guest post written by DAR Wong

Currency Market Observations – 09 December 2013

Fundamental Outlook

The U.S. Labor Department reports additional 203,000 jobs were added in November. New homes sales in U.S. housing market show improvement and trigger some returning interest to Dow Jones stocks. European Central Bank (ECB) and Bank of England (BOE) both maintain benchmark rates unchanged. ECB President Draghi commits his stance to keep low interest rates for extensive period to ensure economic recovery.

The U.S. Institute for Supply Management’s manufacturing index rose to 57.3, the highest since April 2011, from last month 56.4. Construction spending climbed 0.8 percent in October from the prior month, double the forecast and made the biggest gain since May.

The new home sales on American soil jumped 25.4 percent in October to a 444,000 annualized pace. Another separate report by Institute for Supply Management’s services index dropped to 53.9 from 55.4 in October.

The U.S. GDP for Q3 rose 3.6 percent annual rate, up from an initial estimate of 2.8 percent. Data was unexpected despite the over 2-week closure in Federal government in early October. Buying interest was injected into Dow Jones equity markets.

The U.S. jobless claims slumped by 23,000 to 298,000 in the week ended 30 November. Monthly jobless rate was reported at 5-year low of 7 percent in November. There were 203,000 jobs added after followed a revised 200,000 advance in October. Commodity prices were stronger on Friday after the job growth.

German factory orders, after adjusted for seasonal swings and inflation, slid 2.2 percent in November vs. the 3.1 percent gains in October. Though the leading economy is showing uneven recovery, Euro has been bullish last week after ECB official said they will refrain from introducing further stimulus in near future.

ECB also predicts inflation in 014 will rise to 1.1 percent and 1.3 percent in 2015. President Draghi reiterates his pledge to keep borrowing costs low “for an extended period of time”.

Markit Economics reports U.K. manufacturing increased to 58.4 in November, the highest since February 2011, from a revised 56.5 in October. Another report on services output fell to 60.0 from 62.5 in October, causing whipsaw in Pound prices.

U.K. home values increased 1.1 percent to an average GBP174,910 (USD285,800) in November, rising for tenth month and up 8.4 percent from a year earlier.

In the U.K. central bank meeting, BOE officials hold its benchmark interest rate at 0.5 percent and left its asset-purchase target at GBP375 billion.

Technical Forecast

USD/JPY jumped up on Friday to almost 103.00 after U.S. job data was released. This week, we reckon the trend will move from 101.50 – 103.50 ranges as it consolidates. However, the market may climb higher beyond 103.50 should Japan announce new plan to devalue Yen currency. It will be interesting to gauge the next target if the bulls pierce above 103.50 resistances while we aim at 105.00 targets.

EUR/USD has ascended to 1.3700 regions as we predicted last week. Moving forward, we reckon the bulls will face selling forces at 1.3720 – 1.3750 regions while profit-taking is highly prone to occur. Technically, we reckon the trend will move from 1.3600 – 1.3750 ranges but breaking above the aforementioned resistance need to abandon your short-view.

GBP/USD has reached recent high at 1.6442 and begun to recede. This week, we foresee the market will thread from 1.6250 – 1.6450 ranges while liquidation is expected for profit-taking. However, stay alert for British data as positive recovery has been dominating the Pound value lately. Piercing above 1.6450 resistances might attempt 1.6620 regions.

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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