Tweet this

Dealing Desk Hotline

(603)-2181 8848

U.K. Drops in Jobless Claims amid Higher Retail Sales

A guest post written by DAR Wong

Currency Market Observations – 22 February 2016

Fundamental Outlook

American consumer prices improve with producer prices. China reports increasing trade surplus while Japan slows in growth. European Central Bank reiterates on adding stimulus if needed. U.K. advances in retail sales amid declining claims.

The U.S. building permit grew 1.2 million in January and stay well balanced for housing demand. Producer prices went up 0.1 percent after it contracted 0.2 percent in previous month. Weekly claims for jobless benefits fell to 262,000 in the week ended 13 February and better the previous week. However, analysts presume this is due to tighter market from recent rates hike since unemployment has not really decline.

American consumer prices remained unchanged in January after slipping 0.1 percent in December. Core prices, excluding food and energies, rose 0.3 percent and biggest since August 2011.

China trade balance grew CNY406 billion (USD63.3 billion) in January and better than forecast. Consumer prices rose 1.8 percent from a year ago and maintains gains in spending. Producer prices also narrowed to 5.3 percent on annualized rate from previous month 5.9 percent.

The Prelim GDP for Japan fell 0.4 percent in the quarter ended December 2015. Bank of Japan continues to ensure in achieving 2.0 percent inflation in 2017 while investors’ confidence are waning. Yen has begun to rise again since January despite the negative interest rate policy announced on 29 January.

European Central Bank (EDB) President Mario Draghi reassures that policymakers are on standby to add more stimulus if economy fails to recover. However, the negative interest rates implemented since 1-1/2 years ago has not trigger much recovery though a deeper cut to minus 0.3 percent was announced in December.

U.K. consumer prices grew 0.3 percent in January from a year ago and remains stagnant. Producer prices for manufacturer’s input contracted 0.7 percent in January after it shrank 0.3 percent in December.

British claimant for jobless benefits dropped 14,800 in January, at best record since February last year. Average earning ended on quarterly basis ended December rose 1.9 percent while unemployment increased to 5.1 percent.

U.K. retail sales gained 2.3 percent in January and highest since December 2013. Another data on public sector net borrowing dropped GBP11.8 billion unexpectedly and down from GBP7.5 billion in December. Pound value jumped on last Friday after the data release.

Technical Forecast

USD/JPY topped off 114.87 last week and closed at 112.50 regions. This week, we reckon the trend will fall and probably might test 110.00 bottoms before bargain-hunting steps into market. Resistance will be strong at 114.50 in case of pull up retracement.

EUR/USD traded in down trend last week and closed at 1.1125 levels. This week, the trend may be supported at 1.1050 regions with good support strength to push the trend higher. We predict the uptrend might climb to 1.1450 areas if Dollar weakens. Control your risk if the trend falls below 1.1050 supports.

GBP/USD has exhibited the bullish sentiment on last Friday. This week, we expect the trend will probably ascend higher with support resting at 1.4320 areas. Target price might aim at 1.4600 or higher if more positive fundamental news could support the Pound. Abandon your long view if the prices turn beneath 1.4300 levels.

Dar Wong

This post is contributed by OPF Guest Blogger, DAR Wong.

DAR Wong is a registered fund manager in Singapore with 26 years of global trading experiences. You may reach him at

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.