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Dow Jones Hits New High Record

A guest post written by DAR Wong

Currency Market Observations – 15 April 2013

Fundamental Outlook

The US Dow Jones Industrial Average (DJIA) index creates new high after the release of FOMC minutes. Jobless claims fall while due to Easter holiday. Japanese Yen continues in devaluation after recent stimulus and central bank governor Kuroda reiterates his aim to achieve 2 percent inflation. Europe is quite amid new concerns of rising Greece’s unemployment.

In the minutes of Federal Open Market Committee (FOMC) meeting held in March, FED officials said central bank should consider scaling down or terminate the stimulus by year-end. Bernanke stressed that necessary action will be taken to ensure smooth recovery in payrolls which is ironical to the meager gain of 88,000 jobs in March and way below expectation.

The US jobless claims decreased by 42,000 to 346,000 in the week ended April 6, from a revised 388,000. Analysts believe the contraction of claims were probably due to Easter Holiday seasons and may increase in coming weeks.

On Friday, US Commerce Department reported the retail sales unexpectedly fell 0.4 percent in March, at highest record in past nine months. Producer price index dropped 0.6 percent vs. a 0.7 percent gain in February due to slump in energy prices. Stock prices landed softer from intraday week high at 14,887 levels.

Japan’s central bank governor Haruhiko Kuroda has injected the new stimulus since a week ago and Yen moves in devaluation to almost 100.00 benchmarks against US Dollar. Despite many doubts in market, Kuroda stresses in confidence in achieving a 2 percent inflation target as the recovery sets in.

German exports, after seasonally adjusted, contracted 1.5 percent in February compared to 1.3 percent gain in previous month. Greece’s unemployment rate jumped to record 27.2 percent in January from prior month 25.7 percent. The country has entered into its sixth year of economic downturn.

The euro-area industrial output expanded more than median forecast in February as it rose 0.4 percent. The euro-zone economy is struggling to regain momentum after five quarters of contraction. Despite some worries rekindle in Eurozone of persistent recession, Euro currency floated above 1.3000 levels against Dollar last week to counter the fast rising Dollar value in Asia due to Yen devaluation. Market analysts observe the beginning of new currency war as all major economies favor weak currency policy.

In UK markets, the RICS reported the British housing price index gained in March to minus 1 from prior month minus 7. Outlook for property demands have improved as bargain hunters search for good deals. Bank of England (BOE) officials predict the consumer prices will climb while economic growth may scaled backwards in 2013. Forecast reports show the inflation will average at 2.8 percent gain but Gross Domestic Product (GDP) growth will probably rise by 0.8 percent, compared with a previous forecast of 1 percent.

Technical Forecast

USD/JPY fell short below 100.00 benchmarks last week and receded to 99.00 regions before weekend. This week, we reckon the market trend may drive down for technical correction at 97.50 areas to cover the price-gap on day-chart. In case the bulls resume and pierce above 100.00 benchmarks successfully, then we shall expect the topside target to aim at 101.50 regions.

EUR/USD reached 1.3138 highs last week as we predicted. The market trend may begin to trade with prone bias to sell-down this week. The range is expected to move from 1.2930 – 1.3150 regions if the bulls fizzle out this week. However, breaking above 1.3150 may climb higher to 1.3260 regions.

GBP/USD is making healthy recovery in technical ascension. This week, we foresee the market trend will trade from 1.5300 – 1.5500 ranges while prone to bullish sentiment. Abandon your long-view if the trend sinks below 1.5300 as this may drive further down to 1.5100 regions.

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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