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G20 Leaders Meet to Discuss Economic Recovery

A guest post written by DAR Wong

Currency Market Observations – 29 February 2016

Fundamental Outlook

The U.S. home sales fluctuates as consumer confidence wanes. However, core durable goods increase to better performance. German institutional confidence improves amid higher consumer prices. Global stocks and crude demand recover as G20 leaders meet to discuss on economic recovery.

The U.S. Conference Board of consumer confidence dropped to 92.2 in February from 97.8 from previous month, worse in 3 months. Existing home sales grew 5.47 million in January from prior month revised at 5.45 million. New home sales grew 494,000 in January and below forecast after it expanded 544,000 in previous month.

The order for American core durable goods, excludes transport equipment, rose 1.8 percent after it contracted at revised 1.0 percent in December. Weekly claims for jobless benefits for the week ended 19 February was reported at 272,000 and highest in 3 weeks.

Another report on prelim GDP for U.S. economy grew 1.0 percent for the final quarter. Personal spending rose 0.5 percent in January and best record since November 2014.

Japan’s core consumer prices on annual basis remains no change in January. Yen has been trading in uncertainty from 111.00 – 114.00 ranges as investors still hope for stimulus from policymakers.

German Ifo report on institutional confidence expanded 105.7, lowest since January 2015. GDP for the largest economy grew 0.3 percent in final quarter ended December and in line with forecast.

German prelim consumer prices climb 0.4 percent after it contracted 0.8 percent in January. The final consumer prices in Eurozone grew 0.3 percent in January from a year ago and still far from the 2.0 percent target set by policymakers.

The second estimate for GDP in U.K. economy for final quarter grew 0.5 percent and in line with forecast. Another report on prelim business investment contracted 2.1 percent in final quarter compared from previous 3 months ended in last September.

Global stocks rebound as G20 leaders met in Shanghai to discuss how to cushion the global economic struggling and help for recovery. Crude prices traded high before weekend at 1-month high.

Technical Forecast

USD/JPY recovered to 114.00 before weekend after it touched 111.03 last week. This week, we reckon the range will thread sideways and probably move from 112.50 – 115.00 regions. Crude trend will stay as lead factor for influencing this market direction.

EUR/USD traded below 1.1000 benchmarks last week and in line with lower Pound value. This week, we have identified strong resistance to emerge at 1.1000 levels while bear trend may push lower to test the support at 1.0800 areas. Trade cautiously as the sentiment is very mixed and could swing the market prices.

GBP/USD re-visits the low of March 2009 below 1.3900 due to the news of Brexit struggle. Investors are betting the weakness of U.K. economy should it exit European Union this year. This week, we foresee the bear will lead another plunge to test 1.3600 areas. Resistance will emerge at 1.4000 levels in case of reversal.

Dar Wong

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

DAR Wong is a registered fund manager in Singapore with 26 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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