Tweet this

Dealing Desk Hotline

(603)-2181 8848

The US Payroll Contracts Unexpectedly

A guest post written by DAR Wong

Currency Market Observations – 13 January 2014

Fundamental Outlook

The US non-farm payroll grows at small pace while unemployment turns down unexpectedly. Janet Yellen will assume the role to become FED Chairperson after Ben Bernanke steps down at end of January. Eurozone economy slows down but Germany maintains AAA credit rating affirmed by Standard & Poor’s ratings. Mortgage loans and housing markets in UK are recovering steadily with better expectation in 2014.

The US Institute for Supply Management’s non-manufacturing index slid to 6-month low at 53 in December from prior month 53.9. Jobless claims for the week ended 4 January was reported at 330,000 and down from prior week and median forecast.

American payroll rose in December at the slowest pace in almost 3 years, with mere 74,000 gains in December. Ironically, unemployment rate was down to 6.7 percent and economists reckoned more people have left the work force. Another report on consumer credit increased in November when the data advanced USD12.3 billion after followed revised USD17.9 billion rise from the previous month.

In the FOMC’s minutes, FED officials stated the diminishing economic benefits from bond-buying program. Tapering of stimulus will begin in this month and market investors are concerned of backend effects after liquidity is withdrawn. Separately, Janet Yellen has won US Senate confirmation to become the 15th chairman of the Federal Reserve (FED) and the first woman to head the central bank in its 100-year history.

Eurozone inflation slowed in December while annual rate dipped to 0.8 percent vs. prior month 0.9 percent. The central bank’s benchmark remains at 2 percent ceiling and seems remote to the recovery. Another separate report on unemployment in the 17 nations bloc stagnated at 12.1 percent in November while it struggles to recover from long recession.

On the other hand, German factory orders, after adjusted for seasonal swings and inflation, gained 2.1 percent in November and gathered strength in the biggest Euro economy. The unemployment slid in December by down seasonally adjusted 15,000 to 2.965 million.

German industrial output, adjusted for seasonal swings, increased 1.9 percent in November after falling 1.2 percent in prior month. Germany’s AAA credit grade has been affirmed by Standard & Poor’s amid the resilient economy.

Llodys Banking Group reports UK housing prices rose 1.9 percent in the fourth quarter. Mortgage lender Halifax Plc remarks housing prices will continue to extend this year as economy recovered last year.

The UK industrial output stagnated at 0.4 gains in November while construction dropped 4 percent. The UK economic growth slowed to 0.7 percent in the fourth quarter from 0.8 percent in the previous three months. However, market investors are betting on housing growing strength as lead factor to pull economy out of recession.

Technical Forecast

USD/JPY was in whipsaw trend last week from 103.80 – 105.40 regions. The day-chart closed on Friday with bearish pattern at 104.17 levels. This week, we reckon the trend will fall while resistance is expected to emerge strongly at 105.40 – 105.40 areas. The downside target might aim at 102.50 levels as predicted over past weeks. Abandon your short-view if the bulls march passed 105.40 resistances.

EUR/USD climbed on Friday after it reversed up from recent low at 1.3548 levels. This week, we expect the bulls to ascend further with 1.3720 – 1.3750 regions as our correction targets. The market should be digesting the previous bear trend as some short-covering will be occurring in coming week for taking profit. However, falling below 1.3600 may pose danger for long traders.

GBP/USD was consolidating in technical correction last week. Now, the market is resisted at 1.6520 – 1.6550 regions while we predict another downfall may begin soon. However, the market trend should not protrude above 1.6604 levels again if the bears want to stay in control. The support will lie at 1.6300 levels for the time being in case the prices fall this week.

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).

Subscribe to OPF Blog via Feed Reader or Email

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.


Share and Enjoy:
[] [Digg] [Facebook] [Google] [Mixx] [MySpace] [Twitter] [Windows Live] [Yahoo!] [Email]

Post a Comment

Displayed next to your comments.

Not displayed publicly

If you have a website, link ti it here


OPF reserves the right to delete comments that are snarky, offensive, or off-topic. If in doubt, read our Comments Policy.