Friday, Aug 30

Asad Rizvi

Positive US data did not work in favor of US Dollar in true sense. It seems that despite UK Parliament's rejection to attack Syria fear of US military strike on Syria is still dominating the market . Some of the reports suggest that the strike could be possible during weekend after UN inspectors leave Syria, but lot will depend on UN report. 

But this conflict should be over in no time, as US may not want to linger on due to severe opposition on the issue, unless Syria respond to US attack if attacked and just a warning/condemnation could bring stability in the financial. Drag won't do any good, as it will keep market on its toes. From market perspective, there is a fear of US military strike, which is already priced in and is expected to be short lived.

While, the release of  US economic data on Thursday indicated that series of economic recovery maintained its growth pace, GDP Qtr2 2013 was revised upward to 2.5 pct from 1.7 pct due to increase in exports and fall in imports, spending looks OK and the jobless claims fell to almost 6-year low, which is healthier sign for next months jobs data. The trend is is obviously encouraging, as it is consistent.

Today there are quite a few economic data announcement from all over the globe, but none is likely to have any major impact on the market. Any new development in Syria could catch the headlines, but overall bias should be pro US Dollar and gold may have the ability to bounce back after dip.

GMT 2:57 - GOLD @ $ 1408.50 = We could heading for choppy day, as I am expecting sharp moves both ways. During Asian & early Europe, gold is expected to cap below $ 1412 and a possible break of $ 1398-00 is required to challenge $ 1391-93 zones, before sharp bounce back occurs in New York session. A move beyond $ 1415 is required to test $ 1420.

GMT 3:02 - EURO @ 1.3247 = Top is around 1.3260-80 should hold for a dip to test 1.3205 or 1.3185. Break above would challenge 1.3398. 

GMT 3:08 - GBP @ 1.5515 = Should hold around 1.5525-30 levels for a test of 1.5460-70 zones. Break risk for test of 1.5435-40 levels. Apply Stops if 1.5570-75 surrenders.

GMT 3:13 - JPY @ 98.18 = A move beyond 97.95 will encourage for a possible test of 97.70-75. However, if seen I am expecting YEN gains to ease and should not surpass 97.50 for re-test of 98.30-40.

GMT  3:18 - AUD @ 0.8944 = Aussie should hold around 0.8965-75 levels for a test of 0.8905-10, break could see push towards 0.8890-95 or else 0.8998.

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.

Thursday, Aug 29

Asad Rizvi

If Syrian conflict remains an unresolved subject for few more days/weeks or if it prolongs, it could be more complicating for the world financial market because of the global interest involved and could cause more damage. Its immediate impact is felt on the oil prices and higher oil prices may not be sustainable for quite a few economies. Emerging market is already melting fearing tighter liquidity condition due Fed's tapering plan. 

Economies too dependent on foreign borrowing to run their economies are suffering/struggling to manage their balance of payment position and are faced with high deficit problem. Their currencies are under sever pressure and is constantly losing its value. Therefore, any lingering of issue could be too harmful for global growth already struggling to make a comeback. 

Though there is a sort feeling of feeling in the market that the water is flowing back into the sea as Russia and China is not in favour of military intervention, which helped sentiment and saw some correction in US Treasury Bonds, Oil, Gold and JPY. There is some comfort in Global stock market too. However, the pressure is likely to stay until there is a clear direction about the next move. Any news relating to military strike on Syria could once gain distort the market.

During the day if the Syrian topic fails to catch the news headlines, market sentiment will shift towards the release of economic data's. Germany Statistic Office will be  release unemployment rate/change, which should not be disappointing due to recent strength growth shown by the German manufacturing and service industries, which will be flowed by the inflation data.

If the Geo political tension does not escalate all eyes will be on the release of US jobless claims and GDP data. I am expecting sharp upside revision of GDP number that should once again give life to the tapering discussion. To me Fed's September tapering still looks unavoidable, but if the Syrian conflict drags on for next 2-weeks then I may re-consider the timing of FED tapering.

During the day, trading in currencies and gold will remain tricky, as news pertaining to Syria could influence the trading pattern, but quieter day will surly help the market to concentrate on the release of economic data's.

GMT 3:09 - EURO @ 1.3335 = Euro failed to surpass 1.34 convincingly on past couple of occasions, now challenge is to break 1.3360-80 for 1.3415, which looks tough and hence see risk for drop and test of 1.3290-95 levels, break encourages for 1.3260 or else 1.3440.

GMT 3:17 - GBP @ 1.5540 = Tone mildly neutral to mildly Bullish, as Cable has support around 1.5410 should hold or else 1.5480, on the up should exhaust around 1.5580-90 zones. Break may see test of 1.5620.

GMT 3:23  - JPY @ 97.54 = Recovery of Japanese stock, quieter front in international market on Geo political situation and upside revision of US GDP will help USD to regain some of its lost strength, unless Syrian issue flare up. 97.10 should hold, as break of 97.98 is required to test 98.20-30 zones. Or else 96.60. 

GMT 3:29 - AUD @ 0.8968 = Aussie ha support around 0.8920-30 should hold for gains towards 0.8990-00. break may encourage for 0.9025. Or else 0.8890.

GMT 3:36 - GOLD @ $ 1410 = The up-side pressure is easing. $ 1415-20, now looks tough to surrender and a gradual dip below $ 1398-02 should encourage for a test o $ 1390-92 zones. Or else $ 1423.

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.

