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DJIA Recovers Above 16,000 Benchmarks

A guest post written by DAR Wong

Currency Market Observations – 17 February 2014

Fundamental Outlook

The US budget deficit narrows while China extends growth in overseas shipment and consumer inflation. Yellen also stresses on maintaining scale-back policy that puts some demands in Dow Jones Industrial Average (DJIA) stocks while precious metals rally. The Eurozone economy gains and eases the statement by central bank President Draghi who previously mentioned of countering low inflation.

The US budget deficit for January was reported at USD10.4 billion. Total outlays was narrowed down by 37 percent from October through January, recording a shortfall of USD184 billion compared with a USD290.4 billion shortfall from the same period last year.

Another report on US retailer sales slid in January by the most since June 2012, dropping 0.4 percent after slid 0.1 percent in December. Jobless claims increased by 8,000 to 339,000 in the week ended 8 February. Sever snowy weather could have been the factors that has obstructed gains and consistent operations in economic growths.

American factory production declined 0.8 percent in January after followed devised 0.3 percent gains in prior month. Last week, Federal Reserve Chairman Janet Yellen pledged to maintain her predecessor’s policies by scaling back stimulus in “measured steps”. Dow Jones benchmarks were risen to above 16,000 levels on Friday closing by interpretation of steadfast recovery. Both Gold and Silver prices were pushed to 14-week highs after following strong stock demand.

China’s import and import growth unexpectedly accelerated in January, moving against mass speculation of slowing down. The overseas shipment rose 10.6 percent from a year ago while imports advanced 10 percent, leaving a trade surplus of USD31.9 billion, the widest for January since 2009.

China consumer-inflation rose 2.5 percent from a year ago in January, while factory-gate prices fell 1.6 percent. Stronger inflation lifted the Gold prices at 1300.00 regions on Friday and ascended to 1320.00 levels for weekend closing.

Japan’s core machinery orders fell 15.7 percent in December, making worst fall since 1998. Market is staying sideway to observe impact of new sales tax to be implemented in April. Yen advanced slightly against Dollar below 102.00 levels on Friday due to no positive stimulating data from Japan.

The euro-economy expanded in Q4 of last year after being led by Germany and France, countering the possibility of policy action for low inflation that was mentioned by central bank President Draghi last week. Gross Domestic Products (GDP) gained 0.3 percent in the 3 months through December compared to 0.1 percent gained in Q3.

Technical Forecast

USD/JPY closed at 101.78 on Friday and was strongly resisted at above 102.50 levels. This week, we reckon the range will be moving from 100.50 – 102.70 regions with no clear signs of direction. However, the continued silence from Japan’s policymakers may advance the Yen further and push USD/JPY rate to 99.50 areas.

EUR/USD fell off 1.3715 highs and closed barely below 1.3700 on Friday. We foresee the resistance will be very resilient at 1.3750 areas for coming week and may reverse down to 1.3550 again. However, abandon your short-view in case of piercing above 1.3750 resistances as this may indicate higher attempt at 1.3820 – 1.3850 regions.

GBP/USD behaved very bullish last week and closed at 34-month high 1.6744 levels. This week, we shall observe 1.6650 supports closely as turning beneath here will indicate corrective trend. Otherwise if the trend continues to escalate, we foresee the bulls might march higher at 1.6900 regions before next profit-taking emerges.

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.

 






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