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German Slows Down in Growth amid Greek Debt

A guest post written by DAR Wong

Currency Market Observations – 27 April 2015

Fundamental Outlook

The US housing markets reveal demand in existing homes probably due to easier mortgage loans. Japan shows recovery in rising exports and Yen is expected to weaken further to support growth. German slows down in growth and may drag Eurozone in coming months.

The US existing home sales hit 18-month high at 5.19 million annualized rates in March after it was revised at 4.89 million in the previous month. New home sales tumbled in March after the sales were reported at 481,000 annualized rates and below consensus, compared to revised 543,000 sales in previous month.

Weekly jobless claims increased 1,000 to a seasonally adjusted 295,000 for the week ended April 18, rising for third consecutive week. Orders for non-durable goods rose 4.0 percent in March after it slid 1.1 percent in February. Core orders, excluding transportation and aircrafts, declined 0.2 percent and below positive forecast.

Japan posts its first trade surplus in almost 3 years with exports rose an annual 8.5 percent in March. Trade surplus was reported at JPY229.3 billion, much higher than the JPY50 billion expected.

Japan’s manufacturing PMI for April reads at 49.7 after revised data for March rose to 50.3. Market traders expect policymakers to inject new stimulus after Golden week holidays to restart weakening trend in Yen. This will effectively rising exports and Nikkei stock markets.

German producer prices rose 0.1 percent in March and below consensus, lagging in growth due to debt rising in the regions. German ifo business climate progresses steadily at 108.6 in April after it was reported at 107.9 previously.

German ZEW economic sentiment dropped to 53.3 in March versus previous month 54.8 and below forecast. Markit says the German manufacturing PMI dropped to 51.9 in April versus 52.8 in prior month.

In Eurozone, manufacturing PMI is reported at 51.9 reading and below forecast. Index above 50.0 benchmarks indicates expansion. Investors are still wary of Greek debt issues yet to be resolved with international lenders.

Last week, Bank of England policymakers held meeting and remained its monetary policy. Benchmark rates are kept at 0.5 percent while asset purchase program stays at GBP375 billion.

Another report on British retail sales slid 0.5 percent in March compared to 0.6 percent gains in February, underscoring slowdown in public demands. Investors are tuning down activities in Pound speculation in-lieu of May election.

Technical Forecast

USD/JPY still trades around 119.00 regions and has not shown clear direction. Technically, we reckon the trend may fall deeper over early May in order to spur policymakers to step up new stimulus. This week, we forecast market will move inside 118.00 – 120.00 ranges but prone to falling sentiment. It may be good to pick short entry from pull up retracement.

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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