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The US Weekly Claims Rise since January

A guest post written by DAR Wong

Currency Market Observations – 16 Apr 2012

Fundamental Outlook

The US economy recovers on bumpy road with mild inflation and rising claims while imports fall. Japan vows to keep the stimulus in pipeline for eradicating deflation. Europe may deepen into debt woes again with Portugal asking for financial aid from European Central Bank (ECB).

The US wholesale inventories rose more than forecast in February when stockpiles gained 0.9 percent from prior month. The US import-price index rose 1.3 percent in March and indicated higher costs for industrial materials. Another report on core producer prices climbed 0.3 percent after 0.2 percent rise in February and confirmed the mild inflation.

The US weekly initial claims rose 13,000 ended 7 April to 380,000, the highest since end January. The trade deficit narrowed more than forecast in February as imports fell by the most in three years. Trade gap shrank 12 percent to USD46 billion from a revised USD52.5 billion in January.

The US consumer-price index climbed 0.3 percent, matching the median forecast while core measure rose 0.2 percent. FED chairman Bernanke reiterated that financial stability must be focused and vital to prevent from repeating in 1930 recession.

Japan’s machinery orders increased 4.8 percent in February and signaling rise in manufacturing outlook. Last week, the central bank kept JPY30 trillion (USD368 billion) asset-purchase fund and JPY35 trillion credit-lending program unchanged. However, Bank of Japan (BOJ) Governor Masaaki Shirakawa pledges to add monetary stimulus to maintain steady recovery and aim to end deflation.

The ECB offered its financing for Portuguese aid reached record high in March by hitting EUR56.3 billion (USD74 billion) from prior month EUR47.6 billion.

The British Retail Consortium said UK retail sales gained 1.3 percent in March from a year earlier, as demands are recovering. Trade deficit widened in February due to declining exports of cars and heavy machinery. The trade gap widened to GBP8.77 billion (USD14 billion) from a revised GBP7.88 billion in January.

Technical Forecast

USD/JPY has come down to our expected correction target at 80.50 regions last week. This week, we expect the range to move from 80.00 – 82.50 levels but in sideway trend. The market may slow down over few weeks due to technical digestion as well as waiting further comments from BOJ governor to reverse the rising yen value in helping national exports.

EUR/USD met a fierce sell down on Friday and closed at 1.3076. This week, we reckon a continual bear trend will emerge and challenge the 1.3000 major supports. Breaking beneath this level may reach down to 1.2860 regions as next target. Abandon your short-view if the trend reverses above 1.3200 levels.

GBP/USD turned down on Friday and closed at 1.5842. We foresee the bear will challenge the 1.5800 supports again in coming week and might sink further to 1.5650 regions. However, the trend should not head up again above 1.5970 levels in order to maintain this bearish outlook!a

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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