Thursday July 18

Asad Rizvi

GMT 3:15  - Nothing new as yet, the message is obvious that FED wants growth at a faster pace, probably aware that return on an average daily injection of USD 3.9 billion in economy based on 22 working days a month, it is difficult for FED to justify the cost. He is rightly worried and unhappy that the job situation is far from satisfactory. 

His testimony loaded with IF'S used quite frequently and explaining the difference between tapering and tightening and assuring that FED would be prepared to employ all is tool, including an increase in pace of purchase and then adding that market is beginning to understand our message indicates that though he remains Dovish, but FED has to take a breather and halt injection liquidity at some point. 

Here I don't want to mix economics with politics, but we look at the past history, there could be a possibility that Fed Chairman's current stance is a pro active measure to engage Senate into a debate on fiscal policy relating to Federal Debt Ceiling prior to November deadline to minimize the risk of possible economic distortion. 

Bottom line is that confusion persist, as FED Chairman could be doing this intentionally because such a strategy provides little space to guess about Fed's next move and helps to bring stability. US 10-year bond yield is back below 2.50 pct, overall financial market looks stable. FED Chairman is again schedule to appear today before the Senate in a Q&A session and market will be looking for more clues. 

Meanwhile, US economy is giving mixed signal, FED Beige Book suggest "modest to moderate" growth, pointing towards consumer spending, Industrial output, housing, retail sales and manufacturing sector. After Bernanke's testimony market will be keenly watching economic progress that should provide future guidance. Today's initial jobless claims is an important employment indicator that could bring some life in the market. Philadelphia Fed Survey is another US data due today. In the absence of any clarity market will remain choppy and directionless until Bernanke is done with his Q&A session.

GMT 3:15  - EURO @ 1.3108 = Likely to hold 1.3050-80 levels, with firm protection at 1.3010 a gradual up move will be seen, but needs to break 1.3190 for test of 1.3235-50 zones. 
GMT 3:22 - GBP @ 1.5193 = Cable could drift down, but needs to hold around 1.5130-40 zones for test of 1.5230-50 levels or else slide could extend towards 1.5077. 
GMT 3:26 - JPY @ 99.77 = Break of 99.98 will pave way for a test of 100.45-50 zones and beyond. However fall below 99.40 would risk for 99.10. 
GMT 3:30 - AUD @ 0.9187 = As long as 0.9230 is protected Aussie could sip to test 0.9110-20 zones. however, upside break will encourage for 0.9270. 
GMT 3:38 - GOLD @ $ 1278.50 = Gold is likely to hold below $ 1285-88 levels and needs to break $ 1265-68 zones for bigger fall towards $ 1250 or else test of $ 1295-98 possible.

DISCLAMER : The commentary/information presented is not intended for trading purpose. The idea is to exchange views with the members/readers. Therefore, I accept no responsibility or liability for any losses incurred due to position taking.