Wednesday, Aug 28

Asad Rizvi

It is a bit different story today due to Geo political factor that has been brewing for the last few weeks, as main driving force behind the global financial market is Syrian conflict that has forced market to look for safe heaven opportunities, fearing US military action investors sentiment towards Swiss Franc, JPY, Gold, Oil and US bonds buying. Global stock market is under pressure and so are the currencies of emerging markets fearing liquidity crisis. Further, flaring up of the situation can cause excessive volatility and safe haven demand may stay unless there is clarity, but once there is a hint of situation getting back to normal, market will take sharp u-turn.

Odds do not favour too much strength for the Japanese currency due to economic reasons, which has gained, as it still enjoys the safe haven status. Aggravation of Gulf conflict could temporarily do more good for the currency, but from trading prospective from medium to long term Japanese currency could potentially losses substantially, once there is a hint of situation getting back to normal.

Meanwhile, I do not see any other factors driving the currencies today, which could mean US Dollar should remain in demand. Euro could find sellers at higher levels, as it could be nearing the top. Cable is likely to come under pressure. Choppy trading in gold at current levels could be a possibility, as current strength is based on paper demand and not driven by physical demand, as cash remains dearer. Delay in settlement of conflict will certainly make things worse.

However, market should be prepared for price distortion, as unusual moves cannot be ruled out in present Geo-political environment. 

GMT 2:46 - EURO @ 1.3392 =  Though 1.3420-40 should be top of the range, but rally could extend towards 1.3468-70 due to unusual condition. 1.3598 should not surrender, as I am expecting another fall towards 1.3320 zones.   

GMT 2:53 - GBP @ 1.5540 = GBP may not have enough strength to surpass 1.5570-90 zones, as break of 1.5480 will pave way for a test of 1.5440-50 levels. Or else 1.5625.

GMT 2:59 - JPY @ 97.11 = Further gains for JPY is possible on break of 97.50 that may open gates for 96.10. Break would risk for 94.10. however, move beyond 97.60-80 zones will encourage for 98.50 and beyond.

GMT 3:03 - AUD @ 0.8954 = Unless Aussie is able to break 0.9025 levels risk is for a test and break of 0.8910 for 0.8870-80 levels. Or else 0.9070.

GMT 3:09 - GOLD @ $ 1416 = As long as $ 1400-06 levels hold risk is for a test of $ 1425-30 zones is possible with minor chances for a test of $ 1445-50. However, fall below $ 1390 would mean end of upside rally.

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.

Tuesday, Aug 27

Asad Rizvi

Once again in thin market condition it was another slow Monday, which is quite normal during summer period, as Jackson Hole had very little to offer. Later in the day release of notorious durable good order fell sharply to 7.3 pct in July due to fewer commercial aircraft and military goods order. Notorious because durable goods order is subject to revision in big numbers. Since the drop is caused by thin order for planes in July, I think this is not be a taken too seriously as overall slowdown should not impact manufacturing sector in a big way. 

Meanwhile, Europe is once again in the limelight, as we approach German election due on September 22. Greece could become an itching factor, as it may demand for more aid money. Berlusconi factor too could unsettle the current European stability if he is thrown out of parliament on tax charges. This is what Italian stock and bond market suggest. 

During the day market will take clue from the release of German IFO data that may set the pace, which could provide support to the recent economic gains. Further in USA, a possible disappointing consumer confidence number may not help US Dollar to make gain unless it turns out to be surprise positive number, which means some more US bond yield recovery But do keep an eye on Syria as the pressure of military action is mounting that could always give jitter to the market, which means gold and oil could be the beneficiary.

GMT 2:53 - GOLD @ $ 1396.70 = Gold will find support around $ 1388-90 and possible break of $ 1406-08 is likely to pave way for a test of $ 1418-20 levels or else $ 1384-85.  

GMT 3:01 - GBP @ 1.5568 = I am expecting Cable to hold below 1.56 for a possible dip to test and break 1.5520-30 for 1.5490. A break of 1.5635 will encourage for a bigger move towards 1.5720-40 zones.

GMT 3:07 - EURO @ 1.3372 = Euro has good support around 1.3345-55 levels. Should hold a for a move towards 1.3420-40 zones. Break of support levels will encourage for a test of 1.3310-15 levels. 

GMT 3:14 - JPY @ 98.24 = Trading could be choppy due to quite a few external factors. Levels to watch is support at 97.80, which should hold for test of 98.60-65. Failure to move beyond 98.90 risk for another drop. If support break move beyond 97.50 would risk for 97.20.

GMT 3:18 - AUD @ 0.8983 = Keep a close watch on support 0.8950 if hold we could see another test 0f 09025-35 zones or else drop could extend up to 0.8910-20 zones.

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.

Monday, Aug 26 - 30

Asad Rizvi

It is now becoming obvious that FED certainly has a tapering plan, but since there is lot of talking going on by both the voting and the non-voting members, it remains to be seen that when FED acts. What I can make out from Fed’s last Wednesdays minutes is that economic performance will surely matter and will help in determining the timing. August US unemployment rate could be the deciding factor.

Let’s get to the point straight away and try to evaluate the Jackson Hole get together, though Bernanke opted to stay away from the gathering that broke 25 year old tradition as FED Chairman did not addressed the Jackson Hole Policy Symposium, which is said to be because of “personal scheduling conflict”.

But most of the speakers seem to be extremely worried about Fed’s exit strategy, fearing ciaos and volatility around the globe. Economist representing global financial bodies too have joined the bandwagon and voiced concerned about Feds plan to exit, demanding great caution as reversal can severely impact the market. It seems that consensus has developed at the Jackson Hole annual gathering that FED looks determine to start its act by September.

There is lot of talk about market having priced in FED tapering. I think this is probably last effort by the borrowers getting easy money to clam market sentiment in a hope that delay would give them another opportunity to make profit with comfort, which is only possible if FED delays.

