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Pound Higher Amid Growing Housing Demand

A guest post written by DAR Wong

Currency Market Observations – 16 September 2013

Fundamental Outlook

The U.S. stocks trade firmer amid tune-down of drum beat for Syria war. Job markets continue to strengthen in contracting claims and rekindle fear of tapering in September month. London data consolidates on housing demands and construction. Pound moves higher in optimism amid U.K. economic recovery.

The U.S. wholesale inventories rose 0.1 percent in July. Another report on budget deficits narrowed to USD147.9 billion in August, compared with USD190.5 billion gap from a year ago. So far, the accumulated deficits for 11 months that ends 30 September through this fiscal year has charted USD755.3 billion, the narrowest for last 5 years.

American jobless claims fell by 31,000 to 292,000 in the week ended 7 September, returning fear of tapering stimulus in this month. This week, traders will be watching the FOMC meeting for the opinion of FED Chairman Ben Bernanke in monetary policy for new fiscal year.

The U.S. retail sales climbed less than expected at 0.2 percent in August. Last week, Dow Jones stocks rose to a 4-week high amid reducing noise of calling war against Syria. Global stock also stabilized amid corrections among commodity prices. Syria has agreed to Russia’s bid for surrendering its chemical weapons to avoid U.S. air strikes.

German Chancellor Angela Merkel opposes to any tax rise for Europe’s biggest economy as the 17-nation euro bloc remains in crisis. The industrial production for Eurozone in August dropped 1.5 percent and much worse than expectation, signaling the overall contraction that still remains as menace among many euro nations.

The London-based RICS reports U.K. housing price-index increased to 40 from a revised 37 in July, the highest since November 2006. Another report filed by Acadametrics Ltd shows house price increased 0.4 percent in August to an average GBP233,776 (USD370,000).

U.K. construction rose 2.2 percent in July and was 2 percent higher than a year earlier, spurred by private housing demands and pushed the pound higher before the weekend.

On the job markets, British jobless rate fell to 7.7 percent in the 3 months through July, moving closer to the 7 percent that the central bank sets as observation benchmark. However, jobless claims fell 32,600 in August and higher than economists’ forecast. So far, British economy is heading for its fastest expansion since the financial crisis in 2009. Economists have upgraded their forecasts for growth through 2015.

Technical Forecast

USD/JPY turned down from 100.61 highs last week while failing to climb beyond. This week, we foresee crossing below 99.00 will be a signal for bearish sign and may test 97.50 supports. The resistance at 100.50 regions must stay intact. Otherwise it may indicate a reversal uptrend with unexpected weakening Yen.

EUR/USD climbed up last week as we predicted. The market is still capped under 1.3350 resistances and should not pierce above this level in coming week. Technically, we reckon the trend might be prone to fall and moving back to 1.3180 is highly possible. In overall, we forecast the trend to be trading from 1.3180 – 1.3350 over next few days.

GBP/USD has been behaving resilient from the optimism in economic recovery. This week, we reckon the trend will be resisted at 1.5900 regions and higher resistance has been identified at 1.5960 levels. Turning down could aim at 1.5650 regions for a potential correction.

Dar Wong

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

Wong is the founder and Principal Consultant of PWForex.com 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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