Thursday, October 10

Asad Rizvi

As the shutdown drags on, uncertainty is looming. Congressman are gathering in White House and few Republicans are invited to Join Obama on Thursday, which means another day is lost in discussion that can extend up to Friday, which is suppose to be the last of the session, as Congress will officially be closed for vacation. If the issue is not settled and the snow does not start melting by weekend, the market could react negatively.

Meanwhile, after the release of September FED FOMC minutes that clearly says that most of the FED members were of view that FED should start consider scaling down its bond purchase. This is not at all shocking and I stick to my earlier view that expiry of debt ceiling limit is the real cause of tapering delay. Fed had to avoid tapering because of the timing, as soon as understanding on debt limit is reached, Fed will be in a comfortable position to reduce its asset purchase probably by December this year. Tapering is a done deal, the only worrying factor that could lead to delay is the fiscal drag, which is causing damage to the US economic recovery. Hence, after the release of Fed's September FOMC minutes it makes very little sense to discuss Yellen's Dovish stance, as it is the majority that rules.

Meanwhile, Cable got the hammering after weak UK manufacturing data and industrial production data. Hint of UK slowdown came after the release of Trade Balance and Production figures. Today's decision on UK policy rate is likely to remain unchanged and with mildly Dovish stance, Cable may not be able to make correction.

Overall the current weakness of US Dollar is largely due to ongoing fiscal tussle that could drag on a bit, but as soon as an agreement is reached USD should recover.       

GMT 3:16 - GOLD @ $ 1304 = I do not see enough room for up move, as gold should not surpass resistance levels of $ 1310-12 and may exhaust around $ 1307-8 for $ 1295 or for a test of $ 1285-90 zones. Only break of resistance may see a move towards $ 1318.

GMT  3:21 - EURO @ 1.3498 = Euro may struggle to move beyond 1.3520-30 and is likely to dip towards 1.3460-70 zones. 1.3420-40 is the key support area. However move above 1.3570-80 risks for more gains.

GMT 3:25 - GBP @ 1.5925 = Cable needs to move beyond 1.5970-80 zones or else more gains is possible. Break of 1.5885 will encourage for a test of 1.5840-50 levels.

GMT 3:29 - JPY @ 97.73 = Yen may not ease beyond 98.20 with comfort and Japanese currency needs to push below 98.80 for more losses. However, Yen could later recover to test 97.40-50 zones.

GMT 3:33 - AUD @ 0.9404 = Aussie is in corrective mode and may not hit 0.9450 unless fall down towards 0.9350-70 zones before taking a breather. 0.9320 should not surrender for another up 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.