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The U.S. FED Holds Rates Unchanged Again

A guest post written by DAR Wong

Currency Market Observations – 21 September 2015

Fundamental Outlook

The U.S. traps in slow growth amid sluggish consumer demand. Global focus has been eyeing on central bank meeting held last week but FED announced unchanged in rates direction. Japan also holds on to same monetary policy despite Yen has stalled devaluing for months. European economy recedes on the whole with Germany and U.K. pacing down.

The U.S. retail sales grew 0.2 percent in August and lower than 0.7 percent gains in July. Core retail sales, excluding automobiles, gained 0.1 percent after receded from revised 0.6 percent in prior month.

Another report on U.S. industrial production, which includes mining and utilities, dropped 0.4 percent in August, after a 0.9 percent rise in July. Building permits in August grew 1.17 million and higher than revised 1.13 million in July.

American jobless claims for the week ended 12 September clocked at 264,000 and subsided from 275,000 in prior week. The Philadelphia FED manufacturing index dropped to minus 6 reading in August and below positive 8.3 in July. Manufacturing and consumer demands are dragging in slow pace growth despite job markets have stabilized.

In the U.S. Federal Open Market Committee meeting held last Thursday, the chairperson Janet Yellen announced unchanged in monetary policy and interest rates would remain status-quo. Outcome surprised many market analyst amid high debates of rate tightening in September.

Japan’s trade deficits recorded at JPY360 billion and narrowed down from JPY380 billion trade gap in July. Yen has stayed stagnated at 1020.00 regions for many months while investors are waiting for more monetary action from Bank of Japan.

Likewise to U.S. central bank meeting, Bank of Japan held no change in monetary policy last week but emphasized they will maintain expansion of monetary base at JPY80 trillion (USD664 billion) annually. Bank governor Kuroda warns of slowing exports and contracting demands from emerging markets.

German ZEW economic sentiment, that measures investors’ confidence, rose to 33.3 and receded from July 47.6. Trade balance in the Eurozone grew EUR22.4 billion surplus and better than median forecast.

U.K. consumer prices stayed unchanged in August on year basis. Producer prices on monthly output slid 0.4 percent and worse than negative 0.1 percent in July. Separately, retail sales was up 0.2 percent in August after showing par growth in July.

Technical Forecast

USD/JPY has been hovering around 120.00 regions with potential to drive either way. This week, we shall place the support and resistance at 118.50 and 121.00 respectively while observing the breakaway in either direction. The week-chart suggest weakness in market trend that may fall in coming weeks.

EUR/USD traded in sideways last week and closed at 1.1300 regions for weekend. Technically, we reckon a very tight range will trapped the market from 1.100 – 1.1400 ranges though the trend seems like falling soon. However, pay attention to fundamental factors since Greece will be forming new government after election. Risk control is necessary if the trend moves against you!

GBP/USD traded slightly firm last week and closed at near to EMA200 averaging line. The market is likely to trade from 1.5350 – 1.5550 regions in coming week while depending on fundamental leads. Direction is hard to predict as price swings have become irregular lately in market. Only breaking beyond the aforementioned range will confirm new trend.

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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