Wednesday, October 23

Asad Rizvi

Though disappointing, but weak US jobs data announcement that was fewer by 32.000 against expectation of 180K did not cause havoc in the market, as net revision was in positive territory by 9K. Sentiment about US economy has been bearish for nearly 3-4 weeks. The data further confirmed that the US economy in Q3 was soft.

It is estimated that the partial shutdown could hit this quarter GDP by 0.5 pct, as White House Council of Economic Advisers estimates nearly 120.000 job losses due to shutdown. Drop in unemployment rate to 7.2 pct could be good news as it gets closer to FED's target of 6.5 pct, but the fact is that the drop is caused due to fewer application for jobs from job seekers that had dropped out from the labour force. 

However, the risk is that Q4 too will be disappointing for US economy that will push over all sentiment bearish towards zone, as future US economic data will show distorted numbers. This has given further hope to the Doves for delay in tapering for possibly next six-months, though I am not too convinced/sure that how much would it cost, if FED decides to withdraw bond purchase worth USD 10-20 billion. I think any such decision would be more because of policy matter rather than anything else.

Today's important event will be BoE's minutes that will give feeler about the its assessment for UK economy. Recent data have shown strong domestic demand, although growth in the industrial sector has been at a slower pace. Emphasis will be on the need/focus of stimulus package, which may not deviate much from previous release of minutes because of recent UK economic slowdown.

GMT 3:04 - GOLD @ $ 1338.80 = Gold has support around $ 1334-35, if fails to hold could see drop extending towards $ 1330-32 zones.However, in Asia and early Europe, I am expecting a move towards $ 1345-50 that could stretch by another $ 3 before easing.  

GMT 3:10 - EURO @ 1.3788 = Euro has strong support around 1.3750-60 zones and is likely to test and break 1.3815 for 1.3835 or else 1.3730-35.

GMT 3:17 - GBP @ 1.6251 = Prior to BOE minutes, Cable is likely to find resistance around 1.6270-80 and could drop on break of 1.6030 for support level1.6210-15, or else 1.6320-25. On the downside break of support levels could see a push further down to 1.6170-80.

GMT 3:23 - JPY @ 97.74 = Should hold around 97.40-50 levels or else gain for JPY could extend up to 97.20-25 levels. Yen may not extend its gain beyond 96.90, as it needs to push above 97.95-00 for 98.25. 

GMT 3:27 - AUD @ 0.9736 = Aussie will enjoy its upward journey as a long as 0.9670 holds. I am expecting 0.9705 to hold, but need to clear 0.9780 for more gains or else will consolidate in given range.

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.