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UK Housing Prices Recover while Eurozone Steers from Deflation

A guest post written by DAR Wong

Currency Market Observations – 17 November 2014

Fundamental Outlook

The US economy shows slight inflation with better consumer sentiment outlook. Japan stays vibrant in recovery track while Eurozone also pulls out of deflation doldrums. UK housing prices accelerate and consumers’ confidence resurges.

The US wholesale inventories grew 0.3 percent in September after gaining 0.6 percent in prior month. Retail sales rose 0.3 percent in October. Core retail sales, excluding auto sales, climbed 0.3 percent after revised from minus 0.2 percent to par in September.

Weekly jobless claims among Americans recorded at 290,000 in the week ended 8 November. Job openings dropped to 4.74 million from 4.85 million in August.

Thomson Reuters/University of Michigan preliminary sentiment index increased to 89.4 in October, making third straight months of positive rise above median forecast. Dollar strengthened on late Friday session after reacting growing inflation outlook.

Japan’s revised industrial output rose 2.9 percent in September after rising 2.7 percent in previous month. Yen continues to weaken after Bank of Japan expanded monetary base since 2 weeks ago. Traders are eyeing on Japan’s treasuries as U.S. bonds fall.

German final inflation measured by monthly consumer prices grew at minus 0.3 percent in October and unchanged from previous month. Another separate data shows the largest economy in Eurozone rose 0.1 percent in the 3 months through September.

In the same quarter ended in September, France’s economic growth reports its Gross Domestic Product jumped 0.3 percent, the most in more than a year. Sentiment of deflation worries temporary relieved in Eurozone last week as both largest economies in grew in Q3.

On the whole 18 bloc of countries, Gross Domestic Product grew 0.2 percent in Q3 after gaining 0.2 percent in previous quarter ended in June. The final core consumer prices rose 0.7 percent in October from a year ago and matched median forecast.

UK monthly claimant counts for October reduced by 20,400 cases against 18,400 in previous month, but still worst than median forecast. Unemployment rate remained unchanged at 6.0 percent in September.

The British housing prices accelerated in October as housing values rose. Acadata and LSL Property services broadcast the average value of a home in England and Wales rose 0.7 percent to GBP277,390 (USD436,500), compared with a 0.3 percent gain in September.

Technical Forecast

USD/JPY settled above 116.00 levels on Friday while Yen reaches 7-year low. This week, we reckon supports will lie at S1 – 115.00 and S2 -114.00 while uptrend might surge further. The topside targets are identified at 118.00 and 120.00 levels if the bulls could clear them progressively.

EUR/USD is showing consolidation while some short-covering has appeared. This week, we expect the range might reach 1.2600 – 1.2630 areas before new selling pressure emerges. Beware of breaking below 1.2400 supports as this may lead the bears downwards to test 1.2250 levels.

GBP/USD is dipping into southern trend as demand has contracted. This week, we foresee the market will face resilient sellers if it recovers to 1.5700 – 1.5750 regions. However, continuation to dip down at 1.5500 is likely to occur as strengthening Pound will deter housing recovery.

Dar Wong

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

DAR Wong is an approved fund manager in Singapore with 25 years of global trading experiences. You may reach him at dar@pwforex.com

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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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