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Dow Jones Creates New Historical High

A guest post written by DAR Wong

Currency Market Observations – 30 December 2013

Fundamental Outlook

The U.S. DJIA creates new historical high above 16,500 levels amid quite Christmas seasons while 10-year Treasury bond yield climbs to 3 percent. New home sales in America continue to charge higher and lift the stock markets in upward sentiment after investors interpreted as positive recovery. Market has been literally quiet amid festive seasons but U.S. bond yields climb higher and U.K. gilt yields also edge higher causing Pound to create intra-year high.

The U.S. personal spending increased 0.5 percent in November after 0.4 percent gain in prior month. Another report from Thomson Reuters/University of Michigan final index of consumer sentiment climbed to 82.5 from 75.1 in November.

The monthly new home sales that measures American housing demands exceeded projections in November. The data held near to 5-year high and reflected probable gains in coming 2014. The home purchase was reported at 464,000 annualized rates, after following revised 474,000 rates in October.

The U.S. durable goods orders rose 3.5 percent in November after a 0.7 percent drop in prior month. Jobless claims declined by 42,000 to 338,000 in the week ended 21 December, indicating improvement in job markets. Dow Jones markets were bullish after mid last week and created new historical high again above 16,500 levels on Friday closing.

The 10-year bond yields in U.S. Treasury rose to 3 percent at year-high on Friday, reflecting a movement of funds from selling off fixed-income assets to short-term equities. The Dollar rises to 5-year record high against the Yen at 105.00 regions and could help Japan in stimulating recovery in coming weeks.

The weakening of Yen helps the Japan’s Topix index advances to its highest since July 2008. On Friday, Nikkei 225 index also closed at highest record 16,178 regions since November 2008. Most Asian stock indexes celebrated bullish sentiment over year-end seasons.

Before the weekend, European Central Bank (ECB) Governing Council member Jens Weidmann said maintaining low interest rates may endanger political reforms. The Euro currency climbed to highest record within this year at 1.3894 before settling lower amid profit-taking.

On Friday, the U.K. 10-year gilt yield climbed above 3 percent for the first time since September. The Bank of England (BOE) policymakers comment their favor to make changes for easier loan-financing schemes to small and medium-sized companies. Nationwide Building Society reports British home prices rose 0.7 percent in December, compared with a 0.6 percent increase last month.

Technical Forecast

USD/JPY has attempted above 105.00 benchmarks on Friday and proven possible to ascend higher in coming weeks. Moving forward, the market will be supported at 102.50 regions while we foresee the next target could be aiming at 107.00 areas. The continual rise in Dollar and Dow Jones market are leverage factor to throw Yen into weaker values in near future./

EUR/USD floated briefly beneath 1.3900 on Friday and encountered profit-taking by sellers. This week, we reckon the support will be sitting on 1.3750 levels while breaking above 1.3900 again will likely aim for 1.4000 benchmarks. In our opinion, we predict both technical and fundamental factors are resilient at 1.3700 areas and might favor bullish sentiment over the year-end.

GBP/USD reached 1.6578 on Friday and receded on profit-taking. Technically, we reckon the market will be strong at 1.6450 supports in near future while it might climb with Euro currency into early January. The uptrend will remain resilient and reaching 1.6650 regions could be achievable in due time. However, the uptrend has to be well-guarded at 1.6450 supports!

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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