If we look at the cracks appearing in the emerging markets (Brazil, South Africa, Indonesia and India), the math’s is not so simple. There is a grave concern of unrest and market getting exposed if FED decides to withdraw. Soft interest rate and expansionary policy to stimulate growth may not be feasible after tapering because the balance sheet and external balance position will be wakened. Hence, exit from quantitative easing does not support expansionary policy due to mopping of liquidity, neither it will support asset price, which means sizable tapering will have larger impact on the borrowing economics unless done at a measured pace.

Meanwhile, speeches from FED officials will keep market on its toes, market will once again start concentrating on the release of economic data and tapering talk will gradually gather momentum, as we get close to Fed’s policy decision date, which is due next month.

The up-trend favoring is US Dollar is obvious due to better growth condition and improved job market in USA, which is likely to push inflation higher in coming months. The Q2 GDP growth could see a modest upward revision, but consumer confidence could dip because of higher price impact. This is likely to cause volatility in currencies, commodities, equity and bond market.    

GOLD @ $ 1397.10 = It another perfect call, as we saw gold hitting my target $ 1400. On Monday I am expecting breach of $ 1400 levels and break of $ 1406 will encourage for a test $ 1415-20. Beyond those levels I would like to remain cautious as gold could fall from $ 1420-30 levels. On the downside break of $ 1380-85 zones will encourage for test of crucial $ 1375-80, break hear confirms bigger losses targeting $ 1350-55 zones.

EURO @ 1.3376 = The move was quite in line of my projection hitting topside of 1.3440 before easing. The trend is likely to continue, as Euro seems to be stuck in a range. We could see a move towards 1.3410-30 zones, but unless makes a clear break of 1.3490-00 levels. The downside pressure would continue. Break of 1.3305 will encourage for a test of 1.3240-50 zones where European currency will provide stiff resistance and only break should encourage for test of lows of 1.3150. Range for the week 1.3150 – 1.3520.

GBP @ 1.5564 = The move that we saw in Pound Sterling was in line of my forecast perfectly hitting the target 1.5716 before dipping. We may have possibly seen the top, as this week GBP could struggle to make gains due to lack of support.

Cable clearly has strong resistance at 1.5598 and only break would encourage for a minor up-move, but should not surpass resistance 1.5650. Prefer selling as, as break of 1.5480 will encourage for more losses towards 1.5450.  Range for week 1.5390-1.5680.

JPY @ 98.67 = Traded well within the expected range. Bias this week should be for weaker Yen. Weak Japanese stock market helps JPY to recover, as selling of stocks creates demand for the Japanese currency and therefore any such move should be used as opportunity to sell JPY.  Any gains should hold around 97.05, which will only be possible on break of 97.40. A move beyond 98.30 is required to test 99.90-95 zones and once support levels breaks, Yen should sharply move towards 100.60-80 zones. Range for the week 97.05 – 100.80.

AUD @ 0.9020 = Aussie moved in line of my call, but failed to surpass 0.9250, encouraging sellers to take position. This week view on Australian Dollar is neutral. The levels to watch are 0.8950-80, should hold for a move and break of 0.9095 that will encourage for a test of 0.9155 or else 0.8920. Range for the week 0.8920 – 0.9250.

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.

Friday, Aug 23

Asad Rizvi

Market was stable, as there was no exaggerated moves witnessed. It was comparatively a quieter day in terms of volatility seen recently. So far Jackson Hole gathering had nothing to offer and out of five speakers BOJ Governors speech could be of some interest because of some huge combine decisions taken by the newly elected Japanese Government and its Central Bank. But Japanese government is yet to take some administrative measures and introduce structural reforms, which may not have any major impact on the global financial market. 

While, European growth momentum maintained its ongoing pace, which was followed after the release of better Chinese PMI data. It was Germany that took the lead with better PMI numbers suggesting that activity in manufacturing and service industry is flourishing, which means that today's release of German GDP should show improved domestic condition and healthier import/export data. But unfortunately, overall Euro-zone region may not have same story to tell as, high unemployment rate remains at a record high level. 

Meanwhile, economic data released yesterday from USA was not as per FED liking, though not very disappointing. Therefore today's release of New Homes Sale number will provide more hint about the economic activity in USA. Keeping in view the recent changes that have taken place in the financial market, I would prefer to pick US Dollar on rally, which should be the ultimate winner, despite Euro-zone showing signs of recovery, which is believed to come out of recession that could be short lived.

GMT 2:52  - EURO @ 1.3346 = Initially we could see support 1.3320 to hold with minor upside move towards 1.3375-85 zones where Euro could exhaust. A break of 1.3310 will confirm more losses for a test of 1.3280-90 zones. 1.3430 should not surrenders.

GMT :03 - GOLD @ $ 1376 = Today gold has strong support around $ 1368-70 zones and in Asia may see trading above $ 1372 levels. See risk on break of $ 1382 for a possible test of $ 1387-89 zones and if the move occurs I will not be surprise to see a push towards $ 1400, unless gold falls below $ 1364.

GMT 3:09 - GBP @ 1.5583 = Support 1.5540-50 may hold for a mild up move to test 1.5615-20 zones, but this rally should not surpass 1.5650 for a drop. Break of 1.5510 would risk for 1.5480.

GMT 3:15 - JPY @ 98.96 = As long as 99.30-35 holds we see a move towards 98.40-50 zones, but break risks for 98.10 or else 99.80 

GMT 3:17 - AUD @ 0.9024 = Current up move should hold around 0.9050-60 levels, but needs to fall below 0.8980 for more losses or else 0.9080. 

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.

