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.