Wednesday, Aug 21

Asad Rizvi

Market will surly be looking for clues that if FED  has a plan to taper down or not. FOMC minutes may not provide guidance about its next move, but the preception is that if FED has decided to scale down its asset purchase from September onwards, then there should have been some discussion on issue in its July gathering. 

Looking at the statements and speeches of FED officials there is a difference of opinion on the issue and since unwinding would matter most for the major borrowers, any tapering hint is likely to have an impact in the market, which may not be good news for the world stock, bond and gold market. US Dollar should be the sole beneficiary, though surged in bond yield did not help the USD, its the fear of liquidity crunch that may unsettle the market. But any hint of delay or want of more economic mending or no hint at all will move the market in opposite direction. 

However, after the release of FOMC minutes, I am not expecting big moves to occur in financial market unless FED provides a clearer direction, which is unlikely to happen. Therefore, trading is likely to remain range bound. Prior to FED minutes announcement, US existing home sale data is due to be released, which may provide some spark to the market.   

GMT 2:59 - EURO @ 1.3419 = Euro is likely to hold 1.3370-80 and unless fall below 1.3320-40 zones, bias is on the upside to test 1.3450 zones. Break of 1.3460 will risk for a move towards 1.35 levels, if fails to exhaust could test 1.3575.  

GMT 3:09 - GBP @ 1.5661 = Cable has strong support around 1.5620 should hold, but requires to break 1.5710 for 1.5740 or possibly 1.5770-75. Falling to hold support line could extend fall towards 1.5570-80 zones. However, fall below 1.5550 could see GBP tumbling towards 1.5480.

GMT 3:22 - JPY @ 97.23 = is caught between devil and the deep blue sea. There are many factors such as BOJ buying of Yen bonds this morning and surge in US 10-year bond yield that should weakened Japanese currency. But radio-active water leakage at Fukushima has caused Nikkei to suffer badly, selling of Stock against Yen is helping Japanese currency. 96.70-80 is the level to watch failing to hold could extend sharp gains for Yen. Meanwhile JPY needs to push beyond 97.70-80 zones for test of 98.25. We could witness choppy trade.

GMT 3:26 - AUD @ 0.9037 = The current weakness will extend losses, as 0.9060-80 to remain top of the range, gradual dip and break of 0.8980-90 will encourage for a test of 0.8955-60 zones. 

GMT 3:36 - GOLD @ $ 1372 = We have to look at the bigger levels because gold could be choppy with possible big move. This week gold fizzled out after failing to surpass $ 1385 levels, which remains crucial level to watch, as break of $ 1385-90 zones w302-05 zones. Though this may not happen today, but it will provide guideline for the next move.ould encourage for test of $ 1420. However, on the downside a move below $ 1340-45 levels would see a drop extending towards $ 1302-05 zones. Though this may not happen today, but it will provide guideline for the next move.

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.