Fundamental Outlook
THE US Dow Jones fell on Monday after being affected from China¡¦s slowdown but recovered throughout the week amidst better housing demand. American consumer confidence and durable goods also climbed higher in optimism. German business confidence and retail sales gained in pulling out from previous sluggishness. The UK managed to emerge from recession with the highest consumer confidence in past two-year record.
The US stocks fell on last Monday after the Chinese equities entered a bear market on concern of manufacturing slowdown and credit crunch. China¡¦s central bank official says they will safeguard stability in money markets and soon release the cash squeeze to slow the selling pressure in stocks and bonds.
The US Conference Board¡¦s index ¡V that measures consumer confidence ¡V rose to 81.4 in June, making highest record since January 2008, from a revised 74.3 reading the prior month. Another report on booking for durable goods climbed 3.6 per cent for a second month in May and also exceeds forecast.
The Gross Domestic Product (GDP) for the first quarter (1Q) in American economy grew 1.8 percent annualised rate ended through March, below initial estimate 2.4 per cent. Weekly jobless claims ended 22 June clocked 346,000 and slightly below forecast. Another separate report shows the pending home sales jumped more than six times above expectation in June by gaining 6.7 per cent.
German business confidence rose in June after the Ifo Institute¡¦s business climate index reported it gained to 105.9 from 105.7 in May. Retail sales rose 0.8 per cent in May and double the median forecast, adding signs that economic climate is picking up for recovery.
European Central Bank (ECB) policymakers said they will maintain loose monetary stance while urging the euro area governments to cut their deficits and boost investment. Debt crisis has been silent for a while but still worrisome to investors for its random recurrence.
The UK current account for 2Q shrank by 14.5 billion pounds and more than median forecast. The quarterly GDP growth ended three months through June gained 0.3 per cent that was par as expected.
Nationwide Building Society reports the UK housing prices rose 0.3 per cent in May after advancing 0.4 per cent in previous month. The average value was 168,941 pounds (US$257,300), up 1.9 per cent from a year earlier. The GfK NOP said consumer confidence rose to highest at minus 21 over past 2-year record.
Technical Forecast
US dollar/Japan yen climbed up last week from 97.00 bottoms and was approaching 100.00 benchmarks towards weekend. Technically, we reckon the market will be well supported at 97.50 regions and may ascend higher to 100.50 areas before profit-taking occurs. Adopting short strategy above 100.00 levels could be a better bet once we spot weakening signs on downturn pattern.
The euro/US dollar has been falling sharply to 1.2990 regions after the Gold prices fallen. This week, we reckon the market will consolidate at 1.2950 bottoms before turning up to make technical corrections. The target correction at 1.3200 levels is achievable once the bulls cross above 1.3050 resistances. However, abandon your long-view if the 1.2950 supports give way!
The pound/US dollar has been winding down together with Euro currency and hovered at 1.5200 on Friday.
This week, we foresee the market will be supported at 1.5130 regions while reversal up is likely to occur for technical correction. According to our study, the resistances have been identified at R1 ¡V 1.5300 and R2 ¡V 1.5450 if the support at 1.5130 can hold well in the next few days.
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 24 years of trading experience in global derivatives and forex markets. He can be reached at
[email protected].