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.
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.
sir any position to go long in gold??
ReplyDeletekey is $ 1388-90 should hold for another up-move..........
ReplyDeletesir shall go short gbp at 1.5570!!
ReplyDeleteview is unchanged and is bearish, resistance is at 1.5598............
ReplyDeleteHi all, please note for future that when you ask me for trading level,
ReplyDeleteI am giving view on your query. This dose not mean that I am recomending to take position.
It is up to you to decide that if you are keen to take a trading position on my given view.
Yes, when I make a post I do that with lot of research work and when I am confident that it is appropriate level to enter.
So please note and do not mix-up, as I feel this is important to share with you.
Thanks
Gold up currecnies up. USD Down................
ReplyDeleteafter us data view on goold
ReplyDeleteview unchnged.refresh page..................
ReplyDeleteGold @ $ 1397 = do not see fall below $ 1388-90. Buy on dip prefered............................
ReplyDeleteShould hold Euro 1.3350 & GBP 1.5570, as I am expecting minor up move and looking for test of...........
ReplyDeleteEuro 1.3415-20
GBP 1.5615-25
should buy at 1394?
ReplyDeleteStops $ 1388-90 !!!
ReplyDeleteOk pals, it was Monday as usual................
ReplyDeleteReminder, discipline is the key to success.....
Cheers until tomorrow.......................