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The US Housing Wriggles in Recovery

A guest post written by DAR Wong

Currency Market Observations – 26 Mar 2012

Fundamental Outlook

The US housing sales remain in weak sentiment though slump has slowed down. Japan overseas shipment decline at lower rate and viewed as improvement with increasing trade surplus. The UK inflation reduces despite it is still above central bank’s limit and policymakers believe recovery rate could avoid recession.

The US National Association of Home Builders/Wells Fargo index of builder confidence held at 28 reading for March, highest since June 2007. The market begins in small rebound due to rock-bottom property prices.

The US existing home sales in February held at almost 2-year high by mere dropping 0.9 percent to a 4.59 million annual rate from revised 4.63 million in January, adding evidence that home markets are firming. However, another separate report on new homes sales slid 1.6 percent to a 313,000 annual pace. Data showed more interest in secondary markets than new properties.

The American jobless claims decreased by 5,000 to 348,000 in the week ended March 17, making best record of lowest weekly claims since February 2008. Analysts believe US job market is underway recovery while in line with strong payroll in previous month.

Japan’s offshore shipment shed 2.7 percent in February from a year earlier but lesser than median forecast. Imports gained 9.2 percent with JPY32.9 billion (USD395 million) of trade surplus. Yen value reversed after mid week on reacting to data.

Britain’s budget deficit almost doubled in February as taxes fell and spending surged. Net borrowing excluding support for banks was GBP15.2 billion (USD24.1 billion), compared with GBP8.9 billion a year earlier. The UK policymakers have announced hold-on to GBP325 billion bond purchase program without further stimulus.

UK retail sales including fuel was down 0.8 percent from January while consumer prices rattled at 15-month low of 3.4 percent in February. The inflation still outpaces above central bank’s limit 2 percent with contracting employment rate despite policymakers insist of imminent recovery underway.

Technical Forecast

USD/JPY moved in our expectation last week while constricted inside the major trend of 82.00 – 84.00 regions. This week, we foresee the movement range will remain unchanged but wriggle in bottom-up patterns instead. The market is pretty overbought and needs some technical correction though traders are waiting for some fundamental news to initiate it. However, firm sentiment is still intact!

EUR/USD is showing tricky sign on day chart based on Friday’s close 1.3268. This week, short traders are warned to be cautious as breaking above 1.3300 may attempt 1.3380 levels for market short-squeeze. Downside trend has to break below 1.3140 before we resume our bearish view. However, our overall view still remains bearish by adopting a sell-top strategy!

GBP/USD traded in our predicted range estimated from 1.5750 – 1.5900 regions last week. This week, we foresee some selling interest in market so long as pull-up retracement does not violated above 1.5920 levels. In our opinion, the down rush will begin once the bears cross beneath 1.5750 supports and this penetration will probably aim at 1.5600 targets.

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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