Tuesday, October 15

Asad Rizvi

In my weekly note I have pointed out that history suggest that US debt ceiling limit has always been raised. It can never be blocked for longer period of time or the global financial system will collapse. Because negotiators know that they do not have a choice and will have to sail on the same boat when its is their turn if they win next elections. Hence, It could be conditional, intentional or sensational, with some delay and with hue and cry. The is why they have to make rumbling noise to gain political mileage to avoid possible protest.

This time it could be different, because the risk is that if the deadline date passes, US will have to face default that will have sever negative impact on the global financial market that has been struggling against recession and slowdown for past several years. I think negotiators will avoid being blamed for causing catastrophe. Therefore, extension of US Debt Ceiling is almost a done deal, as default is not affordable. Its matter of time, as we still have 70-hours to hit the debt ceiling if not raised by Congress.

Though stock market has responded in a hope that negotiations now looks a good possibility after some of the developments in Washington, but as the issue remains unsettled and as it gets closer to the deadline time, market could react, which could soften the Stock market and the Greenback. But reaching of agreement on extension of US Debt Ceiling Limit will ease off the pressure on US Dollar and market will immediately start concentrating on economy. 

GMT 3:26 - GOLD @ $ 1274 = The basic to understand is that if an agreement is reached on US Debt Limit Deal, gold will fall and if delayed or signs of trouble, then gold will surge sharply. I am expecting gold to hold around $ 1280-85 levels in Asia and may exhaust below $ 1280 for a test of $ 1257-63 zones on clean break of $ 1267. 

GMT 3:33 - EURO @ 1.3562 = Initial support is at 1.3530, may hold for small gain, but 1.3598 is the crucial level to watch, only break would encourage for a test of 1.3640 or else, on the down side break of support levels risks for test of 1.3470-80 zones.

GMT 3:39 - GBP @ 1.5996 = As long as 1.5960-70 holds there is minor risk for a test of 1.6020-30 level, break is required for a move to extend towards 1.6060. However could exhaust for dip. But break of support level risks to challenge 1.5910.

GMT 3:45 - JPY @ 98.46 = JPY is likely to remain locked in 98.05-90 range, breakout could see see a 100 pip move either way.

GMT 3:48 - AUD @ 0.9433 = Aussie is in a Bullish mode and should not fall below 0.9370-80, as potentially the move could extend beyond 0.9475. 

GMT 3:48 - AUD @ 0.9533 = Aussie is in a Bullish mode and should not fall below 0.9470-80, as potentially the move could extend beyond 0.9575.

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.