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A guest post written by DAR Wong

Currency Market Observations – 4 February 2013

Fundamental Outlook

The US data mostly strengthen in recovery while FED policymakers signal in continual buying of assets with monthly USD85 billion. The Japan government has bought the euro bonds and yen recedes further in lowest value against greenback in 2-1/2 year record. The UK recovery kicks off the New Year with improved factory orders above 50 benchmarks.

The US durable goods advanced 4.6 percent in December while pending home sales declined 4.3 percent to 101.7 after a revised 1.6 percent increase in November. The S&P/Case-Shiller index of property values increased 5.5 percent from November 2011, the biggest year-over-year gain since August 2006.

Last Tuesday, the US FED announced they will continue to purchase securities with USD85 billion a month. The division will be USD40 billion monthly injections in mortgage-backed securities and USD45 billion in Treasury securities. The weekly jobless claims rose 38,000 in the week ended 26 January to 368,000.

Another report showed US consumer spending rose 0.2 percent in December while Gross Domestic Product (GDP) shrank 0.1 percent at an annual rate in the fourth quarter. On Friday, American payrolls rose 157,000 in January following a revised 196,000 advance in the prior month, showing consistent recovery in jobs markets. Jobless rate increased to 7.9 percent.

Japan’s retail sales rose 0.1 percent in December, compared to falling 0.1 percent in prior month. The new government has decided to increase its defense budget for the first time in 11 years, increasing 0.8 percent to JPY4.68 trillion (USD51.7 billion).

The Japanese government bought EUR400 million (USD545 million) of the European rescue fund’s debt auctioned in January, pushing yen lower for devaluation crossing above 91.00 in USD/JPY rate.

European Commission reported the index of economic confidence rose to 89.2 from a revised 87.8 in December. The euro-area inflation rate unexpectedly fell in January as annual inflation rate marked at 2 percent from prior 2.2 percent, dampened by high unemployment and austerity measures across the 17-nation currency bloc.

The UK Hometrack Ltd reported housing prices slid 0.3 percent in January from a year ago. Consumer confidence rose to minus 26 from minus 29 in December, showing optimism in recovery. Another report on manufacturing expanded for a second month in January as factory output rose to 50.8, compared with a revised 51.2 in December.

Technical Forecast

USD/JPY closed at 92.83 for the weekend with continual bullish strength in market. This week, we foresee the trend may climb higher to 95.00 targets once it can settle above 93.00 benchmarks. The buying interest in market is still very vibrant while we have spotted the supports to emerge at 90.50 regions.

EUR/USD reached 1.3711 highs last week in our expected target and settled at 1.3639 on Friday. This week, we are still holding bullish view in market with target aimed at 1.3860 as our next higher levels. On the downside, support will act strong at 1.2450 areas in case the trend draws down for correction.

GBP/USD fell on Friday from intra-week high 1.5880 for about 200 pips. The market is still under selling pressure after making an attempt to move into consolidation. This week, we expect the trend to be trading sideways again with resistance capped at 1.5900 areas. Only breaking below 1.5650 supports will drive lower to 1.5500 regions.

Dar Wong

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

Wong is the founder and Principal Consultant of PWForex.com 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.

A guest post written by DAR Wong

Currency Market Observations – 28 January 2013

Fundamental Outlook

The US Treasury Secretary Geithner reiterates the debt limit will be reached sometime in February and should be planned with more budget cutting. Japan policymakers announced the unlimited stimulus measures but will begin only from January 2014. Contracting exports and inflation rate are far from Japan’s government’s 2 percent target. International Monetary Fund (IMF) predicts growth for 2013 will expand 3.5 percent, lesser than the 3.6 percent forecast in last October.

The US existing home sales unexpectedly slid in December by 1 percent to a 4.94 million annual rates. Leading indicators reported by Conference Board for outlook over next 6 months increased 0.5 percent after no change in November. Another report showed jobless claims was down 5,000 to 330,000 in the week ended 19 January, lower than median forecast.

Despite improvement in economic data, the US Secretary Timothy F. Geithner said the government might reach USD16.4 trillion debt ceiling in mid-February. The House Republicans say any increase in the limit should be matched by equal reductions in future spending.

Japan’s exports dropped 5.8 percent in December from a year earlier, falling for seventh month. The annual trade deficit was JPY6.93 trillion (USD78 billion) and swelled to record high. Another separate report on national consumer prices excluding fresh food fell 0.2 percent in December from a year earlier.

Japan policymakers ended 2-day meeting on 22 February by implementing open-end asset purchase program and set inflation target at 2 percent for recovery. However, market was disappointed that the stimulus plan of JPY13 trillion monthly injection (USD145 billion) will only begin in January 2014. After the inflation data released at far from the target, Bank of Japan (BOJ) faced increasing pressure to add more stimulus.

An euro-area composite index based in both manufacturing and services rose to 48.2 in January from prior month 47.2. German investor confidence increased to the highest in 2-1/2 years in January. The ZEW Center for European Economic Research in Mannheim said its index of investor and analyst expectations jumped to 31.5 from 6.9 in December.

IMF predicts global growth for 2013 will expand 3.5 percent this year, lesser than the previous estimate 3.6 percent forecast in October. UK jobless claims unexpectedly fell in December by declining 12,100 from November to 1.56 million, the lowest since June 2011.

Technical Forecast

USD/JPY receded in mid-week to 88.06 after disappointment in BOJ stimulus measures. However, it made new recent high at 91.00 levels on Friday when market traders expected more funds will be injected after sliding exports and contracting inflation were reported. This week, we reckon the support will rest at 90.00 regions while topside may aim at 92.50 levels should the bulls continue to ascend.

EUR/USD has been consolidating between 1.3250 – 1.3400 ranges for past 2 weeks but finally skipped above 1.3400 resistances on Friday. The market reached 1.3480 highs after European Central Bank (ECB) said borrowing banks will pay back loans next week at more than forecast. This week, we expect euro to continue strengthen with resistance probably emerging only at 1.3660 regions. Supports have emerged at 1.3400 levels now.

GBP/USD was down for the past week and tested the 1.5750 supports at the close of the week. The market is going to lean on fundamental news this week for deciding the forthcoming trend. Breaking below 1.5750 will test lower supports at 1.5630 levels while making technical recovery will aim for 1.5950 areas.

Dar Wong

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

Wong is the founder and Principal Consultant of PWForex.com and holds a professional
qualification in NASD series 3 and 5 approved by National Futures Association (USA).

Receive the latest blog posts via your Feed Reader or Email

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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