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Dow Jones Suffers Loss in 7-Week Low Record

A guest post written by DAR Wong

Currency Market Observations – 24 June 2013

Fundamental Outlook

The U.S. consumer price index gained 0.1 percent in May after dropping 0.4 percent in previous month. Core prices climbed 0.2 percent as projected. Housing starts climbed below expectation by 6.8 percent to 914,000 annualized rates after revised 856,000 in April.

FED Chairman Bernanke said after the Federal Open Market Committee (FOMC) that policymakers may plan to wind down the financial stimulus sometime next year if economy recovers. Last Thursday, China’s Purchaser Manager Index indicated manufacturing data grew to 48.3 which is lower than expected. Dow Jones markets, Crude and Gold prices declined.

The U.S. existing home sales rose 4.2 percent in May to 5.18 million annualized rates, highest in past 3-year record. Another report on the economic outlook projected by the Conference Board’s gauge has increased 0.1 percent in May vs. a revised 0.8 percent gain in April, showing looming confidence among investors.

Japan’s overseas shipments for May increased 10.1 percent from a year earlier and above consensus. The monthly trade deficit recorded at JPY993.9 Billion (USD10.4 Billion) from increasing imports. The government expresses that they will provide extra spending if a sales-tax increase next year damps economic growth.

The U.S. Treasury 10-year note yields climbed to a 22-month high as government bonds tumbled from Germany to New Zealand. The falls came after remarks of FED Chairman Ben S. Bernanke in tapering the stimulus in next year. Market analysts forecast FED policymakers will cut back on monthly asset purchase in September meeting.

The composite index in Euro area in both manufacturing and services rose to 48.9 from 47.7 in May, exceeding forecast. The euro-area economy is shrinking for a second year and the U.K. is emerging from a double-dip recession amid investor concern that the U.S. withdrawal of stimulus may influence in new market downturn.

British budget deficit narrowed in May as government spending slid. Net borrowing excluding temporary support for banks was GBP12.7 billion compared with 15.6 billion pounds a year earlier. The U.K. consumer price index was up 2.7 percent in May from a year ago while core index recorded 2.2 percent gain. Both data were slightly better than expectation but the producer price index remained on par in May. Pound slid on profit-taking from top 1.5700 regions.

Technical Forecast

USD/JPY has been recovering from recent bottoms at 93.75 and begins to move large sideways. Technically speaking, the market may trade in fluctuation constricted to the range of 93.75 – 99.00. We reckon the trend may re-test 95.00 levels again before building new buying supports. Abandon your short-view if the market pieces above 99.00 resistances.

EUR/USD falls from above 1.3400 to 1.3100 levels on Friday. Apparently, the market may continue to drop more on Monday to 1.3050 regions before consolidation comes in. This week, we reckon the trend may trade from 1.3050 to 1.3300 ranges. Picking short-entry from topside is ideal with controlled risk as the trend is turning to bearishness now.

GBP/USD comes down to the 1.5400 regions after it has topped the 1.5700 areas last week. This week, we reckon the market may fall further to 1.5280 levels before recoiling up. Technically, it may trade from 1.5280 – 1.5700 ranges in sideways if fundamental news remain as insignificant in coming week.

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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