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US Payroll Climbs and Supports DJIA

A guest post written by DAR Wong

Currency Market Observations – 12 Mar 2012

Fundamental Outlook

The US monthly payroll shows increased jobs and regains stock market confidence. Eurozone shows uncertain sentiments though Greece obtains agreement from creditors for swap repayment. Bank of England remains the benchmark interest rates unchanged at 0.5 percent and keeps its bonds purchase program at GBP325 billion.

The US Institute for Supply Management’s non-manufacturing index climbed to 57.3 in February from prior month 56.8, indicating recovery led by services industries. Another separate report showed factory orders fell 1 percent in January after a revised 1.4 percent gain in December, signaling a slow start in the New Year.

The weekly jobless claims ended for the week 3 March rose 8000 to 362,000, making its way to control the gradual growth of unemployment again. On Friday, American non-farm payroll delighted the investors by proving 227,000 jobs gain in February following a revised 284,000 growth in last month. Unemployment rate held at 8.33 percent.

However, US trade deficit gap increased 4.3 percent to USD52.6 billion in January and largest since October 2008 as imports rose rapidly. DJIA was strong after capped on Friday evening from this contradictory data.

Europe Growth Domestic Products (GDP) shrank 0.3 percent in last Q4 due to lower demands in consumer spending. The exports fell 0.4 percent after a 1.4 percent gain in the prior Q3 while household spending declined 0.4 percent and investment dropped 0.7 percent.

Last Friday, Greece went through the biggest sovereign restructuring in history after private investors agreed to swap 85 percent debt worth more than EUR100 billion (USD132 billion) in repayment. European Central Bank will be preparing to issue the second bailout package to Greece with these guidelines being satisfied.

The UK Lloyd Banking Group Plc said housing prices slid 0.5 percent from January to an average GBP160,118 (USD252,600). A separate report from the British Retail Consortium showed retail sales decreased 0.3 percent in Feb from a year earlier.

The Bank of England policymakers remained their stance unchanged on last Thursday meeting and believed the economy will move into gradual recovery soon.

Technical Forecast

USD/JPY was bullish last week especially on Friday after reacting to better US payroll figure. The market is now sitting on 80.50 levels as strong support while targeting to reach 84.00 regions. This week, we reckon that reversing beneath 81.20 levels will indicate a slowdown in bullish sentiments.

EUR/USD was sold down on Friday night after reacting to US and Greek news of bailout. The market closed at 1.3122 with bearish sign. We expect the resistance to emerge at 1.3200 – 1.3220 regions in coming early week while aiming to decline further beneath 1.3000 benchmarks towards weekend. Abandon your short-view if the trend breaks above aforementioned resistance.

GBP/USD plunged heavily on Friday and closed at 1.5674 levels. This week, we presume hunting for short entry in early week at 1.5750 regions. The support at 1.5650 levels will be crucial as breaking below here will probably land at 1.5250 regions towards weekend.

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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