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DJIA Stays Buoyant Amid Firm Economy

A guest post written by DAR Wong

Currency Market Observations – 19 Mar 2012

Fundamental Outlook

The US policymakers reiterate to keep low borrowing interest rates despite no new stimulus is expected. The US economy shows mild recovery on firming while the Eurozone remains dormant despite bailout of Greece has been approved. Investors adopt observation attitude as Greece may need further restructuring and on the other euro nations on debt balance.

The US import-price index gained 0.4 percent in February due to slow down in global economy. The weekly jobless claims fell by 14,000 to 351,000 ended 10 March. On Tuesday, Federal Reserve (FED) policymakers stressed their favor in projecting low interest rates at least until late 2014 in the release of FOMC minutes. Stock markets climbed and uplifted the Asia equities as well for the whole week.

The producer-price index rose 0.4 percent in February following 0.1 percent gain in prior month. Another report on consumer-price index also climbed 0.4 percent at the highest record in past 10 months. Core prices excluding fuel and food rose 0.1 percent and less than forecast. A steadfast recovery in US economy has put the greenback on stronger sentiment while inflation revealed from the above 2 reports indicates mild rising cost only.

The US industrial output for February at factories, mines and utilities gained 0.4 percent. Retail sales rose 1.1 percent and charted the most in five months since October. DJIA remained on high side above 13,000 benchmarks at weekend close.

German investor confidence report by ZEW Center for European Economic Research in Mannheim advanced to 22.3 from 5.4 in February. The Eurozone is rather dormant after Greece has been bailout successfully with a new EUR130 billion package. However, International Monetary Fund (IMF) said Greece may need more financial aid from European countries for further debt restructuring.

The UK jobless claims climbed 7,200 from January to 1.612 million, a 12th straight monthly increase in February. Unemployment held at 8.4 percent in the three months through January. Pound dropped but reversed on Friday night after US dollar receded on softening industrial output.

Technical Forecast

USD/JPY reached above 84.00 as we forecast last week and attained the high 84.20. This week, we reckon the market will trade sideways from 82.00 – 84.00 regions while more prone bias to consolidate in top-down patterns. Abandon your short-view if the market penetrates above 84.20 resistances again!

EUR/USD was supported at 1.3000 benchmarks last week and closed at 1.3172 for weekend. We expect the market to consolidate for few days from 1.3120 – 1.3300 regions before the market takes a new direction due to fundamental leads. In our opinion, a higher probability may arise for decline once the trend sinks beneath 1.3000 supports after mid-week. Abandon your short-view if the trend rises above 1.5300 levels.

GBP/USD pulled up fiercely on Friday and short-squeezed many sellers. The market closed at 1.5834 for the weekend. This week, we foresee the market will be resisted at 1.5900 regions while receding below 1.5750 levels will indicate new selling forces in market. Abandon your short-view if the market penetrates above 1.5900 resistances but breaking beneath 1.5750 may re-test the 1.5500 supports.

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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