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Greece Receives Second Bailout Worth EUR130 Billion

A guest post written by DAR Wong

Currency Market Observations – 27 Feb 2012

Fundamental Outlook

The US housing prices firm up while jobless claims remains unchanged at lowest record since March 2008. Japan posts record high for trade deficits while being pulled down by the economic meltdown of Tsunami attached since last year March. Greece receives new bailout package that will help to avoid national bankruptcy. New stimulus in Euro area lifts the crude and Gold prices in weekly highs.

The US previous home sales climbed 4.3 percent in January to a 4.57 million annual rate, highest record since May 2010. The claims for jobless benefits were unchanged in the week ended 18 February at 351,000, the fewest since March 2008.

Japan’s trade deficit posted record high in January when trade gap widened to JPY1.48 trillion (USD19 billion) and shipments plunged 9.3 percent from a year earlier. Economic performance has been declining since last year March after Tsunami attack with rising yen value.

A composite index in euro area that measures both services and manufacturing industries slid to 49.7 from 50.4 in January. Budget cuts by various European governments may stave off the recovery pace across the regions. However, German business confidence measured by Munich-based Ifo institute rose to 109.6 in February from prior month 108.3 and boosted the market appetite together with successful Greek bailout.

Last week, Greece won EUR130 billion aid package from European Central Bank and will be able to meet its treasury repayment in March. Crude oil prices responded to the positive news by surging to 9-months high while and Gold prices crossed above 1750 levels again.

The UK budget surplus hit highest record in January over past 4 years and proved positive side of austerity measures. Revenue exceeded spending by GBP7.75 billion (USD12.3 billion) compared with a surplus of 5.2 billion pounds a year earlier However, opposite politicians pressured the British government to provide more stimuli to no avail.

Technical Forecast

USD/JPY has been very bullish last week due to technical recovery. The market is now taking 79.50 supports to lift up the buying sentiment and probably will reach 82.50 in coming week. We foresee the next higher resistance will emerge at 84.00 levels should 82.50 be violated. Abandon your long-view if the market falls back below 79.50 levels.

EUR/USD advanced last week following the positive bailout news of Greece. This week, we expect the bulls to stay afloat and will probably reach 1.3550 regions before slowing down. Resistance at 1.3600 levels should be strong enough to counter the bullish sentiment unless further fundamental factors in euro area push the trend beyond this benchmark. Abandon your long-view if the market breaks beneath 1.3320 supports.

GBP/USD touched the 1.5650 bottoms last week and reversed up very quickly on Friday to 1.5850 regions. This week, we foresee the market may surpass the 1.5930 levels and climb up to 1.6080 regions. However, the 1.5930 resistances will be a crucial point to halt the upcoming trend in early week. Otherwise, falling beneath 1.5800 levels will re-initiate a new down trend.

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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