Thursday, Aug 22

Asad Rizvi

I have been arguing since day one that FED Chairman has clearly hinted on June 18 that Fed could end its asset purchase plan by the middle of 2014 that will be tied to economic conditions. He then emphasised that if FED forecast is correct, it could begin slowing its asset purchase by end of 2013. This is what was repeated according to release of July minutes 

The confusion on Fed's tapering plan was intentionally created, as there was lot of hue and cry, mostly from well connected fund managers and investors having access to easy money that were earning hefty profits against cheap borrowings, fearing that reversal or scaling down of asset purchase could have adverse impact on profitability that can shift their position from profit to loss if they are unable to reduce their positions. 

They were simply disregarding a clear Fed message that it cannot continue with asset purchase for forever, but it did force Ben Bernanke to slightly change his tone and other Fed members realizing the gravity of the situation came to the rescue of Fed Chairman with their own views to bring calm in the market. There can be difference in opinion, but such huge decisions are part of policy matter that cannot be overruled with a stroke of the pen. 

With the current pace of growth rate, which should be acceptable to Fed and with unemployment rate down to 7.4 pct, which is far better than July gathering, Fed should be comfortably placed on the issue of tapering. Now it is the size of scaling down of Fed's asset purchase that should dominate the talk, as market should be well aware that tapering is around the corner. US Economic data will have more say towards market moves. Weather it is September or December does not matter, as tapering is imminent and delay will only provide more space to borrowers to adjust. 

Do keep a close watch on US 10-year bond yield hovering around 2.92 pct. Break of 3 pct physiological level should bring some spark in the market. I am not sure that what Jackson Hole Summit has to offer in the absence of Fed Chairman Ben Bernanke who is not too keen about this gathering. Overall conclusion is that USD will surely benefit from current development and even minor economic gain would favour Greenback.

GMT 3:02 - EURO @ 1.3336 = Euro may not find easy to surpass 1.3360-80 zones, as break of 1.3305 will pave way for a test of 1.3275-80 levels or else 1.3410

GMT 3:08 - GOLD @ $ 1364 = Top of the day around $ 1367-69 levels with Stops $ 1375, as seek risk for  drop towards $ 1352-54. Break of $ 1345 will encourage for more losses. 

GMT 3:15 - GBP @ 1.5599 = Cable should find top around 1.5625-35 zones and move beyond 1.5660-80 looks difficult for more gains. On the downside break of 1.5570-80 is required for a test and break of 1.5540-50 levels.

GMT 3:19 - AUD @ 0.8981 = Better Chinese PMI gave some breathing space, but needs to surpass 0.9025-50 for 0.9080, which may not happen and could drop to res-test 0.8950-70 zones.

GMT 3:23 - JPY @ 98.16 = Looking for a test, but needs break of 98.50 levels that would encourage for a visit to 98.85-90 zones or else to move below 97.80 would encourage for a test of 97.55-60 zones.

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.

Wednesday, Aug 21

Asad Rizvi

Market will surly be looking for clues that if FED  has a plan to taper down or not. FOMC minutes may not provide guidance about its next move, but the preception is that if FED has decided to scale down its asset purchase from September onwards, then there should have been some discussion on issue in its July gathering. 

Looking at the statements and speeches of FED officials there is a difference of opinion on the issue and since unwinding would matter most for the major borrowers, any tapering hint is likely to have an impact in the market, which may not be good news for the world stock, bond and gold market. US Dollar should be the sole beneficiary, though surged in bond yield did not help the USD, its the fear of liquidity crunch that may unsettle the market. But any hint of delay or want of more economic mending or no hint at all will move the market in opposite direction. 

However, after the release of FOMC minutes, I am not expecting big moves to occur in financial market unless FED provides a clearer direction, which is unlikely to happen. Therefore, trading is likely to remain range bound. Prior to FED minutes announcement, US existing home sale data is due to be released, which may provide some spark to the market.   

GMT 2:59 - EURO @ 1.3419 = Euro is likely to hold 1.3370-80 and unless fall below 1.3320-40 zones, bias is on the upside to test 1.3450 zones. Break of 1.3460 will risk for a move towards 1.35 levels, if fails to exhaust could test 1.3575.  

GMT 3:09 - GBP @ 1.5661 = Cable has strong support around 1.5620 should hold, but requires to break 1.5710 for 1.5740 or possibly 1.5770-75. Falling to hold support line could extend fall towards 1.5570-80 zones. However, fall below 1.5550 could see GBP tumbling towards 1.5480.

GMT 3:22 - JPY @ 97.23 = is caught between devil and the deep blue sea. There are many factors such as BOJ buying of Yen bonds this morning and surge in US 10-year bond yield that should weakened Japanese currency. But radio-active water leakage at Fukushima has caused Nikkei to suffer badly, selling of Stock against Yen is helping Japanese currency. 96.70-80 is the level to watch failing to hold could extend sharp gains for Yen. Meanwhile JPY needs to push beyond 97.70-80 zones for test of 98.25. We could witness choppy trade.

GMT 3:26 - AUD @ 0.9037 = The current weakness will extend losses, as 0.9060-80 to remain top of the range, gradual dip and break of 0.8980-90 will encourage for a test of 0.8955-60 zones. 

GMT 3:36 - GOLD @ $ 1372 = We have to look at the bigger levels because gold could be choppy with possible big move. This week gold fizzled out after failing to surpass $ 1385 levels, which remains crucial level to watch, as break of $ 1385-90 zones w302-05 zones. Though this may not happen today, but it will provide guideline for the next move.ould encourage for test of $ 1420. However, on the downside a move below $ 1340-45 levels would see a drop extending towards $ 1302-05 zones. Though this may not happen today, but it will provide guideline for the next move.

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.

