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China’s Manufacturing Remains Flat

A guest post written by DAR Wong

Currency Market Observations – 28 April 2014

Fundamental Outlook

The US housing market remains in weak sentiment while orders for durable goods rise. Recovery in American economy reveals mixed performance. China reports flat growth in manufacturing and dampens overall stock markets. The European currencies are firm as economic data shows strong track records.

The US existing home sales declined for a third time in March when it fell 0.2 percent to a 4.59 million annual rates, the lowest level since July 2001. Another report on new home sales unexpectedly dropped 14.5 percent to 384,000 annualized pace, lower than median forecast and signaled housing recovery running out of steam.

Weekly jobless claims filed by Americans rose 24,000 to 329,000 in the period ended April 19, highest in 6 months’ record. Core durable goods rose 2.5 percent in March and highest since November.

China’s manufacturing PMI reported by HSBC on March data was at 48.3 reading and almost in-line with median forecast. The failure to climb higher in manufacturing sector has waned investors’ confidence and slowed down Asia’s equity markets.

Japan’s overseas shipment rose 1.8 percent in March from a year ago, far below the median forecast. Imports increased 18.1 percent and expanded the trade gap to JPY1.71 trillion (USD16.7 billion) deficits on seasonally adjusted basis.

Tokyo’s consumer prices surged 2.7 percent in April from a year earlier, the biggest jump since 1992. Increment was believed to be hiked by sales-tax rise in April and a year of unprecedented stimulus from the Bank of Japan.

German Ifo institute’s business climate index reports its sentiment rose to 111.2 this month from 110.7 in March. Euro currency traded strong in sideway sentiment last week.

The UK sales rose 4.2 percent in March from a year earlier. Excluding auto fuel, sales fell 0.4 percent on the month basis. Pound was also behaving firm while the prices were supported above 1.3750 levels.

USD/JPY is still uncertain in market direction as no clue has been given by Bank of Japan. The market is prone to decline in coming week if it could not rise above 102.80 resistances. The bears might try the 101.30 supports again if Dollar buying contract in market. We believe the trend is going to break beyond either way from the aforementioned extreme points.

EUR/USD is capped under 1.3900 resistances and might be turning down in coming week. Technically, we reckon the violation below 1.3800 immediate supports will drive the trend down to 1.3650 regions as liquidation occurs. Abandon your short-view if the trend pierces above 1.3900 resistances.

GBP/USD is very toppish at 1.6800 regions currently. Technically, we reckon the market is also prone to turn down soon. In our opinion, the bears will probably drive the prices down to 1.6650 areas if Dollar devalues in coming week. Breaking above 1.6840 resistances will push the prices up to 1.6900 targets before the bulls become exhausted.

Technical Forecast

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

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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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