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The US Economy Picks Up 5 Percent in Growth

A guest post written by DAR Wong

Currency Market Observations – 29 December 2014

Fundamental Outlook

The global market has a short week due to Christmas season. American housing market proves sluggish in recovery despite economy growth jumps. Japan enjoys moderate consumer growth while UK moves in steady economic acceleration.

The US existing homes slumped in November from 1-year high, underscoring rough tides on road to recovery. Home purchases fell 6.1 percent to a 4.93 million annual rate, showing the weakest reading since May, from a 5.25 million pace in October.

Another separate report on American new home sales unexpectedly declined in November to a 4-month low, following slide in existing home sales. New home sales dropped 1.6 percent to a 438,000 annualized pace after expanded 445,000 annual rate in October that was weaker than previously estimated.

American economy grew 5 percent annual rate in Gross Domestic Product (GDP) from July through September, the biggest advance since the third quarter of 2003, and up from a previously estimated 3.9 percent. Orders for durable goods decreased 0.7 percent in November while core orders, excluding transportation equipment, fell 0.4 percent from October.

The weekly US jobless claims ended for the week 20 December was 280,000 compared to 289,000 in prior week, showing slight improvement. USD index (USDX) maintains in its surge above 90.0 levels and may add pressure to stock market in coming week.

Tokyo core consumer prices in December rose 2.3 percent from a year ago while national core inflation expanded 2.7 percent at annualized pace, both in line with forecast. Household spending improved at minus 2.5 percent in November from a year ago after reported at minus 4.0 percent in prior month.

UK trade deficit increased to a record GBP27 billion (USD42 billion) from GDP24.3 billion in the second quarter. Final GDP for third quarter was reported at 0.7 percent growth and same as expectation.

Technical Forecast

USD/JPY has emerged above 120.00 levels while still trading in small range. Market is moving in thin volume amid holiday seasons though Yen is prone to favor the weak sentiment. This week, we reckon market will continue to thread minimally from 119.50 – 120.70 ranges but piercing above 120.70 resistances might climb to 121.50 regions.

EUR/USD is trading at year-low around 1.2170 regions while market is pressured by bearish sentiment. This week, we foresee the downtrend may continue to stretch down at 1.2000 benchmarks in case the Dollar persists in rising. Resistance is identified at 1.2300 regions if euro currency could reverse the trend upwards.

GBP/USD is still in congestion range though it has been capped below 1.5600 as bearish sentiment. Technically, the market is pressured by seller above 1.5600 regions with high potential to see another slide in coming week. We foresee the target may reach 1.5350 at the bottom in near future.

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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