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Japan Slows Down Inflation for 7 Months

A guest post written by DAR Wong

Currency Market Observations – 30 March 2015

Fundamental Outlook

The US new home sales show recovery while consumer inflation gains in mild sentiment. FED Yellen reiterates on rate hike that will come only later of this year. Japan slows down in consumer inflation amid more expectation of stimuli from citizens. UK economy projects uncertainty in uneven recovery.

The US existing home sales grew 4.88 million in February from a year ago and below forecast. Another report on new home sales rose 539,000 from a year ago after it was revised at 500,000 annualized gains in January. Consumer prices grew by 0.2 percent after contracted at minus 0.7 percent changes in January. Excluding food and energies, core prices also rose by 0.2 percent and higher than forecast.

American orders for durable goods pulled down Dow Jones benchmarks after it declined in February. The orders dropped 1.4 percent against positive forecast. Core orders, excluding transport equipment, also slid 0.4 percent after it was on par growth in prior month.

The US jobless claims improved in the week ended 21 march by lowering to 282,000 after it was reported at 291,000 in prior week. The final release of GDP in quarterly report ended in December advanced 2.2 percent and below forecast. The revised consumer sentiment from University of Michigan grows to 93.0 in March after 91.2 in previous month.

Before weekend, FED Yellen said a rate increase will not be immediate from now though credit tightening may be warranted later this year, adding that an increase in core inflation is not essential before the Fed raises rates. Stocks firmed up on small recovery following her remarks.

Japan’s consumer inflation grew 2.0 percent in March on annual basis but has been slowing down for a straight 7 months. Unemployment rate stayed unchanged at 3.5 percent in February. Another report on retail sales contracted 1.8 percent from a year ago, making a fourth straight month of slowdown.

Markit reports the German manufacturing index gains 52.4 in March and higher than prior month 51.1 reading. French manufacturing expanded at 48.2 but after it rose 47.6 in February. Another report on German Ifo business climate expanded to 107.9 in March after it gained to 106.8 in previous month.

UK consumer prices grew at par in February from a year ago after made 0.3 percent annualized gains in previous month. Core prices rose 1.2 percent annualized rates and below forecast. Retail sales jumped 0.8 percent in February after progressed 0.1 percent gains previously.

The UK Nationwide Building Society says housing price index backed up by mortgages expanded by 0.1 percent in March and better than minus 0.1 percent last month.

Technical Forecast

USD/JPY begins to lose momentum below 120.00 after Yen appreciated. Market is still in our expected range projected last week. Moving forward, we foresee the trend will trade from 118.00 – 120.00 regions while waiting for fundamental leads. Beware of breaking beneath 118.00 that may drive down to 117.00 as lower supports.

EUR/USD has been trading sideways from 1.0750 – 1.1050 ranges and will likely continue this week. However, the trend is still going at uncertainty direction until we see it extending beyond the aforementioned range. Driving above 1.1050 resistances will aim for 1.1150 targets.

GBP/USD traded from 1.4800 – 1.5000 ranges last week amid sideways trend. This week, we foresee the bulls are prone to rise higher to 1.5150 levels once it penetrates above 1.5000 resistances. However, we need to observe the 1.4800 as firm support that should not be violated throughout the coming week.

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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