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The US Payrolls Rise At Minimal Growth

A guest post written by DAR Wong

Currency Market Observations – 07 May 2012

Fundamental Outlook

The US payrolls shrinks again while jobless claims lessens due to contracting offerings in employment. American economy stagnates together with the Eurozone moving into recession at highest unemployment in past 15-year record. UK housing persists and slows down though policymakers still believe economic recovery is underway.

The US Institute for Supply Management-Chicago Inc. reported its business index decreased to 56.2 in April from prior month 62.2 and indicated slowdown in manufacturing. Another service index from this same institution on non-manufacturing sectors slid to a 4-month low 53.5 from 56 in March. Both readings indicated the slowdown in economic recovery.

The American consumer spending increased 0.3 percent in March that was same as forecast while factory orders fell 1.5 percent after a revised 1.1 percent gain in February. On Thursday, jobless claims dropped 27,000 to 365,000 in the week ended 28 April signaling more people have given up in looking for jobs.

On Friday, the US payrolls climbed 115,000 in April, making the smallest gain in last 6 months, after a revised 154,000 gain in March. Unemployment remained at 8.1 percent with stagnated personal earnings, signaling the cool down in current recovery.

In Eurozone, the Portuguese government will reduce its primary spending limit by 3.2 percent in 2013 and lower the limit for total spending by 2.1 percent, in an effort to curb debt and regain foothold in bonds markets. Following Spain, the 17-nations have its twelfth member country decaling recession with progressive 2 quarters of decline in GDP data.

Eurozone unemployment rose to 10.9 percent in March from 10.8 percent in February, showing deepening slump at 15-year record high. Manufacturing continues to decline when Market Economics reported the index fell to 45.9 in April, a 34-month low, from 47.7 in March. European Central Bank (ECB) policymakers said would reserve their rights to add stimulus if necessary.

Halifax Ltd said UK housing prices dropped 2.4 percent from March, the largest monthly decline since September 2010, to an average GBP159,883 (USD258,700) in April. Bank of England (BOE) governors said mortgage approvals increased in March with new home buyers emerging while consumer confidence held unchanged, thus reiterated unlikely to fall into recession. So far, policymakers held their stimulus target at GBP325 billion since April and kept the benchmark interest rate at a record low of 0.5 percent.

Technical Forecast

USD/JPY has been hovering at 80.00 benchmarks with buying interest in market. This week, we reckon the market will be supported at 79.30 – 79.50 regions though the trend will be trading sideways at bottom zone. Resistance lies at 80.80 levels which will narrow the trend down to test the bottom area. The long-term outlook for this market remains bullish if the aforementioned support can hold well!

EUR/USD has begun to soften last week from the top resistance emerging at 1.3200 – 1.3250 regions. This week, the trend will continue to be bearish if there is no further fundamental influence from human’s remarks. The initial support lies at 1.3000 benchmarks which may break to test lower grounds at 1.2850 levels. Abandon your short-view if the trend pierces above 1.3200 resistances.

GBP/USD traded from 1.6150 – 1.6300 ranges last week with-holding market strength. We expect some support to emerge at 1.6100 regions that will channel the market trend into sideways in coming week. Basically, we foresee the consolidation will occur from 1.6100 – 1.6300 in near future. Abandon your long-view if the trend breaks ground at 1.6100 supports.

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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