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Dow Jones Recovers Amid Housing Improvement

A guest post written by DAR Wong

Currency Market Observations – 1 July 2013

Fundamental Outlook

The U.S. Dow Jones fell on Monday after affected from China’s slowdown but recovers throughout the week amid better housing demand. American consumer confidence and durable goods also climb higher in optimism. German business confidence and retail sales gain in pulling out from previous sluggishness. The U.K. manages to emerge from recession with the highest consumer confidence in past 2-year record.

The U.S. stocks fell on last Monday after the Chinese equities entered a bear market on concern of manufacturing slowdown and credit crunch. China’s central bank official says they will safeguard stability in money markets and soon release the cash squeeze to slow the selling pressure in stocks and bonds.

The U.S. Conference Board’s index that measures consumer confidence rose to 81.4 in June, making highest record since January 2008, from a revised prior month 74.3 reading. Another report on booking for durable goods climbed 3.6 percent for a second month in May and also exceeds forecast.

The Gross Domestic Product (GDP) for Q1 in American economy grew 1.8 percent annualized rate ended through March, below initial estimate 2.4 percent. Weekly jobless claims ended 22 June clocked 346,000 and slightly below forecast. Another separate report shows the pending home sales jumped more than 6 times above expectation in June by gaining 6.7 percent.

German business confidence rose in June after the Ifo institute’s business climate index reported it gained to 105.9 from 105.7 in May. Retail sales rose 0.8 percent in May and double the median forecast, adding signs that economic climate is picking up for recovery.

European Central Bank (ECB) policymakers say they will maintain loose monetary stance while urging Euro-area governments to cut their deficits and boost investment. Debt crisis has been silent for a while but still worrisome to investors for its random recurrence.

The U.K. current account for Q2 shrank by GBP14.5 Billion and more than median forecast. The quarterly GDP growth ended 3 months through June gained 0.3 percent that was par as expected.

Nationwide Building Society reports the U.K. housing prices rose 0.3 percent in May after advancing 0.4 percent in previous month. The average value was GBP168,941 (USD257,300), up 1.9 percent from a year earlier. The GfK NOP said consumer confidence rose to highest at minus 21 over past 2-year record.

Technical Forecast

USD/JPY climbed up last week from 97.00 bottoms and was approaching 100.00 benchmarks towards weekend. Technically, we reckon the market will be well supported at 97.50 regions and may ascend higher to 100.50 areas before profit-taking occurs. Adopting short strategy above 100.00 levels could be better bet once we spot weakening signs on downturn pattern.

EUR/USD has been falling sharply to 1.2990 regions after the Gold prices fallen. This week, we reckon the market will consolidate at 1.2950 bottoms before turning up to make technical corrections. The target correction at 1.3200 levels is achievable once the bulls cross above 1.3050 resistances. However, abandon your long-view if the 1.2950 supports give way!

GBP/USD has been winding down together with Euro currency and hovered at 1.5200 on Friday. This week, we foresee the market will be supported at 1.5130 regions while reversal up is likely to occur for technical correction. According to our study, the resistances have been identified at R1 – 1.5300 and R2 – 1.5450 if the support at 1.5130 can hold well in the next few days.

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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