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American Non-Farm Payroll Declines Unexpectedly

A guest post written by DAR Wong

Currency Market Observations – 10 August 2015

Fundamental Outlook

The U.S. services advances due to rising Dollar while trade gap widens, payrolls slow down amid unchanged unemployment record. Japan refrains from adding new measures but targets at inflation growth. Bank of England maintains policy unchanged with majority policymakers favor no rate hike.

The U.S. Institute of Supply Management’s manufacturing PMI declined slightly to 52.7 in July after it rose to 53.5 in prior month. Factory orders in June grew 1.8 percent from minus 1.1 percent in previous month, probably triggered by stronger Dollar for domestic purchase.

Another report from the Institute for Supply Management on its services sector index rose to 60.3 in July, making its highest reading since August 2005. The trade gap increased 7.1 percent to USD43.8 billion in June, due to strong Dollar and rising import.

American jobless claims data was reported at 270,000 in the week ended 1 Aug and higher than previous week 273,000. The monthly non-farm payroll was reduced to 215,000 in July and lower than revised 231,000 in June. Unemployment rate was at 5.3 percent and unchanged from June.

Last week, Bank of Japan kept monetary policy steady and pledged to maintain its yearly monetary expansion at JPY80 trillion. Policymakers are upbeat on the continual growth and target to aim the inflation at 2 percent target without additional monetary stimulus.

Japan’s leading indicators, comprises 11 economic indicators, show better advancement in June at 107.2 percent growth and better than median forecast.

Markit reports German final manufacturing PMI at 51.8 while maintaining pace of recovery in July. Another report on industrial output dropped 1.4 percent in June against revised 0.2 percent gains in May.

Another report filed by Markit on final service PMI in Eurozone among 19 countries grew to 54.0 I July and matched forecast. Germany stays on track at 53.8 reading in services and remains in growth.

U.K. construction industry slid to 57.1 from June’s 58.1. The service PMI slid to 57.4 and below median forecast. U.K. manufacturing output for June rose 0.2 percent and better than prior month at 0.6 percent decline.

Last week, Bank of England held interest rates unchanged at 0.5 percent and purchase program at GBP375 billion after the central bank meeting. Out of 9 policymakers, 8 voted for no rate increment against 1 favor.

Technical Forecast

USD/JPY has topped 125.00 levels but closed lower at 124.16 for weekend. This week, we reckon the resistance will be resilient at 125.00 and likely to go lower at 122.50 regions. However, piercing above 125.00 resistances will aim to challenge 126.00 levels or higher.

EUR/USD has built strong support at 1.0800 – 1.0830 areas and determine to climb higher this week. We predict the trend will attempt 1.1100 levels again but still uncertain of the strength to break above here. Technically, safeguard your long positions if the trend turns below 1.0800 supports.

GBP/USD reveals falling pattern that might indicate widening of EUR/GBP cross rate. This week, we foresee the Pound may drive lower at 1.5300 targets. Overwhelming selling pressure may land at 1.5130 regions if the bears engulf market. Risk control should be practiced if the trend ascends above 1.5600 levels.

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

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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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