Wednesday, July 17

Asad Rizvi

Bernanke known for his Dovish stance will be presenting his semi-annual testimony to Congress, as market is keen to know that if FED still plans to carry on with his asset purchase strategy or will shift it's stance. He did confuse the market by hinting Fed's tapering plan in his late May policy announcement, but following month he applied brakes by setting condition before making his next move. I am note sure what caused shift his earlier tempo, it could be market forces or fear of facing congress aggression to defend growth with additional liquidity or reason best know to him.

What baffles me is that why did Chairman Bernanke had to talk about Fed's tapering plan hinting that it could end by mid-2014 if it is a premature subject to talk and what caused him to take a sudden U-turn after his May announcement. I think there is surely immense internal pressure to halt or reduce money printing and it may have reached a point that Fed Chairman may have thought that he should mentally prepare the market for the next move. It is quite possible that timing of withdrawal of its liquidity injection may not be as important as it is important to inform and prepare the market about its next possible move.

Interestingly, after Fed's call in May that they intend to withdraw it's asset purchase program there was lot of noise/pleading/demand not end its asset purchase program fearing/threatening of grave consequences for the global financial market by the so called Dig Daddies minting money in tons due to cheap availability of funds. Is this going to be the dominating and influencing factor for Fed to change its stance and delay tapering or it's credibility is more dear to FED that it will not succumb to any external pressure or will it go for the third and easiest but temporary option by opting for tiny tapering to silence all the critics ?

Today, uncertainty will prevail in the market and it would not be easy to get hold of the real trend until tomorrow. In another major event of the day BOE minutes will be keenly watched because of Mark Carney's first appearance as BOE Governor. 

GMT 3:11 - EURO @ 1.3140  = Likely to hold around 1.3102, as see bounce back from 1.3120-25, break o1.3175-80 will encourage for av test of 1.32 zones. However, on the downside 1.3040 is the key level. 
GMT - 3:19 - GBP @ 1.5115 = Prior to BOE announcement Cable could come under pressure and should hold below 1.5150, see risk for a drop towards 1.5070-80 zones. However levels to watch is 1.5010, if surrenders break of 1.4940 is required for bigger fall. But do keep an eye on 1.5195, break risk for more gains.
GMT  - 3:23  - JPY @ 99.38 = Break of 99.90 is required for 100.30, which looks tough, as see risk for another test of 98.80-90 zones, break will encourage for 98.30. 
GMT  - 3:27 - AUD @ 0.9234 = Aussie is loosing its gloss, unless break above 0.9270-80 levels see risk for a move towards 0.9180-90 zones. 
GMT  - 3:33  - GOLD @ $ 1291 = Bias is on the upside as long as $ 1285 holds. Likely to see a push towards $ 1298 and could stretch up to $ 1302. Or else $ 1277. If we talk of a bigger of picture, levels to watch is $ 1260 and $ 1320.

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.