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Dow Jones Closes at Record High

A guest post written by DAR Wong

Currency Market Observations – 20 May 2013

Fundamental Outlook

The U.S. stock markets triumph to new historical highs after leading indicators rebounded in April. Other data including jobless benefits and inflation measure are weak in U.S. economy. Japan’s economy expanded in Q1 and Abe’s government is favored by investors for leading the economic recovery. Euro area sees a jump in exports despite the economy has recorded a consecutive decline for six quarters as of end of March.

The U.S. retail sales advanced 0.1 percent in April. Import-price index slid 0.5 percent after followed 0.2 percent decline in March. Another separate report shows industrial production dropped 0.5 percent in April by worst decline in past 8 months.

The U.S. Commerce Department reports factory gate-price shed 0.7 percent after falling 0.6 percent in March. Another data that measures inflation benchmark reported consumer prices down 0.4 recent in April while the core prices rose 0.1 percent and lesser than expected.

The weekly jobless claims by Americans jumped 32,000 to 360,000 in the week ended 11 May. Housing starts slumped 16.5 percent in April, the most since February 2011, to an 853,000 annualized rate after a revised 1.02 million pace in March- On Friday, leading indicators compiled by Conference Board reversed the market situation by positive 0.6 percent gain in April after falling a revised 0.2 percent in March. Dow Jones markets rose and index made new high upon closing at 15,354.

Japan’s Gross Domestic Product (GDP) expanded more than forecast in Q1 by an annualized 3.5 percent, after the momentum of gains have kicked in from consumer spending and exports. Weakening Yen has pulled up Nikkei stocks above 15,000 for the first time since January 2008. On Friday, USD/JPY closed at new 4-1/2 year high above 103.00 and we expect Asia equities to be flying in coming week.

The German investors’ confidence reported by ZEW Center for European Economic Research in Mannheim said its index advanced to 36.4 from 36.3 in April but below forecast. Spain reports its first monthly trade surplus in March with trade balance recorded at EUR634.9 million (USD818 million) due to rising imports. On the other hand, International Monetary Fund says Cyprus may need additional financing if its economy contracts more than expected and faces high risk in its bailout program.

In the 17-nations area, Eurozone reports a 0.2 percent GDP decline and falling for sixth quarter at the 3-month period ended March. Investors are worried in resurging debt crisis and prolonged recession in the regions for economic slowdown. Nevertheless, the exports in Eurozone rose a seasonally adjusted 2.8 percent in March while trade surplus jumped to EUR18.7 billion (USD24.1 billion) from prior month EUR12.7 billion.

Technical Forecast

USD/JPY closed at 103.24 on Friday and making new high since October 2008. Technically, we remain resilient in the bullish strength and reckon the market will reach 105.00 as our target in due time. On the risk management, the market will form a new support at 101.50 regions that will serve as indicator for turning down in case this level gives way!

EUR/USD sank to intra-week low at 1.2795 on Friday and closed at 1.2835 for the weekend. This week, we reckon the trend will move in moderate recovery from 1.2790 – 1.2930 ranges for short-covering. However, beware of the trend breaking beneath 1.2790 that may drive to new low at 1.2750 regions.

GBP/USD plunged on Friday and closed at 1.5169 levels. This week, we shall observe for market recovery above 1.5270 resistances before we could expect to reach 1.5400 regions. Otherwise, failing to touch 1.5270 may indicate a continual down move to 1.5020 targets!

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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