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Weekly Market Review 28th January 2013

Published 01/28/2013, 07:20 AM
Updated 03/09/2019, 08:30 AM
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The job market in the U.S. probably kept making headway in January even in the face of Washington’s budget battles, economists said before reports this week. Employers added 160,000 workers to payrolls in January after a 155,000 December increase, according to the median of 67 forecast in a Bloomberg survey before a Feb. 1 Labor Department report. The average monthly gain over the past two years was 153,000. Other data this week may show manufacturing is stabilizing, housing is improving and consumers are spending.

Japanese Prime Minister Shinzo Abe’s government predicts that tax revenue will exceed cash raised from bond sales for the first time in four years as the nation’s economy emerges from last year’s recession. The government forecasts 43.1 trillion yen ($473 billion) of tax revenue for the coming fiscal year, which starts April 1, compared with 42.85 trillion yen from issuing bonds, Finance Minister Taro Aso said in Tokyo late yesterday. Total spending is forecast at 92.6 trillion yen.

Euro-area jobless data this week will expose the social cost of last year’s debt crisis and recession on southern European economies as unemployment across the region probably rose to a record in December. Unemployment in the 17-nation bloc climbed for a fifth month to 11.9 percent, according to the median of 34 economists in a Bloomberg News survey. That result due on Feb. 1 would show the highest jobless rate since records began in 1995. By contrast, German unemployment data the day before may show the jobless rate there held steady for a fourth month at 6.9 percent in January, a separate economist survey found.

EUR/USD: The EUR/USD traded higher (11-months high) on Friday after the European Central Bank said 278 euro zone banks are to repay EUR137.2 billion in central bank loans next week and after some positive data were released in the Euro area. In addition, good economic data in the U.S fueled demand for risky assets. Today, the pair was trading lower at 1.34622 at the time of writing on some profit takings. The events likely to bring volatility on the EUR/USD today are the M3 money supply and private loans in the Eurozone, the German 12-Month Bubill Auction and the French BTF Auctions. On the other hand, the U.S will release the key risk event, the Core Durable Goods Orders (MoM). Demand for U.S. goods such as machinery and electronics probably rose 2 percent last month after a 0.8 percent gain in November, according to the median estimate of economists surveyed by Bloomberg News. The U.S will also release the Pending Home Sales (MoM), which expected to decrease to 0.3% from 1.7% registered last month. Investors should monitor all these data to get visibility on the market. In the week ahead, events likely to affect the pair are; Tuesday, the Eurozone will release the Gfk consumer climate index, while the U.S will release the CB consumer confidence and the Case-Shiller’s house price inflation. Wednesday; Spain will publish data on fourth quarter gross domestic product. On the other hand, the U.S will release the ADP Nonfarm Employment Change data on fourth quarter economic growth and weekly data on crude oil stockpiles. Later in the day, the Federal Reserve will announce its federal funds rate and publish its closely watched rate statement. Thursday; Germany will publish data on consumer inflation as well as data on retail sales and the change in the number of unemployed. France will release data on consumer spending. Conversely, the U.S. will release report on initial jobless claims, as well as data on personal spending and manufacturing activity in Chicago. Friday; the euro zone will publish data on consumer inflation in the bloc, as well as official data on the unemployment rate. On the other hands, the U.S will release the nonfarm payrolls and the unemployment rate. The Institute of Supply Management will publish a report on manufacturing activity. In addition, the University of Michigan will release revised data on consumer sentiment. Volatility is expected on the pair throughout the week. The resistance level is at 1.35753 and the support level is at 1.32565 on the weekly chart.
<span class=EUR/USD" title="EUR/USD" width="690" height="348">
USD/JPY: The USD/JPY traded at highest level in 2 1/2 years on Friday after Japanese government officials said the yen still had room to weaken. On Thursday, Japan's Deputy Economy Minister Yasutoshi Nishimura said an exchange rate of 100 yen to the dollar would not be a concern to the government. Today, the pair was trading slightly lower at 91.001 at the time of writing on market correction and profit takings following the recent sharp increase. Market sentiments remain bullish on the pair as data today, forecast to show an increase in U.S. durable goods orders, adding to signs of a recovery in the world’s biggest economy and before Federal Reserve officials begin a two-day policy meeting tomorrow. Investors should adopt a wait and see approach on the pair. In the week ahead, events in Japan likely to affect the market are Wednesday; the country will publish official data on retail sales. Thursday; Japan will produce data on industrial production as well as data on manufacturing activity and average cash earnings. Friday; Japan will release official data on consumer spending. Investors should also monitor all the data in the U.S to better assess the trend of the USD/JPY. The resistance level is at 91.476 and the support level is at 90.399 on the weekly chart.
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Oil (WTI): Oil traded near the highest price in four months on Friday after posting the longest run of weekly gains since April 2009, lifted by speculation that a global economic recovery will boost fuel demand. The commodity was trading at 95.980 at the time of writing ahead of the U.S. government reports today that may show durable goods orders and pending homes sales advanced last month, according to Bloomberg News surveys. Market sentiments remain positive on the commodity, however market participants should remain prudent as there may be some market corrections intra trade. In the week ahead, oil traders will be anticipating Wednesday’s preliminary data on U.S. fourth quarter economic growth, as well as Friday’s U.S. nonfarm payrolls report, as markets attempt to gauge the strength of the U.S. economic recovery. Market players will also be eyeing the Federal Reserve’s policy-setting meeting on Wednesday, for further hints on the future of its ultra-loose monetary policy. News and data from China and the Eurozone will also affect the movement of the commodity. The resistance level is at 98.250 and the support level is at 93.198.
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