Tuesday, Aug 20

Asad Rizvi

On Monday, market was reluctant to make a big moves in the absence of data release, as they have been waiting for Wednesday's FOMC FED minutes. There are quite a few tapering supporter and market is more keen to see that if the release of minutes adds more names joining the bandwagon or not. The unrest and weakening of equity and bond market now surely tilts towards FED pause. US 10-year bond yield now close to 3 pct after hitting 2.89 pct yesterday is surely matter of big concern. Anything beyond 3 pct will unsettle currencies and  global stock market that may support gold and USD would be ultimate beneficiary due to asset sale. 

However, since gold is now close $ 1400 levels it is a risky proposition to buy around or beyond $ 1400, as risk of sharp sell off is a big possibility if FED decides to scale down its asset purchase plan. Furthermore, if 10-year US bond yield surges towards 3 pct mark, keep an eye of Japanese Yen, which is likely to take beating, but I would expect yield to recover quickly and that should provide opportunity to buy cheap JPY, which should not surpass 99.50 levels.   

We are heading for eventful next few weeks because apart from mid-September monetary policy to be announced by FED that will be followed by German election on September 22 , which I mentioned in my yesterday's weekly post is another big event in the pipeline, but for now trading will remain within a narrow band, as there is enough reason to move the currencies either way.

GMT 2:56 - EURO @ 1.3337 = We are in the middle of the range, as I do not see any reason to move beyond 1.3290 and 1.3390 range. We could see a dip before Euro making minor gains that could be corrective rally. However, weakness of European market would risk for more losses for Euro towards 1.3240.

GMT 3:02 - GBP @ 1.5649 = Cable has support around 1.5620-30 zones should hold for a move towards 1.5680-90 or else 1.5590 before up again.

GMT 3:06 - JPY @ 97.70 = Only break of 97.45-50 would see move extending towards 97.20-25, which is not a favoured move. But needs to break 97.98 for a test of 98.20-40 zones.

GMT 3:10 - AUD @ 0.9084 = Aussie may struggle to move beyond 0.9180 and may exhaust around 0.9125 for a test of 0.9025-30 or possibly 0.8980.

GMT 3:21 - GOLD @ $ 1366.50 = As long as $ 1370-72 holds gold is likely to test $ 1358-60 zones, break will encourage for a test of $ 1355. Move beyond upside levels risks for test of $ 1376-78 zones.

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.

Monday, Aug 19 - 23

Asad Rizvi

Mixed to slightly better economic condition in US still favor Fed’s idea of tapering that looks possible next month and is keeping market on its toes, as large number of traders/investors still believes that the US Central Bank will reduce its asset purchase. I think Fed will not decide its line of action based on release of next couple of month’s economic data unless it is too damaging. Let’s not forget that labor market, which is one of the key benchmark for reduction in asset purchase is responding well and the unemployment rate is already down to 7.4 pct.

Surge in US Bond yields is clearly showing sign of fatigue, fearing tapering is coming soon. There is nervousness in the global stock market, as few of them have already taken a dip. Asian currencies are under severe pressure in anticipation of demand for US Dollar. This is why large number of borrowers that consist of hedge funds/speculators/investors is pleading for extending the stimulus period. The nature of funding at almost Zero pct is so attractive that they would never want moping of liquidity until it becomes an expensive proposition.

FED may have decided earlier about the coming move with a 3-6 months time period strategy to mentally prepare the market before making the announcement. By now, market has already priced in Fed’s possible scaling down move. If Fed decided to act then its next challenge would be to monitor and manage market volatility. USD 15-20 billion reduction in asset purchase may not have too much of an impact unless the size is larger.

Meanwhile, focus this week will be once again be on economic performance, but Wednesday’s release of July 30-31 FOMC minutes will be keenly watched to get better sense of Fed’s stance on monetary policy. 2-days Jackson Hole symposium on Thursday and Friday, which is a gathering of Central Bank policy experts and academics sponsored by Federal Reserve, is another major event of the week that will not be attended by Fed Chairman Ben Bernanke.

It is summer time and normally major European and US market players take vacation during this season, but there are few major developments in pipeline that has potential to disrupt the market such as Italian political unrest. In Germany, Merkel is looking comfortable to sweep next month’s election, but there can always be a surprise until the election result is announced.

Hence, we could be heading for another cautious week and trading is expected to remain is a narrow band. Overall initial sentiment could be from neutral to mildly bearish for US Dollar with mood gradually shifting towards bias for US Dollar, as we approach Fed FOMC announcement.

  

GOLD @ $ 1376.12 = It was another great week in terms of gold forecasting, as the rally extended to comfortable hit top side of the range. The surge is bit unusual, but not unexpected as hedge funds/investors are making every effort to pull gold and improve its average purchase. This time it is weak stock market that should be blamed for helping gold prices to recover, as funds have possibly shifted towards gold buying, which means gold traders will be eying equity market for more clues. It is also because generally gold trading volume is thin that makes it easier for the key market players to make big moves. This why we often witness excessive volatility, as there is no threat of Central Bank intervention like in currencies.

I am expecting continued uptrend since Monday morning and break of $ 1385 will see a move towards $ 1395-03. On 1^st 2-days of the week, keep a close watch on $ 1415-20, break risks for more gains that could see extension of rally towards $ 1435-40 or else gold rally will fizzle out. On the downside, fall below $ 1355-60 zones is required to test $ 1338.

EURO @ 1.3325 = Euro could not make big strides despite improved economic conditions and Euro-zone coming out of recession. This because there still grey areas that must be bothering the policy makers. ECB’s forward guidance policy must be looming on the heads that threatens continued easing stance if small businesses fail to recover. Neither strong Euro makes European goods more attractive.  

