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Currency Market Observations – 13 Jun 2011

A guest post written by DAR Wong

The Eurozone Plagues with Greek Debt amid Rate Hike News

Fundamental Outlook

The main focus of last week was at Greece’s bailout and the debate of European Central Bank’s (ECB) involvement in it. The dollar index weakened and fell against Yen in mid week after OPEC members held unchanged policy in crude oil supplies and triggered it above USD100 per barrel. UK economy dawdles in housing fatigue with fears of uncertainties.

The US trade deficit unexpectedly shrank 6.7 percent to USD43.7 billion in April, the lowest since December, probably due to drop in oil prices and steadiness in exports. Initial jobless claims increased by 1,000 to 427,000 in the week ended June 4, against median forecast of decline.

While market analysts and traders are still waiting anxiously for US Federal Reserve officials to announce its economic stimulus in June, FED Chairman Ben S. Bernanke stressed necessity in record monetary stimulus as vital to revive the slow recovery.

Japan’s GDP shrank at an annualized 3.5 percent rate in the three months ended March 31, higher than initial estimate and after the March 11 crisis. Japan reported its producer price index for May gained 2.2 percent from a year earlier, after climbing 2.5 percent in April, rising for consecutive eight months. Economy is still sluggish though Government officials commented a “V” recovery is high possible in 2H2011.

European market sources said Greece still needs another EUR45 billion (USD65 billion) to stay abode the debt crisis and budget nodded by International Monetary Fund (IMF). However, ECB President Jean-Claude Trichet rejected any direct ECB participation in a second bailout for Greece. So far, Germany has lent biggest loans to Greek Government by purchasing their bonds worth USD22.7 billion in 2010, making them a likely negotiation partner in burden-sharing deals for the country.

UK retail sales fell 2.1 percent in May from a year earlier, compared with a 5.2 percent increase in April. Another research company Acadametrics Ltd. and LSL Property Services Plc said housing prices remained looming in May. The average price of a home in England and Wales was GBP223,971 (USD366,484), 20 pounds more than the April average.

The British consumer markets are still plagued by fears in economic uncertainty, job markets, income squeeze, housing slumps and austerity budget cuts by Government. Last week, Pound swung in wild motions but bias in bearish sentiment after Moody’s Investors Service said that UK’s AAA credit rating may be at risk if debt reduction is not properly controlled.

Technical Forecast

USD/JPY broke beneath 80.00 benchmarks last week but quickly recovered above these levels. The market is slow moving and lack of punch though the bears tried to drive lower. We foresee strong supports to emerge at 79.50 regions while the topside may recover to 81.00 regions again this week.

EUR/USD plunged on Friday to low 1.4322. We expect another sell down in early week if the bear breaks beneath 1.4320 supports and attempt 1.4200 regions. We advise traders to pick long trades only from midweek onwards when the aforementioned bottoms have been accomplished. In our opinion, a consolidation will entail only after this lower bottom is done.

GBP/USD has started its bearish engine and will decline further n longer term. In coming week, we foresee the market may reach 1.6100 regions before the bulls will emerge. We expect consolidation to follow at the lower bands of this target bottoms in coming week. Topside resistances are expected to form at 1.6320 regions.

Dar Wong

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

Wong is the founder and Principal Consultant of 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.

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1 Comment to Currency Market Observations – 13 Jun 2011

  • d'obtenir's Gravatar d'obtenir
    April 19, 2012 at 6:00 AM | Permalink

    Your place is valuable for me. Thanks!