Asad Rizvi
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.
We could be heading for another slow day with thin market activity due to low trading volume in the foreign exchange market, but trading could be choppy due to month end and rages could be wide.
Yen has weakened due to increased military activity in the disputed air defence zone as Chinese jet claims it to be a routine exercises. This could be in response to US 52-bomber that flew couple of days ago over same territory. Though there does not seem any purpose behind such an exercise. Another big factor that is helping Japanese currency to weaken is massive buying of Japanese Government Bond by BOJ through which Bank of Japan is injecting liquidity. Excess liquidity will also help to create inflation, as Japan is desperate to increase economic activity and push exports higher.
In UK, BOE decided to halt its support for mortgage funding that was announced through its six-monthly financially report. The need to stop funding could be because of substantial growth and the strength of housing market that could be heading for faster inflation and possible bubble. I think the support to the housing market may continue with a plan or else it may not take time for UK economic slowdown. The other risk is that with such a decision the chances of rates increase is faster that has helped Pound Sterling to make further gains.
Meanwhile, tough a quite day in USA as there is no economic data due to be released today. Europe will once gain keep market busy with the release of economic data.
GMT 2:50 - GOLD @ $ 1242.80 = If gold is able to clear $ 1246-50 zones, it may make a futile attempt to move towards $ 1260. However, I do not see such a move occurring as there is huge risk for sharp fall next week, so buyers may refrain from showing aggression. Break of $ 1228 could see acceleration at a faster pace and I will not be surprised to see test of $ 1215. Preferred strategy would to pick top to sell.
GMT 2:55 - EURO @ 1.3617 = Likely to hold around 1.3580-90 for a move towards 1.3540-45, break will encourage for a move towards 1.3565-70 zones or else 1.3565.
GMT 3:2 - GBP @ 1.6364 = Cable may have another good day as it may find support around 1.6325-35 for test of 1.6375-90 zone, only break would encourage for further gains. However, fall below 1.6270-80 would risk for bigger drop next.
GMT 3:09 - JPY @ 102.53 = Japanese currency has strong support around 102.80-90 zones and only break would encourage for further fall towards 103.20-40 zones. However, corrective rally could occur for possible test 101.80-90, but JPY will give strong resistance if 101.40-50 is tested.
GMT 3:14 - AUD @ 0.9076 = AUD has barrier around 0.9125, which could not be easy to surpass unless 0.9035 is tested break would risk for a crucial test of 0.9010 zones an could bounce back from the lows of 90's unless 0.8970 surrenders.
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.