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.