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Weekly Crude Inventories Increase in Supply

A guest post written by DAR Wong

Currency Market Observations – 28 March 2016

Fundamental Outlook

The U.S. goes through quiet week amid Easter season. Crude inventories grow higher and pressure demand for oil prices. American economy grows in GDP amid falling corporate profits. Germany stays robust in manufacturing growth. British economy stays flat ahead of June referendum for Brexit.

The U.S. existing home sales rose 5.08 million in February and lower than forecast, after it gained 5.47 million in January. Another report on new homes sales grew 512,000 last month after January was revised at 502,000 gains.

Weekly crude inventories increase to 9.4 million barrels and more than 3 times the forecast, putting lid on crude prices below USD40 per barrel. Weekly jobless claims stayed moderately high at 265,000 for the week ended 19 march after previous week was revised at 259,000.

American core durable goods, excluding transport equipment, dropped 1.0 percent after it was revised at 1.7 percent gains in January. Final GDP in U.S. economy rose 1.4 percent and better than expected. Corporate profits have fallen amid slow growth.

Tokyo core consumer prices slide 0.3 percent in March from a year ago and worse than minus 0.1 percent in previous month. Nationwide consumer prices stays unchanged from last month data. Investors are dubious of achieving 2.0 inflation targets as outlined by policymakers many times.

German Ifo business climate that measures manufacturing and wholesale reports gains at 106.7 in March, highest in 4-month record. ZEW economic sentiment rose to 4.3 after it was at 1.0 in last month.

U.K. consumer prices rose 0.3 percent in February from a year ago and in line with expectation. Another report on producer prices of raw materials rose 0.1 percent after it was revised at minus 1.1 percent in January.

U.K. retail sales slid 0.4 percent in February compared to 2.3 percent gains in prior month, probably affected by plunging currency value in Pound. Investors are debating if Brexit referendum in June will lead U.K. to better economy.

Technical Forecast

USD/JPY pulled up last week amid short covering. Technically, we reckon resistance will emerge at 113.60 regions while the trend may resume into bearish sentiment this week. Downside target could drive to 110.50 bottoms again if oil prices plunge.

EUR/USD has exhibited strong resistance at 1.3300 – 1.3350 regions while mkt closed lower at 1.3150 levels for the weekend. This week, we predict the trend will be swinging from 1.3050 – 1.3350 areas without clear directional clue. Traders are advised to exercise risk control when the prices breakout beyond the aforementioned range.

GBP/USD resumes bear trend due to loss of confidence in Brexit debate. Market is seen temporary supported at 1.4100 levels while capped under 1.4500 resistances. This week, we foresee the trend will move sideways within the aforementioned range but the weakening strength in Dollar may counter the bears in Pound and cause uncertain consolidation.

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 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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