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American Payroll Drops to 3-Month Low

A guest post written by DAR Wong

Currency Market Observations – 09 May 2016

Fundamental Outlook

The U.S. payroll slides unexpectedly amid stronger construction spending. Jobless claims also rise as vacancies shrink. European economy is expected to grow at lower rates. British slows in manufacturing growth and service sectors.

The U.S. Institute of Supply Management reports its manufacturing index grew to 50.8 in April but declined from previous month 51.8 and below forecast. Construction spending hits 8-1/2 year high at 0.3 percent gains in March after it gained at revised 0.1 percent growth in February.

Another separate report from Institute of Supply Management says services index grew at 55.7 in April, tracking a good momentum and highest at 5-month record. However, weekly jobless claims rose to 5-week high at 274,000 in the week ended 30 April.

The U.S. non-farm payroll declined to 160,000 in April from revised 208,000 in March. Unemployment rate says unchanged at 5.0 percent.

China’s Caixin manufacturing index expanded at 49.4 in April and below 50.0 benchmarks, after it was revised at 50.7 in March. Service index grew at 51.8 and above 50.0 benchmarks in April though it slid from 52.2 in previous month.

European Commission revises the gross domestic product (GDP) for Eurozone in 2016 at 1.6 percent from a previous forecast of 1.7 percent growth. Growth forecast for 2017 also has been tuned down to 1.8 percent from 1.9 percent.

Market reports a decline in U.K. manufacturing index at 49.2 after it was revised at 50.7 in March. Another report on construction index grew at 52.0 in April but lower than forecast. Index above 50.0 indicates growth. However, Service index fell to 52.3 after it was reported at 52.3 in March.

Technical Forecast

USD/JPY traded above 106.00 last week and even after U.S. payroll release. This week, we reckon the market might recovery higher in sideways momentum. Range is expected to move from 106.00 – 109.00 regions as Dollar strengthens momentarily.

EUR/USD topped off 1.1600 and closed at 1.1400 regions for the weekend. This week, we predict the prices will dip further to 1.1150 areas. Resistance will emerge at 1.1500 – 1.1520 regions. Eurozone is stuck in a fragile economy while waiting for more stimulus from central bank.

GBP/USD has been resisted above 1.4700 levels by the EMA200 line followed by a fall last week. We forecast the range will trade from 1.4300 – 1.4650 regions in coming week. Trend will most likely thread sideways until it finds the way into new direction.

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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