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Greece Asks for Bailout Vote Beyond June

A guest post written by DAR Wong

Currency Market Observations – 29 June 2015

Fundamental Outlook

The U.S. housing demand shows recovery in better annualized increment. Job claims remain steady in tight market while consumer sentiment rises. Attention has been staked in Greece on debt repayment before end June while Prime Minister Tsipras calls for another delayed vote on 5 July. Market investors are taking the Greek outcome as market benchmark for next week’s trend.

The U.S. existing home sales increased 5.1 percent to an annual rate of 5.35 million units in May, the highest level since November 2009. Another separate report on new home sales rose 2.2 percent to a seasonally adjusted annual rate of 546,000 units, the highest level since February 2008.

American core capital goods order rose 0.5 percent in May after it was revised at 0.2 percent contraction in April, signaling business spending increased as economy stabilizes. National economy contracted slightly in the first quarter as it struggled with bad weather and strong dollar. Gross Domestic Product fell at 0.2 percent annual rate in the Q1 ended March, from previous estimate of 0.7 percent contraction.

The U.S. claims for job benefits rose 3,000 to a seasonally adjusted 271,000 for the week ended June 20, rising moderately in tight market. Separately, the manufacturing index filed by Markit declined to 53.4 in June from final reading of 54 in May.

American household spending increased 0.9 percent last month, the biggest gain since August 2009, after an upwardly revised 0.1 percent rise in April. The University of Michigan’s consumer sentiment is revised higher at 96.1 in June after it rose to 90.7 in May.

Markit reports that manufacturing index in Japan grew to 49.9 in June and lower than previous month 50.9. Another report on monthly core consumer price index rose 0.1 percent on yearly basis in May, down from a 0.3 percent rise in April.

Japan’s unemployment rate was steady at 3.3 percent in May. Household expenditures rose 4.8 percent on annual basis and better than forecast for the first time, since the consumption tax started in April of 2014.

Markit reports German manufacturing index climbs to 51.9 in June and first time higher than previous month in past 3 consecutive months. German Ifo business climate grew to 107.4 in June and slight lower than 108.5 in May.

After four meetings held last week with Greece, European creditors failed to reach an agreement on economic reform deal for its debt repayment. German’s Merkel says it is impossible to find fresh fund for Greece from current bailout package. On Friday, Greek Prime Minister Tsipras called for a vote of bailout proposals on 5 July.

Technical Forecast

USD/JPY has been trading strong and moves back to 124.00 regions. Strong Dollar is partial reason from Greek financial rout that lifts the market sentiment. This week, we remain conservative to predict the range to trade from 122.50 – 124.50 areas. However, observe the Greek resolution outcome that may push the price trend beyond this range.

EUR/USD has fallen from 1.1450 tops to current 1.1150 levels after confidence in Greek repayment waned. This week, market will continue to be alert on Greece issue and probably move from 1.1050 – 1.1300 ranges. The resolution of Greek debt after 5 July will decide the Euro strength to be stronger or abandoned by investors.

GBP/USD fell off 1.5900 tops to current 1.5700 levels for weekend closing. This week, we reckon the trend will continue to slide to 1.5550 areas before bargain-hunting comes in. Resistance will emerge at 1.5800 levels in case of technical recovery. Dollar strength will play essential part in moving against Pound in coming weeks.

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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