Thursday, Aug 01

Asad Rizvi

GMT  1.54 = My yesterday's post headline was "Fed may not deviate from last FOMC", which was spot on, the only change that I could find in MPS is that Fed is little bit concerned that the mortgage rate is slightly up and this is simply because the housing market has responded well to it's easing strategy. Despite Fed assurances that interest rate will not be hiked in near term to short term and FED's benchmark rate will remain close to Zero pct until unemployment hits 6.5 pct, there is a fear that inflation could speed up rather quickly.

Overall if we analyse the recent economic performance, it is moving in the right direction. Though market may have a slightly Dovish view about the policy statement, as FED hinted slow growth, but everything will boil down to FED minutes due to be released on Aug 21. Fate is still unknown and market is unclear about FED's timing of its next move, so tapering fear in September is still looming. Tomorrow's US jobs data is another major event of the week that will provide some hint about FED's intention.

Today, Europe will be in the limelight as BOE and ECB will announce its decision on interest rates, which is likely to be unchanged. It is Draghi's press conference that always brings spark an energy. Though recent economic recovery in Germany is a positive sign suggesting better bank lending conditions, but rest of Europe with low inflation well below the target level of 2 pct is still struggling with tighter liquidity conditions and this may compel ECB President to highlight economic weakness and his tilt could be towards policy accommodation.

Today, there are quiet a few economic data's due to be released from Europe and USA that should help in determining the trend.

My yesterday's post headline was "Fed may not deviate from last FOMC", which was spot on, the only change that I could find in MPS is that Fed is little bit concerned that the mortgage rate is slightly up and this is simply because the housing market has responded well to it's easing strategy. Despite Fed assurances that interest rate will not be hiked in near term to short term and FED's benchmark rate will remain close to Zero pct until unemployment hits 6.5 pct, there is a fear that inflation could speed up rather quickly.

Overall if we analyse the recent economic performance, it is moving in the right direction. Though market may have a slightly Dovish view about the policy statement, as FED hinted slow growth, but everything will boil down to FED minutes due to be released on Aug 21. Fate is still unknown and market is unclear about FED's timing of its next move, so tapering fear in September is still looming. Tomorrow's US jobs data is another major event of the week that will provide some hint about FED's intention.

Today, Europe will be in the limelight as BOE and ECB will announce its decision on interest rates, which is likely to be unchanged. It is Draghi's press conference that always brings spark an energy. Though recent economic recovery in Germany is a positive sign suggesting better bank lending conditions, but rest of Europe with low inflation well below the target level of 2 pct is still struggling with tighter liquidity conditions and this may compel ECB President to highlight economic weakness and his tilt could be towards policy accommodation.

Today, there are quiet a few economic data's due to be released from Europe and USA that should help in determining the trend.

GMT 1.55 - EURO @ 1.3295 = I would still prefer to sell Euro around 1.3320-40 zones, though break risk for potential test of 1.3360-60 zones. However, unless move beyond 1.3395 more gains is not possible. Break of 1.3265-70 will encourage for fall towards 1.3220-30 levels. Failure to hold risk for 1.3140.
GMT 2:02 - GBP 1.5167 = Cable has strong resistance around 1.5210-20, if holds risk is for test of 1.5050-80 zones, break suggest deeper fall, or else bounce back could mean 150-200 pips recovery.
GMT 2:23  - JPY @ 98.26 = Needs to break barrier 98.50-60 for 98.95 or else risk for gains of Japanese currency. Break of 97.60 may open doors for a possible test of 96.70.
GMT 2:27 - AUD @ 0.8955 = Only break above 0.9010-20, will encourage for extension of corrective move or else risk for  for deeper fall if 0.8910 surrenders for 0.8850.
GMT 2:31 GOLD @ $ 1326 = Only break of $ 1330-32 may encourage for a test $ 1334-36 zones. But see risk for a drop towards $ 1315-20 zones, break risks for bigger fall towards $ 1302-05 levels, or else $ 1340. 

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.