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Currency Market Observations – 19 Sep 2011

A guest post written by DAR Wong

The US stocks lead Asia equities into recovery

Fundamental Outlook

The US stocks rebound amid quiet week. Economic data remained weak but funds moved into US equity as safe haven. European debt crisis has been put a lid on flaring news but analysts foresee no concrete solutions from Governments.

The import-price index into US country declined 0.4 percent in August after followed a 0.3 percent increase in July, due to dropping cost in oil and food. The Government’s budget deficit widened in August while the gap climbed to USD134.2 billion compared to shortfall of USD90.5 billion in same month a year ago.

The US retail sales remained unchanged in August compared to 0.3 percent gain for July. Producer price index also stagnated after a 0.2 percent increase in July. Other reports showed consumer price index increased 0.4 percent in August and jobless claims climbed by 11,000 to 428,000 in the week ended Sept. 10. The above data indicated sluggish living cost amid rising job loss.

On Friday, household worth in American families shed in Q2 by down USD149 billion, down 1 percent drop annually to USD58.5 trillion, led by falling property prices and shares values.

European Union (EU) cut its growth forecasts for the second half for 2011 to reflect a worsening outlook on the sovereign-debt crisis and warned the euro-area economy may stagnate. European Financed Ministers shunned the plea of Geithner, US Treasury Secretary, to increase firepower of rescue funds in debt crisis aid.

UK Markit Economics reported the index of price expectations rose in September to 53.6 from prior month 48.5, showing rising confidence of British citizens after BOE held rates unchanged. Consumer prices rose 4.5 percent from a year earlier, the fastest in 3 months, compared with 4.4 percent in July.

Last week, Bank of England (BOE) remained its key interest rate at a record low as policymakers attempted to steer a path between a faltering recovery and inflation that’s more than double their goal.

Technical Forecast

USD/JPY is still threading nowhere after it came off 77.85 to 76.50 support regions again. We remain same opinion in establishing new long trades around this support area with tight stop loss. Abandon your long-view if the market settles beneath 76.50 due to fundamental changes.

EUR/USD is consolidating between 1.3500 to 1.3950 levels as we predicted correctly. This week, we reckon sideways will remain and swing to test S1 – 1.3700 and S2 – 1.3550. However, breaking above 1.3950 will probably test the higher grounds at 1.4100 levels.

GBP/USD is currently consolidating to gather strength for moving higher in coming week. We reckon good long opportunity if the market re-tests 1.5740 regions with potential to reach up 1.6000 levels. The market is expected to make digestion over next few weeks in sideways trend. Abandon your long-view if the bears break below 1.5740!

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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