Asad Rizvi
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.
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 1st 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.
GOLD @ $ 1374 = We saw a perfect move towards $ 1385 before easing, now I am expectig $ 1368-70 hold for another test of $ 1378-80 zones.......... Or esle $ 1365
ReplyDeletewhat to do in golod wait till us opens or can sell at 1378 1380
ReplyDeleteSince you did not buy on early sugnal. Now wait for my next post...........
ReplyDeletesir shall go long aud at 0.9160!!
ReplyDeleteAUD @ 0.9153 = Time to book profit around 0.9140-50.
ReplyDeleteI am not an Aussie fan, but appy Stops at 0.9105...............
GOLD @ $ 1371.90 = Strategy unchnaged buy around $ 1368-70. Stops $ 1364............
ReplyDeleteGOLD @ $ 1374.50 = if Gold does not break $ 1376-78 levels we could see test and break of $ 1370 for possible test of $ 1365-67..........
ReplyDeleteok buy at 67 sl 64 ok sir
ReplyDeleteMarket is too fast to inetract. Hope you guys are picking up levels fropm earlier post unless I amend with aonther the post.
ReplyDeleteYou may have book booked profit around $ 1367. Yes i will prefer long around $ 1365-67. Stops if $ 1360 surrenders..........
GOLD @ $ 1371.50 = gold could still take a dip if holds below $ 1375........
ReplyDeleteSoryy about Euro & GBP which is stuck in 25-30 pip range since morning.
ReplyDeleteThere is no clear view, but buy on dips for currencies is still favoured...
i sell gold sl 78 ok sir
ReplyDeleteOk but pick profit around $ 1367..............
ReplyDeleteGOLD @ $ 1365 = I would buy around $ 1362-64. stops $ 1357..............
ReplyDeleteshould buy gold 1365 ?
ReplyDeleteJPY @ 98.06 = time to book your Yen profit around 98.10-20.cheers
ReplyDeleteOk pals, it is Monday another day of thin market activity..............
ReplyDeleteCheers until tomorrow................