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American Payroll Rises While Jobless Rate Falls to 6-Year Low

A guest post written by DAR Wong

Currency Market Observations – 8 December 2014

Fundamental Outlook

The U.S non-farm payroll advances at almost 3-year largest growth with jobless rate down to 6-year low record. Trade balance increases with narrowing gap. Euro area slows down in economy progress while central bank seeks to implement new stimulus in early 2015. Britain maintains space of recovery in steadiness.

The US Institute for Supply Management’s factory index was little changed at 58.7 in November and remained strong in past 3-year record. Another report on its service index for October rose 59.3, better than previous month 57.1 reading.

American jobless claims decreased 17,000 to 297,000 in the week ended 29 November from 314,000 in the prior period. Trade gap narrowed by 0.4 percent in October to USD43.4 billion from the prior month’s revised USD43.6 billion.

November payrolls advanced 321,000 and grew at largest pace in almost 3 years. Jobless rate held at 6 year-low of 5.8 percent. Dollar strengthened after the data release and pushed Yen to 7-year low.

German factory orders rose higher than forecast in October. The orders, adjusted for seasonal swings, climbed 2.5 percent after revised 1.1 percent gains in September.

In the 18 Euro nations, the producer prices contracted at minus 0.4 percent against positive gains of 0.2 percent in prior month. A composite Purchasing Managers Index reported by Markit Economics fell to 51.1 from 52.1 in October, the lowest in 16 months and points to economic growth of just 0.1 percent this quarter.

Euro area investment declined 0.2 percent in the 3 months through September after a 0.6 percent decline in the previous quarter. Gross Domestic Products increased 0.2 percent in Q3 and matching the forecast.

Despite Germany maintaining economic strength, Euro bloc nations have been suffering from slowdown that spurs the central bankers to consider new stimulus. President Mario Draghi pledges towards more monetary stimulus in early nest year but disappoint some investors for seeking faster action.

UK Markit Economics reports monthly construction in Britain expanded at 59.4 and down from September 61.4. The manufacturing purchasing manager index rose to 53.5 in November after rising at revised 53.3 in prior month. On the other hand, service index also gained 58.6 after expanded 56.2 in September.

Halifax Ltd says UK housing values in the quarter through November rose an annual 8.2 percent, down from 8.8 percent in October and marking a fourth consecutive slowdown. In last week meeting, Bank of England left the benchmark interest rates at 0.5 percent.

Technical Forecast

USD/JPY climbs to 7-year high with receding Yen value. Market surpassed 121.00 levels on Friday respectively to strong Dollar. This week, we reckon the market will continue to remain bullish and might reach 124.00 targets with little resistance on topside. Support has begun to build at 120.00 regions in case of drawdown.

EUR/USD has resumed weak trend with resistance emerging at 1.2400 regions. The market is going to approach 1.2250 as we predicted last week. Technically, we reckon there is high chance for the bears to drive down to 1.2100 regions should the Dollar rise further. Immediate resistance lies at 1.2400 – 1.2450 regions.

GBP/USD is dipping into new bearish trend once it drives below 1.5600 levels. This week, we forecast the market will drive down to 1.5400 regions if Euro currency declines. Strong resistance will emerge at 1.5700 levels in case of upward retracement.

Dar Wong

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

DAR Wong is an approved fund manager in Singapore with 25 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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