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American Payroll Sinks Below Forecast

A guest post written by DAR Wong

Currency Market Observations – 5 October 2015

Fundamental Outlook

The U.S. adds jobs slower than forecast and put off rate hike pressure on market traders. China paces down in manufacturing at 6-1/2 low record. Japan is down on Tankan report and raises market voices for new stimulus. Britain poises for recovery in property demand.

The U.S. pending home sales was down 1.4 percent in August and signal looming demand in property market. The Conference Board’s consumer confidence rose to 103.00 in September and higher than median forecast, after it was reported at revised 101.3 gains in August.

The U.S. weekly claims for jobless benefits ended 26 September stayed almost unchanged at 277,000. The Institute Supply Management’s manufacturing index for September dropped to 50.2 from previous month 51.1 reading.

On Friday, the Labor Department reported U.S. economy added just 142,000 jobs in September while new hires were revised down to 136,000 in August. Median forecast is expected at 201,000. The unemployment rate stayed unchanged at 5.1 percent. Traders bet on immediate rate hike will be called off in November.

China’s Caixin final manufacturing PMI fell to 47.2, at fresh 6-1/2 year low record after it slid to below 50.0 expansion levels since March this year. Commodity has been sliding since beginning of this year with contracting demand from China.

Japan’s preliminary industrial output was down 0.5 percent in August and against expected growth. Retail sales grew 0.8 percent from 1 year ago and slid from revised 1.8 percent gains in July.

Bank of Japan’s quarterly Tankan report on large manufacturing index rose to 12 at the end of September and slid from 15 in end June. Analysts expect Prime Minister Abe to implement stimulus quickly to absorb the economic shock from China’s slowdown.

Another report on Japan’s household spending grew 2.9 percent in August from a year ago, making first rise in past 3 months after it declined 0.2 percent in prior month. Jobless rate held steady at 3.4 percent.

German import prices was down 1.5 percent in August and worse than minus 0.7 percent in July, signaling slowdown in general demand. Preliminary consumer prices in September declines 0.2 percent after staying unchanged in previous month.

Bank of England says mortgage approvals for August was almost unchanged at 71,000, in line with forecast. The current account deficits narrowed to GBP16.8 billion as of end June on quarterly basis, from GBP24.0 billion in Q1 this year. Final GDP growth in Q2 stayed in line as forecast at 0.7 percent gains.

Markit says manufacturing index in U.K. poised firm at 51.5 in September and continues to keep above 50.0 expansion levels. British construction PMI expanded for a second straight month in September at 59.9 reading, adding optimism in housing demand in near future.

Technical Forecast

USD/JPY has been hovering at 120.00 regions but prone to bearish sentiment. This week, we foresee the trend may drop with resistance acting on 120.50 levels. Support at 118.50 is a crucial areas that will lead to price fall once it is broken.

EUR/USD traded in sideways for whole week in uncertainty. This week, it is essential to observe the violation of prices from the range 1.1100 – 1.1300 regions since it may go in either direction. Market is in whipsaw sentiment while leaning on the fundamental influences between Dollar strength and Euro debt issues.

GBP/USD might have reached support at 1.5100 areas after it closed at 1.5178 for the weekend. We expect the market to make recovery in the range from 1.5100 – 1.5400 in coming week. Breaking below 1.5100 for settlement is unfavorable for bullish traders and need to control risk in that situation.

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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