Last week, Euro traded well within the given band and this week too I am expecting 1.3220 to hold until FED FOMC minutes announcement or else 1.3140. Break of 1.3420 is required for a test of 1.3485 before Euro gets exhausted for 150-200 points drop. Range for the week 1.3205 – 1.3520.

GBP @ 1.5622 =  Cable continued to show its muscles extending gains to hit the top side of the given range. I remain cautiously bullish to neutral for Pound Sterling and expecting buying on dips, as I am expecting GBP to test physiological 1.57 levels, but may not have enough courage to hold Pound beyond that level. There is ongoing debate about BOE policy stance on easing, as quite a few believe that BOE may not opt for further easing. I do not think that BOE will mop up the liquidity as the economy is still faced with structural problems and UK Central Bank will not act in haste. Instead, if the recovery is not sustainable, Pound could receive another wave of pounding in coming months.

Though Cable is a buy on dips, but initially we could see a move towards 1.5670, only break risk for a test of 1.5710-20 zones. 1.5780 should hold for a drop. On the downside 1.5530 should hold or else 15470 before up again. Range for the week 1.5450- 1.5750.

JPY @ 97.55 = The volatility factor has reduced to a greater extent, but Japanese currency did not make gains despite Nikkei falling and the challenges faced by the Japanese government to meet its promises is yet to be fulfilled that supports strong Yen.

The levels to watch are 96.70 and only break would risk for 96.10. A move beyond 98.50 would encourage for a test of 99.10-20 levels. Range for the week 95.70 – 99.70

AUD @ 0.9177 = Australian Dollar is gradually losing its momentum and is probably on its last leg of corrective up-move, since the current gain is not backed by economic recovery. Any surge would be result of strong Chinese numbers rather than economic strength that should be short-lived and opportunity to sell Aussie. RBA meeting minutes due on Tuesday may provide more clues about the economy and possibility of another rate cut in coming months.  For further gains break of 0.9250 is required to test 0.9350 zones. However, risk of deeper fall in coming months is a high probability. Fall below 0.9050 will once again open gates for a test of 0.8902 levels. Range for the week 0.8920 – 0.9370.


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.

Friday, August 16

Asad Rizvi

All that I can make out from yesterday's move is directionless and confused market. After the release of US economic data that apparently looked OK to me due to fall in US jobless claims what bothered the market ? I have been reading few posts that FED St.Louis official James Bullard earlier mentioned that inflation reading is low, though recently announced CPI & PPI data points to 2 pct inflation, which is the desired FED level that should strengthens tapering case. 

Basically, its all about the market mood, which is managed by big names. They are trying to shift the sentiment, as they are well aware about the consequences of of tapering. Based on current economic numbers, the economy is able to maintain its required growth pace and so does the job market that should be enough for FED to act. The impact of tapering announcement will not dent the economy immediately, as scaling down will be gradual that may take time and may linger on for sometime. Therefore, adverse impact on economy if any should not happen immediately and deteriorates that may not happen in next 12-months. Market is overreacting in desperation.

I would continue to focus on economic data's that will decide the fate of Fed's next move, which does not support gold to rally much further. I don't think Egypt unrest has anything to do with gold buying. Similarly, US Dollar weakness has more to do with the respective economies rather than USD weakness. Yen is strong because new Japanese government will have to fulfill its commitment. Strength of Pound Sterling is because of recent Hawkish signal from BOE officials helped by strong retail sales data is due to rise in food and drinks sales because of good summers in UK. Euro is getting firm support from Euro-zones tow major economies Germany & France.

GMT 2:18 - EURO @ 1.3349 = Euro could get exhausted around 1.3360-80 zones and only break above would see a push towards 1.3410-20 levels. As European currency is likely to fall to test 1.3305-10 levels, if breaks could hit 1.3280-90 levels.

GMT 3;23 - GBP @ 1.5632 = Should hold around 1.5655-60 or else Cable could test 1.5685-90 for test 1.5580-90 levels before making another attempt to move upwards, as support on the downside is at 1.5540.

GMT 3:27 - JPY @ 97.53 = Should hold around 97.10-20 levels for a move towards 97.90-00 or else.96.80.

GMT 3:31 - AUD @ 0.9171 = 0.9130 is the levels to watch, if holds could see a test and break of 0.9190 for 0.9215-20 or else 0.9105.

GMT 3:46 - GOLD @ $ 1364 = During Asian and European session, Gold should find support around $ 1358-60 and is buy with STOPs on break of $ 1354-55 for $ 1372-74, break could see final assault towards $ 1378-80 today, before the sharp fall next week if not today.

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.

Thursday, Aug 15

Asad Rizvi

After lot of hard work and injection of liquidity by the Central Banks the two-economies of USA and Europe have started to respond. The big moves that is visible is the US unemployment rate falling to 7.4 pct and now Europe coming out of recession after a long struggle to avoid collapse and yesterday's Eurozone GDP Q2 of 2013 better than expectation is surely encouraging. 
The real challenge for US financial managers would be when FED decides to pause before its next move to hike interest rates that may still take time. But Europe is not faced with a similar situation, as has long list of things to be done. 17- European Union countries that uses Euro currency is faced with difficult situation with high unemployment rate of 12.1 pct, fiscal imbalance and challenges faced by regions banking sector are some of the burning issue that can ignite fire anytime and therefore, Europe is still faced with a high risk situation. 

Market is still undecided about FED's intention and would be focusing on Fed's Bullard statement for guidance, as yesterday he suggested to for a wait and see approach, which means economic data will be deciding factor. Today all eyes will be on the release of US economic data with a close watch on CPI data.

