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American Payroll Rises In November

A guest post written by DAR Wong

Currency Market Observations – 10 December 2012

Fundamental Outlook

The US payroll climb as unemployment falls to almost 4-year low. Eurozone slows down in debt rupture while policymakers are prepared to keep low interest rates through coming year. The UK emerges from recession in third quarter with 1 percent growth but has been moving into lethargy.

The Institute for Supply Management’s services index read 53.5 in November, down from prior month 54.2. Jobless claims decreased 25,000 to 370,000 in the week ended 1 December. Another report showed American household wealth and non-profit groups increased USD1.72 trillion in 3-month period from July through September to USD64.8 trillion, or 2.7 percent growth from the previous quarter.

November payroll climbed 146,000 after following a revised 138,000 gain in October. The unemployment rate fell to 7.7 percent, the lowest since December 2008. The FED policymakers may announce next week in expanding the bond buying program while re-planning exit strategy from record monetary stimulus.

A composite index based on study reported by Markit Economics conducted on the euro-area services and manufacturing industries rose to 46.5 from 45.7 in October. This November data stays below 50 benchmarks for 10th month which indicates contraction. Another report on euro-area retail sales dropped 1.2 percent in October vs. 0.6 percent decline in September.

Majority of European Central Bank (ECB) policymakers favor cutting the benchmark rate while holding it unchanged at 0.75 percent on last Thursday meeting. ECB analysts forecast that the 17-nation euro economy will contract 0.3 percent next year. The central bank also forecast inflation will slow to 1.6 percent in 2013 and cap below its 2 percent limit.

The UK services gauge unexpectedly slowed in November as demand fell. The Markit Economics and Chartered Institute of Purchasing and Supply reported the reading dropped to 50.2 from prior 50.6 and made the lowest record in 23 months.

The British factory output for October dropped 1.3 percent. Though economy emerged from a recession in the third quarter with growth of 1 percent, the recovery remains weak. The Bank of England (BOE) officials left their bond-buying program on hold at GBP375 billion (USD604 billion). The Chancellor of the Exchequer George Osborne implements another 5 more years of austerity and tire out investors.

Technical Forecast

USD/JPY seems to be toppish while resisted below 82.80 levels. This week, we reckon the market may dive down to S1 – 81.50 or S2-80.00 targets due to liquidation. Look out for Japan’s news before the election and abandon your short-view if the trend climbs above 83.00 resistances.

EUR/USD is moving into bearish sentiment on day-chart though the market may be supported temporarily at 1.2850 – 1.2870 areas. This week, we expect the price to consolidate with topside capped at 1.3020 regions. Abandon your long-view if the market dives beneath 1.2850 supports.

GBP/USD has come off from 1.6131 highs and now builds up resistance at 1.6060 – 1.6080 areas. The downside support will probably emerge at 1.5960 regions with bargain hunting for coming week. Lower support is identified at 1.5900 levels in case the trend declines further. Enter from extreme ends to prevent swings.

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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