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The U.S. Home Sales Slow Down

A guest post written by DAR Wong

Currency Market Observations – 28 October 2013

Fundamental Outlook

The U.S. existing home sales slows down as payroll drops in pessimism. Market expects tapering will be delayed in November as U.S. economy weakens again. Japan’s core consumer prices rise for a fourth month but in-line with expectation. German Ifo Business climate slides for a second month below median forecast and causes jittery in Euro’s bullish sentiment.

The U.S. existing home sales slid in September for the first time in 3 months as purchases dropped 1.9 percent to 5.29 million annual rates. Non-farm payroll for September rose 148,000 after followed a revised 193,000 gain in August. Unemployment rate dropped to lowest record since end 2008 at 7.2 percent.

The Dollar index declined to 8-month low record at near to 79.00 levels after the U.S. federal government shut down for 17 days. Economy fails to pick up after the operation re-opens and market analysts expect tapering of stimulus to be delayed in November.

Another report shows trade deficit in the U.S. increased 0.4 percent to USD38.8 billion from a revised USD38.6 billion in July. Jobless claims decreased by 12,000 to 350,000 in the week ended 19 October.

Before the weekend, the orders for durable goods added limelight to U.S. economy as it gained 3.7 percent in September and more than double the expectation. Core orders excluding transportation equipment fell 0.1 percent after a 0.4 percent decrease in August.

Japan’s core consumer prices rose 0.7 percent in September from a year ago, making a fourth gain as Prime Minister Shinzo Abe aims to exit from the 2 decade-long deflation. However, Japanese Yen fails to weaken and has been trading sideways in small range throughout the whole week.

German’s business confidence unexpectedly decreased in October when the index was reported at 107.4 from 107.7 in September. Bullish sentiment in Euro currency was pulled back on Friday after the figure fell below median forecast.

Britain’s budget deficit narrowed in September as the housing demands stabilizes. Net borrowing excluding temporary support for banks was GBP11.1 billion (USD18 billion) compared with GBP12.1 billion a year earlier.

Another separate report in U.K. GDP rose 0.8 percent in Q3 after rising 0.7 percent in the previous 3 months ended June. Growth accelerated in fastest pace in more than 3 years. Pound stays on the high side above 1.6100 levels for the weekend.

Technical Forecast

USD/JPY is narrowing into the range from 96.50 – 99.00 regions. There is no clue to which direction the market will be heading but breaking beyond either side of these extremes will lead a new extension. Fundamentally, we feel that Japan needs to announce some very strong economic improvements in order to weaken the Yen, hence driving the market upwards.

EUR/USD is hovering at 1.3800 regions as the market may begin to fizzle out in profit-taking. This week, we expect the resistance will emerge at 1.3850 regions and probably move in sideways consolidation. The market has to dive below 1.3650 supports before we can confirm the new bearish sentiment. Hence, there is a likelihood of sideways correction in this range from 1.3650 -1.3850 regions.

GBP/USD has been capped below 1.6250 as forecast last week. The market is still unable to pierce above this resistance and likely will trade lower in coming week. Technically, we reckon the trend will move inside 1.6000 – 1.6250 ranges as profit-taking might occur soon. Abandon your short-view if the trend breaks above 1.6250 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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