Meanwhile, Pound Sterling was the real beneficiary after the release of BOE minutes that was taken positively in the sense that it was not too Dovish this time. Drop in unemployment claim also mattered as it should help in easing pressure on jobs, as BOE is targeting unemployment rate at 7 pct that was in line of expectation of 7.8 pct. Hence, buying on dips may could be seen. Strong retail sales data should add to the current sentiment.

GMT  GMT 3:04  - GOLD @ $ 1340 = The crucial level is $ 1318-20 for resumption of fall on break of $ 1327. However, we could see gold holding above $ 1333-35 levels for a possible test of $ 1346-50. Break risk for test of $ 1358-60 zones.
GMT 3:16 - EURO @ 1.3295 = Euro could inch up towards 1.3325-30 zones, but needs to break for a test of 1.3355-70 area. Or else, on the downside clear break of 1.3250-55 will pave way for 1.3220.
GMT 3:21  - GBP @ 1.5522 = Cable is buy around 1.5480-90 zones, with Stops on break of 1.5450. Break of 1.5555 could see a move towards 1.5580-90, but beyond that I would refrain from further buying.
GMT 3:26 - JPY @ 97.65 = Yen should find resistance around 97.40-50 and is failing to make further gains would encourage for a quick move towards 97.90-00 zones or else 97.20.
GMT 3:30 - AUD @ 0.9170 = Aussie could hold around 0.9130-40 zones for a move and break of 0.9190-00 levels for possible test of 0.9230-40 or else. 0.9110.

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.

Wednesday, Aug 14

Asad Rizvi

ZEW, the German economic sentiment indicator surged to 42 points showing confidence in economy indicating that the domestic demand is improving, but it did not help the European currency to gain, as US retail sales edged up for 4th consecutive month, though not meeting market expectation, as auto sales was a bit slow. Sentiment about the US economic performance is still positive, hinting that consumers are not hesitating to spend. Previous months retail sales numbers that was revised upwards was also helpful. Surge of US 10-year bond yield to 2.71 pct endorses market view that US economy is on the up trend.

On of the FED non voting official President of FED Atlanta confused the market with his statement on tapering, as he thinks that economy required consistent growth to declare end quantitative easing in September, but is of view that FED can announce slowing down the pace of its asset purchase. I think this should be the proper way of doing it because gradual reduction of asset purchase will give time and space to the market to adjust accordingly. The bottom line is that keep a close watch on the US economic data that will lead to FED's decision on tapering. So far the data looks reasonable and should not be discomforting for Fed to decide its next line of action.

Today, the release of German GDP data will not prove to be the game changer, but could be responsible to create minor volatility if it deviates form target. With the recent release of positive economic data from Germany, I will not be surprised to see bias on the upside as growth prospect looks better. However, any disappointment will spoil the sentiment and European currency may then suffer.

GMT 3:22 - EURO @ 1.3261 = Euro should hold around 1.3230-35 levels, but needs to break 1.3280-90 levels for a test and break of 1.3310 for 1.3325-30 zones or else a fall below 1.3210 will see a test if 1.3160-80 zones.

GMT 3:30 - GBP @ 1.5444 = Cable needs to penetrate beyond 1.5480-90 zones for test and break of 1.5525 for 1.5550-70 zones. On the down side break of 1.5380 would risk for losses extending towards 1.5340-50 zones.

GMT 3:35 - JPY @ 98.01 = The levels to watch is 97.80 if break risk for 97.50-60, but should hold for a move towards 98.25-30 zones, break could see the rally extending towards 98.55-60 zones.

GMT 3:38 - AUD @ 0.9103 = Should hold around 0.9070-80 levels for 0.9140-50, break would encourage for 0.9170 or else 0.9150.

GMT 3:48 - GOLD @ $ 1323.50 = Should hold below $ 1330 and needs to break $ 1310-12 levels for test and break of $ 1300 levels or risk for test of $ 1336-38 zones. 

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.

Tuesday, Aug 13

Asad Rizvi

Traders could not find enough reason to move the market, as it happened to be another dull Monday session in the absence of any major economic data announcement. Though today, it is going to be an active day in terms of economic data release, but all eyes will be on the US Retail sales number for further guidance. 

In Europe, focus will remain on economic data release, specially German ZEW is expected to show signs of improvement after recent economic gains. Release of Euro-zone's Industrial production data and ZEW survey too will provide guidance towards regions monetary policy.

Meanwhile, slow growth in Japan may cause delay in hiking sales tax, which is topping market talk agenda. Slow economic recovery also demands BOJ to reconsider more stimulus package, as implementing tax reform at this stage looks inappropriate. I think the importance of sale tax discussion at this point is a clash between more stimulus or implementation of tax reforms as both generates funding. The difference is that sales tax will benefit Japan's debt ridden economy, as the size of debt has grown to 223 pct of the GDP, which is the largest in the world, whereas, stimulus means adding liquidity, but more burden for the economy.   

GMT 2:52  - EURO @ 1.3305 = I a expecting 1.3250-60 levels to hold, but Euro needs to break 1.3335-40 levels for a test of 1.3370-75 zones or else another test of 1.3280 is possible, break risk for deeper fall towards 1.3195 on break of 1.3250.
GMT 2:59 - GBP @ 1.5460 = Cable should find support around 1.5430-40 zones, but needs to break 1.5490-95 levels for a test of 1.5515-20 zones, break will encourage for 1.5540 or else 1.5410.
GMT 3:06 - JPY 97.22 = Japanese currency may find resistance to move beyond 96.80-90 zones and could test 97.60, as 97.890 is the crucial level that needs to break for more losses or else test of 96.50-60 levels.
GMT 3:11 - AUD @ 0.9128 = Upside move beyond 0.9150-70 does not look every encouraging, as I will not be surprised to see selling interest on the rise, break of 0.91 risk for test of 0.9070-80 zones.
GMT 3:19  - GOLD @ $ 1334 = Should hold around $ 1337-40 levels for a test of $ 1325 zones. Failing to break below $ 1318-20 risk for another up move, break of $ 1348, would risk for possible test of $ 1366.

