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The Greek Government Finally Agrees to Deeper Budget Cut

A guest post written by DAR Wong

Currency Market Observations – 13 Feb 2012

Fundamental Outlook

The US trade deficit widens from rising import but housing slump remains as bug to economic recovery. Greek government reaches an agreement to deeper budget cut that will qualify for financial aid to meet the March repayment in national treasuries. British economy jumps start probably after taking effect in budget cut.

The US consumer credit rose in December by up USD19.3 billion to total USD2.5 trillion, higher than forecast. The jobless claims ended 4 February was down 15,000 to 358,000 and showed improvement in job market. The December trade deficit widened to 6-month high record due to imports jump with trade gap increased 3.7 percent to USD48.8 billion from prior month USD47.1 billion. Federal Reserve Chairman Ben S. Bernanke said housing slump is deterring recovery in economic growth as injected by policymakers.

German factory orders rebound in December. The data rose 1.7 percent from November after adjusted for seasonal swings and inflation compared to prior slump in 4.9 percent. As the largest euro economy, German exports slumped 4.3 percent from November when they gained 2.6 percent, due to viral debt crisis in the regions.

Euro was fluctuating wildly last week due to unstable economic figures while attention was focused at Greece for reaching a pension cut. By weekend, Greek Prime Minister Lucas Papademos finally obtained approval from his Cabinet for deeper budget cuts needed to secure a second package of international aid, thus preventing financial collapse.

UK manufacturing production jumped in December by 5 times higher than forecast and trade deficit shrank to the smallest since 2003. Factory output increased 1 percent from the previous month while the trade gap narrowed by more than half to GBP1.11 billion (USD1.7 billion).

Another separate report showed the British producer price rose in January by 0.5 percent and higher than forecast. According to Acadametrics Ltd. and LSL Property Services Plc, the average price of a home in England and Wales fell 0.2 percent in January to GBP218,992 (USD346,840) and 1.4 percent from a year ago.

Technical Forecast

USD/JPY has been constricted ion the range from 76.00 – 78.20 regions for past 3 months. This week, we reckon the trend will move inside 76.80 – 78.00 regions with prone bias to selling from topside resistance. The market has been slow and listless due to weakening Japan’s economy and rising yen issue.

EUR/USD fell from the recent high 1.3322 made last week. This week, we foresee strong selling in profit-taking will emerge and support may be tested at .3020 levels. Basically, the market is beginning to consolidate into sideway movements. However, breaking above 1.3322 due to positive euro news could be reaching 1.3400 regions.

GBP/USD slid from last week’s high 1.5929 and closed at 1.5731. This week, we foresee the market will be supported temporary at 1.5700 levels while it may tease the EMA200 at 1.5800 levels. We reckon the trend will consolidate for another few days before it will slide again in near future. Abandon your short-view if the market penetrates above 1.5930 levels.

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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