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The US Initial Claim Falls To Lowest In 4 Years

A guest post written by DAR Wong

Currency Market Observations – 8 October 2012

Fundamental Outlook

The US initial jobless claims fall to lowest record in 4 years while trade deficit widens in reducing exports. The total US debts decline to lowest since 2006 at 3.29 times gross domestic products. Europe’s sovereign debts edge into third year while International Monetary Fund (IMF) warns of danger of re-eruption. UK property prices sink to bottoms with little interest among buyers.

The US trade deficit widened in August as demand for American goods slowed down. Trade gap grew 4.1 percent to USD44.2 billion from USD42.5 billion in July, curtailed by stagnancy in Europe and slower growth in China. Initial jobless claims dropped 30,000 to 339,000 in the week ended Oct. 6, the fewest since February 2008.

The American producer price index climbed 1.1 percent in September after a 1.7 percent gain previously. Core prices remained unchanged. The total debts including that of federal and state governments and consumers’ outstanding credit have fallen to 3.29 times gross domestic product from a peak of 3.59 four years ago.

Japan’s machinery orders fell more than expected in August when the data declined 3.3 percent after rising 4.6 percent in July. Prime Minister Yoshihiko Noda calls for talks with China to control the damage of mutual economic progress out of the dispute on Diaoyu Islands. China has agreed but no specified date is mentioned.

Euro-region industrial production unexpectedly increased for a second month in August when output rose 0.7 percent from July. German industrial production fell 0.4 percent in August from the previous month, when it rose 1.3 percent.

Last week, S&P rating agency downgraded Spain’s credit rating and assigned a negative outlook to the nation’s long-term rating. Both economic and political risks are spurring Spanish leaders to consider another bailout package from ECB and EU. International Monetary Fund (IMF) reminds central bank to keep interest rate at low levels as Europe’s sovereign debt crisis moves into third year and may post danger in worsening outlook.

The UK housing prices fell for a third month in September as buyers show little interest amid tightening mortgages. Acadametrics and LSL Property Services Plc (LSL) reported the average cost of a home in England and Wales fell 0.1 percent from August to GBP225,374 (USD362,000).

Technical Forecast

USD/JPY closed at 78.44 for the weekend as the market traded narrowly between 78.00 – 79.00 ranges. This week, the trend might firm up due to mutual talks with China. However, the bullish sentiment needs to escalate above 79.00 resistances to confirm the uptrend. Abandon your short-view if the market reverses below 78.00 levels again.

EUR/USD tested our forecast support at 1.2850 levels last week while turning up from the dip at 1.2825 levels. This week, we expect the market to float above 1.2900 levels and probably will re-test 1.3100 areas resistances before new slide begins. Lookout for fundamental news on debt crisis and abandon your long-view if the bears penetrate beneath 1.2825 supports.

GBP/USD sat on 1.5980 supports last week and reversed up to almost 1.6100 regions before the weekend. This week, we reckon the market will remain in buying interest and short-covering to 1.6170 areas is expected. Do not keep long-view once the trend sinks beneath 1.6000 major benchmarks again.

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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1 Comment to The US Initial Claim Falls To Lowest In 4 Years

  • October 15, 2012 at 8:17 PM | Permalink

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