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.

Monday, Aug 12 - 16

Asad Rizvi

Last week US economic data have once again showed healthier growth, but release of Euro zone economic numbers depicted better picture of the region’s economy, as orders came from Paris show that gave boost to Germany’s manufacturing sector. Similarly, Euro zone’s manufacturing PMI entered growth zone, as German and Italian factories/industries performed well.

We may witness a very similar condition this week if the release of European data show continued trend. The expectations are that after the recent release of positive European data Euro-zone GDP Q2 could be revised upward. Some of the German economic indicators are also pointing towards healthier growth and hence, German ZEW data is also likely to do well.

But this does not necessarily mean that Europe will lead the market. Release of US economic numbers will counter European data. Consumer spending has been encouraging that should help retail sales. Averaging softer gasoline prices during the month and drop in food prices should not see jump in PPI numbers, which point towards softer CPI number. All eyes will be on US initial jobless claims, which should once again reflect better economic conditions. Overall release of economic data this week from USA should provide better sense about economy.

However, though focus should be towards economic performance, it is preferable to keep a close watch on FED official’s statement that can potentially increase market volatility.

GOLD @ $ 1314.21 = The move was quite in line of projection hitting the bottom of the range, but failed to break $ 1275 and later bounced back to move beyond $ 1300 on the news of China’s July industrial output of 9.7 pct. Such reasoning is temporary and hence, up moves provide opportunity to catch the top and offload expensive gold holding, as it does not change the trend. Risks for bigger fall exist.

Initially we could see gold making gains, but the crucial levels to watch is $ 1325-30, break is required for a test of $ 1350-55 zones and technically if gold surges, it should exhaust around there levels. Weekly close above is required to hit $ 1370-75. If seen, I would prefer selling around $ 1350-55 zones. A fall below $ 1295-97 will open doors for a test and break $ 1280-85 that will help gold to test $ 1250-55 zones.

EURO @ 1.3336 = The expected move did occur hitting and toping 1.34 levels before easing. This week too, the trend is likely to continue and should hold above 1.3250-70 levels. Break of 1.3410-20 will encourage for a test of 1.3460 zones. But may struggle to move beyond 1.3520-40 levels and could see a 150-200 pip drop. Range for the week 1.3220 – 1.3550.

GBP @ 1.5496 =  Saw a perfect up move in line of my forecast stretching a bit and this trend will be short lived before exhausting. The levels to watch is 1.5580 that needs to surpass for 1.5640 or else risk for down move will increase if 1.5410 surrenders for 1.5320-50 zones. However, I will not be comfortable long around or beyond 1.5580 if seen, as Cable is suspect to quick economic revovery and may drop sharply on any poor economic news. Range for the week 1.5250- 1.5650.

JPY @ 96.15 = The strength of Japanese currency is caused by delay in action by the Japanese government to implement proposed tax measures, which may not happen anytime soon. Expectation of adding further stimulus did not happen is also providing strength to JPY. This has given enough space to JPY to correct. Furthermore, to halt current surge, JPY needs to ease beyond 97.90 for 98.50, else risk is that break of 95.50 could see this correction extending towards 94.80. Range for the week 94.50 – 98.50

AUD @ 0.9193 = Last week, I warned that despite half percent rate cut, Aussie is looking ripe for correction and is likely to bounce back. The expected move did occur, hitting comfortably the top of my given target 0.9180.   

This move could extend up to 0.9290, but may not have enough legs to make bigger strides. Break could see extension of move towards 0.9340, but another drop is unavoidable. Fall below 0.9150 will encourage for a test of 0.9170-80 levels. Range for the week 0.9050 – 0.9450.

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.

Thursday, Aug 8

Asad Rizvi

Dear all,

I will be taking off for 2-days (Thursday & Friday) 

I wish you all a "Very Happy Eid".

However, If I get time I will try to Update the page.

Regards & best wishes

GMT 5:44 - GOLD @ $ 1296.50 = We are somewhere near top. Sell around $ 1297-00, as break of $ 1306-8 level is required for more gains, which is not a favoured move. Fall below $ 1288-90 will see a push towards $ 1280-82 zones Or else $ 1312.

GMT 5:53 - EURO @ 1.3346 = At current levels keep a close watch as break of 1.3355 will see a move towards 1.3370-90 zones and the rally should exhaust or else will see a final push towards 1.3415-20 zones. Suspect beyond that Euro has enough legs. On the down side break of 1.3310 will encourage for 1test of 1.3270-80 zones.

GMT 6:04 - GBP @ 1.5504 = The corrective rally in Cable could extend and still looks a buy around 1.5470-90 levels. Support is around 1.5430-40. Break of 1.5525-30 levels will encourage for a test of 1.5560-70 zones

GMT 6:17 - JPY @ 96.38 = Choppy trading is possible, but Japanese currency could make some more gains and hold around 96.70-80 levels for a dip and test of 96.10 levels, break will encourage for 95.80. Move beyond 98.30-40 zones could mean more losses for JPY.

GMT 6:21 - AUD @ 0.9077 = Saw a perfect up move, now 0.91 is the resistance levels, if breaks 0.9120-40 will be tough to crack, as fall below 0.9010 would mean ,ore losses for Aussie or else 0.9180

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.