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The US Housing Markets Recover From Bottom

A guest post written by DAR Wong

Currency Market Observations – 28 May 2012

Fundamental Outlook

The US DJIA begins to move in technical consolidation from 12,350 – 12,550 regions after falling for more than past 2 weeks. Housing markets stabilize in US economy while Japan makes slow recovery in exports. Europe is still suffering in overall crisis doldrums due to debt woes. European Central Bank (ECB) is setting up the Emergency Liquidity Assistance (ELA) funds for relieving the distressed indebted nations among 17 nations.

The US existing home sales jumped 3.4 percent in April to 4.62 million annual rates. Another separate report on new home sales rose unexpectedly in April by gaining 3.3 percent while increasing 343,000 annual rate, compared to the revised 332,000 in March.

The monthly demands for durable goods rose 0.2 percent in April while jobless claims decreased by 2,000 to 370,000 in the week ended May 19, both were in-line with median forecast. DJIA stocks advanced from recent bottom at 12,311 that supported the S&P index for the first weekly gain since April.

Japan’s exports rose 7.9 percent in April from a year earlier, lesser than initial estimate and worried the Japanese leaders of possible threats by global slowdown in 2012. The inflation marked by consumer prices rose 0.2 percent in April from a year earlier, but still far off from the ideal 1 percent benchmark set by central bank. Last week, Fitch cut Japan’s local-currency rating one step, and foreign-currency grade two levels, to A+, the fifth-highest ranking.

In Eurozone, a composite index of both service and manufacturing industries dropped to 45.9, the lowest in almost three years, from 46.7 in April. German economy grew 0.5 percent in the first quarter, lifting the euro-area from recession hit. Separately, German Ifo institute said its business climate index fell to 106.9 in May from prior month 109.9, the lowest since November.

European Central Bank (ECB) is setting up an Emergency Liquidity Assistance (ELA) while market news revealed some Greek banks have been moved out from the regular refinancing operations but onto ELA rescue plan.

The UK consumer prices rose 3 percent in April from a year earlier, down from annual figure of 3.5 percent in March. Retail sales including auto fuels declined 2.3 percent from March due to record rainfall that contracted consumer demands. The inflation rate cooled down while BOE governor halted bonds purchase at GBP325 billion this month but opened to further stimulus if needed.

Technical Forecast

USD/JPY rebound from recent 79.00 bottoms and has begun to consolidate with resistance capped at 80.20 regions. This week, we reckon the market will be supported at 79.50 levels and climb up to 80.60 -81.00 areas for recovery. Abandon your long-view if the trend breaks beneath 79.00 supports.

EUR/USD broke our 1.2600 supports as predicted and settled at near intra-week low 1.2514 for the weekend. This week, it is very much dependent on fundamental news to trigger the continual dive into 1.2150 targets as revealed on the technical chart. Otherwise, it is time for making technical digestion from 1.2500 areas to 1.2800 levels as our first topside target.

GBP/USD dipped below 1.5700 supports and closed at 1.5660 for the weekend. This week, we foresee the next strong support will emerge at 1.5600 regions while recovery target is aimed at 1.5800 areas. Abandon your long-view if the trend violates beneath 1.5600 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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