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FED Yellen Hints No Immediate Rate Hike

A guest post written by DAR Wong

Currency Market Observations – 23 March 2015

Fundamental Outlook

The US FED chair Yellen expresses no immediate rate hike though the credit tightening may be this year. Bank of Japan (BOJ) remains unchanged in policy amid more expected stimuli form market. Europe stays in looming economy despite Germany leads in economic recovery.

The US factory production grew 0.1 percent in February after it was revised to minus 0.3 percent in previous month. Building permits rose 1.09 million and higher than revised 1.06 gains in January. Housing starts were down to 900,000 from 1.08 million in January, underscoring weak recovery in American housing market.

The FED chair Yellen says the zero interest rate is about to end but the rate hike may not come yet in June. Market analysts reckon Yellen is keeping watch on job data, wages growth and core inflation to make her final decision.

American weekly claims for jobless benefit rose to seasonally adjusted 291,000 in the week ended 14 March. Current account deficits increased to USD113.5 billion in final quarter, biggest since 2012 and from a revised USD98.9 billion deficit in the third quarter.

Bank of Japan (BOJ) kept its massive monetary policy stimulus intact on last Tuesday just as market expected. However, more stimuli are still expected in coming months as consumer inflation falters. Policymakers reaffirm that monetary base will be increased at annual pace JPY80 trillion (USD659 billion) via purchases of government bonds and risky assets.

German ZEW economic sentiment rises to 54.8 in March, higher than previous month 53.0 but still below forecast. Another report on German producer prices rose 0.1 percent in February after contracted 0.6 percent in January.

Among the 19 nations, final consumer prices in February contracted 0.3 percent from a year ago and remained sluggish. European Central Bank (ECB) says the trade surplus for January advanced EUR29.4 billion and higher than revised EUR22.5 billion in prior month.

British claimant counts slid 31,000 in February. Unemployment rate held down at 5.7 percent in January without changes. In last week meeting, Bank of England (BOE) policymakers voted unchanged in interest rates and opted to hold asset purchase program at GBP375 billion.

British net borrowing in public sector rose to GBP6.2 billion in January but below forecast, after it was reported at minus GBP8.9 billion in revision. England is preparing for national poll on coming 7 May while Prime Minister Cameron pleads to stay for another term to help shape economy.

Technical Forecast

USD/JPY fails to pierce above 122.00 after Bank of Japan (BOJ) refrained from stimulus. The market has been loitering at 120.00 regions amid profit-taking. This week, we reckon the trend will trade from 119.00 – 121.00 ranges with soft landing. Only breaking above 121.50 resistances will resume bullish sentiment in market.

EUR/USD reversed up to 1.1000 last week but failed to stay above this level. The trend may begin to consolidate sideways in coming weeks due to more short-covering. This week, we foresee the trend will move from 1.0600 – 1.1000 regions in mixed sentiment and could be unfavorable for speculators.

GBP/USD also traded sideways last week amid short-covering. This week, we reckon the trend will move from 1.4700 – 1.5000 in mixed players in market. Breaking above 1.5000 resistances will ascend to 1.5200 as our next target in case the bulls overtake the market sentiment.

Dar Wong

This post is contributed by OPF Guest Blogger, DAR Wong.

DAR Wong is an approved fund manager in Singapore with 25 years of global trading experiences. You may reach him at dar@pwforex.com

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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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