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    Housing Woes Endure 17.04.2015

    US Housing Sector Faces Uphill Recovery Battle




    With the end of the winter weather season, expectations for a rebound in building permits and housing starts were largely disappointed after yesterday’s figures showed the housing sector recovery remains tenuous at best.  Housing starts which were forecast to improve based on improving weather conditions, failed to recover from the previous month’s -15.3% contraction as breaking ground on projects was difficult due to persistently cold conditions on the East Coast, printing a minor 2.0% expansion.  Building permits fell a deeper than estimated -5.7%, weaker than a forecasted -2.0% decline. Coupled with Federal Reserve remarks jawboning the prospect of higher interest rates in the future, the dollar gave up ground, with gold prices recovering to the upside, remaining above the key $1200 level.
    Across the Atlantic, Greece has managed to overtake the headlines once more as Greek Prime Minister Tispras’ pleas to the IMF to restructure and delay repayments falls on deaf ears.  May’s looming repayments come at a substantial tradeoff for the embattled administration as they must choose between repaying creditors or compensating public sector workers and pensions.  IOUs to pay salaries and pensions has been floated, but has been met with staunch resistance as the electorate returns to Athens to protest recent government moves.  While neighboring Germany does not expect a default event to trigger a reaction in other European nations, Itay and Portugal have seen short-term bond yields rocket higher.  The epic amount of short interest in the Euro has seen the common currency squeeze higher against peers despite the negativity emanating from the Greek default concerns.
    Australian unemployment managed to surprise economists, trending lower even though the mining sector of the economy continues to weaken.  The move by the Reserve Bank of Australia to hold off on dropping interest rates further looks prudent following the latest employment print at 6.1%, highlighting that the Central Bank can keep another interest rate cut in the pipeline should the situation deteriorate further.  Another reason for holding off on another rate cut has been the mounting pressure in the housing economy which has seen prices surge higher as reduced interest rates have stoked a borrowing and buying frenzy in major cities.  The Australian dollar has edged higher against the US dollar in recent sessions as continued weakness in the US economy spurs US dollar selling.

    Economic Calendar


    USDJPY Descending Triangle Trading Opportunity





    Rampant flip-flopping from Abe Administration officials continues to stoke volatility in the USDJPY currency pair as the Bank of Japan maintains qualitative and quantitative easing measures.  Asset purchases have kept the benchmark Nikkei 225 elevated, but recent softness in US macroeconomic data has weighed on the dollar in recent session as the carry-trade unwinds slightly.  The descending triangle technical pattern setting up in the USDJPY pair over the last week has a predominantly bearish bias with major support at 118.79 as the level to monitor.  Any move below the key level should be treated as a breakout trade with initiation of short positions the ideal strategy to capitalize on the increased price momentum and volume.  




    Resistance: 119.16/119.45



    Support: 118.47/118.24



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