The US payrolls reduce with rising unemployment
by Dar Wong. Posted on June 6, 2011, Monday
Fundamental Outlook
The US payrolls rose in slower pace in May. Consumer confidence has been slacken and housing slump still persists in American economy.
Eurozone is focused at Greek debts as centre of attraction for bailout as euro currency recovers to positive news. The sluggish UK economy is under impact of weaker consumer confidence and housing plunge.
The US Conference Board’s index for consumer confidence slid to 60.8 from a revised 66 reading in April, showing the worst data in past six months. The factory index reflected by Institute for Supply Management dropped more than projected to 53.5 in May from prior month 60.4.
Another report by Standard and Poor’s/Case-Shiller reported home pr ices plunged 5.1 per cent in the first quarter from the same time in 2010.
On month to month basis , housing price index fell 3.6 per cent in March from a year ago, the biggest yearover-year decline since November 2009. Jobless claims was down 6,000 to 422,000 in the week ended May 28 but lesser than forecast.
On Friday release, the US payrolls increased below expectat ion by 54,000 in May, after a revised 232,000 gain in April that was smaller than initially estimated.
Unemployment rate rose to 9.1 per cent and underscoring weak recovery.
US dollar index plunged upon this data report and spiked reversal up in commodity prices.
Japan’s factory output rose one per cent in April, only at half the median estimate and unemployment rose to 4.7 per cent from 4.6 per cent in March. Prime Mini s t e r survived a no-confidence vote and market analysts claimed possible ‘V’ recovery to be seen in Japan’s economy soon.
German economy remains as strongest in Eurozone despite other sovereign debts erode investors’ confidence.
Unemployment fell in May for a consecutive twenty-third months due to expansion in exports and growing business confidence. The jobless rate declined to seven per cent.
After long discussion among European policymakers, European Union (EU) and International Monetary Fund (IMF) of f icials completed a rescue plan worth euros 78 billion (US$113 billion) for Greek bailout on Friday by ordering asset sales and austerity measures.
In UK economy, a report from Hometrack Ltd showed British house prices dropped 0.1 per cent in May following demands contraction.
Obviously, weaker consumer confidence in recent months had deterred property buyers while analysts expect the next rate hike will be seen probably in August only. Thus, UK pound is still weak in market trend.
Technical Forecast
US dollar/Japanese yen moved in tight range from top 81.77 and down to 80.05. Market dropped on Friday after weak US jobs data and reaching the support levels that we predicted last week.
We reckon the market is still in fatigue though the direction is unclear.
The next support at 79.50 regions may be tested unless the trend reverses above 81.77.
Euro/US dollar has reached our price target above 1.4600 regions forecast last week. We expect the market to slow down and will begin to consolidate soon with bottom supports to be tested at 1.4450 levels.
The current tops at 1.4650 regions should guard well against the bulls with new selling interest emerging in early week.
Abandon your-view is the market penetrates above 1.4700 levels.
UK pound sterling/US dollar is bearish in coming week though the market may test the topside resistance 1.6500 regions.
Traders are advised to pick short entry from top regions in early week as suggested and aim for bottoms around 1.6280 levels. We predict the mid term trend over coming months will be weak unless the bulls break above 1.6550 resistances.
Disclaimer: This article was written for general information only. No liability by the writer or newspapers.
Dar Wong is the founder of PWFOREX.com with 22 years of trading experience in global derivat ive s and fore ign exchange markets. He can be reached at dar@pwforex.com.
