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Britain Votes for BREXIT and Shocks Market

A guest post written by DAR Wong

Currency Market Observations – 27 June 2016

Fundamental Outlook

The U.S. home market data contradict as more interest lean towards resale properties. European markets sink to fear of bearish sentiment after U.K. voted for BREXIT on last Thursday. Market analysts reckon more risk will emerge in financial market instruments.

The U.S. existing homes sales increased 5.53 million in May and best since January this year, also hitting 9-year high. New home sales grew 551,000 in May versus 586,000 revised for April, tuning down the market sentiment after heated up by rising existing home sales.

American weekly jobless claims drop slightly after it was reported at 259,000 in the week ended 18 June, lowest in 8-week record. Another report on core durable goods, excluding transport equipment, contracted 0.3 percent in May after a 0.5 percent gains in prior month.

Japan’s trade surplus grew JPY270 billion after the previous month rose revised JPY400 billion in April. Yen rose again last week to year high against Dollar as USD/JPY declined beneath 100.00 benchmarks, pointing loss of confidence after BREXIT realized in U.K. referendum.

German producer prices rose 0.4 percent in May and highest in past 12-month record. German Ifo sentiment that measures the general businesses advances 108.7 after it revised at 107.8 in May.

Another economic report on German ZEW economic sentiment on institutional investors show 19.2 gains in June and almost 4 times above the median forecast, after June grew 6.4 in May. Euro currency also slid right after U.K. announced BREXIT on Friday morning in Asia hours.

Great Britain has confirmed voted out of European Union bloc under BREXIT referendum on 23 June. Prime Minister Cameron says will tender resignation before October. Meanwhile, global market faces selling pressure as most analysts expect strings of bear sentiment will slip into risk assets and financial instruments.

Technical Forecast

USD/JPY dipped to 98.95 on Friday after U.K. announced BREXIT. Market is uncertain with huge swings that moves in rapid mixed sentiment. This week, we reckon the range will thread from 99.00 – 104.00 ranges in mixed sentiment. Beware of trend swings that could harm your profit.

EUR/USD slid about 400 pips on Friday following decline in European market. This week, market movement will remain uncertain as traders are still waiting to hear more about the effects of BREXIT. Technically, we foresee the market might be prone to bearish while ranging from 1.0900 – 1.1200 regions. Beware of piercing the topside in case of sentiment change.

GBP/USD has turned into bearish for long-term chart analysis after moving averages crossed down. This, we feel the market might set a short-term bear trap by making upward retracement. Range is expected to move from 1.3200 – 1.4200 regions with strong resistance emerging from topside. Trade cautiously as the trend may be volatile.

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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