Asad Rizvi
By
the end of the week, market focus shifted from US economic performance/policy
and tapering talk to Europe after ECB President Draghi made an effort to end market
speculation about the chances of negative deposit rate by punishing Commercial
Banks not lending to consumers and parking their funds with Central Banks.
Earlier
in his press conference on Nov 7, Draghi spoke of possible softer stance
defending his easing policy by adding that the purpose of recent cut was sort
of precautionary measure to defend inflation from further side.
ECB’s
rate cut decision is faced with severe criticism from German media accusing ECB
policy for helping Southern part of Europe, as they believe that the idea of
negative deposit rate could backfire without serving the purpose.
Depositors/Savers could be the end looser as bank instead of taking the hit
could pass the negative return/cost to their respective customers.
Meanwhile,
looking at the developments in USA, Fed may have taken the right decision to
delay tapering due to risk of default caused by shutdown, but I still believe
that the recent statements by the FED official’s hints that they are under
immense pressure to start reducing its bond purchase program, as it has become
too costly that possesses huge risk to the economy and not producing the required
result.
Therefore,
FED is simply looking for an appropriate reason/timing to act and this is one
factor that recently we have seen shift in the stance of FED representatives and
they sound less Dovish. Last week, Lockhart a FED official though not a voting
member has clearly said that tapering should be on the table, he further added
that it should not necessarily begin in December. Normally such messages are
conveyed through senior and responsible officials.
Furthermore,
the ongoing debate on tapering is done with a purpose to mentally prepare the
market. The only fear, which is tough to guess/calculate, is what will be the
market reaction and the repercussions after the announcement that will depend
on the size. Hence, unwinding the whole lot will be the most difficult part to
conclude.
This
could be choppy in thin market condition due to Thanks Giving Holiday and month
end and next week we could be heading for another exciting week as payroll factor
due to be released on Dec 6, will dominate the market moves.
GOLD @ $ 1242.30
= Gold,
which is witnessing continued sell off on the rise is unable to retain its lost
strength and often find sellers on the up. Demand for gold is on decline and
the metal got further blow last week after Swiss government’s decision not to hold
minimum 20 pct of gold as asset that may have prohibited SNB from selling gold.
The argument for disagreement was based on facts that it would have restricted
constitutional independence of Swiss Central bank (SNB) that would have
hindered SNB’s Monetary Policy decision, as gold has no connection with price
stability and proportion of gold on SBB’s Balance Sheet.
Gold
is likely to remain under pressure, as selling interest should dominate. Gold
should cap below $1265-70 levels and only breakout will risk for test of $ 1295-98
zones. However, next support is around $ 1220-25 levels. Break will encourage
for test of psychological $ 1200 levels.
EURO @ 1.3555 = Positive release
of data specially from Germany and Draghi compelled to make a statement after
facing heavy criticism from German media to tone down his earlier European slowdown
concern helped Euro’s recovery. Earlier mildly Dovish stance by Yellen during
her nomination appearance in front of Banking senate Committee is also weighing
on US Dollar. But in comparison Europe has more economic problems, as compared
to strong German growth, which could disturb German celebration, since overall Euro
region’s economy is faced with bigger challenges.
Euro
could benefit, as technically it closed above 1.3480-90, which remain a strong
support level and only break would challenge 1.3420-50 zones. However, this
rally will find resistance around 1.3590-00 and may exhaust around here, though
break will encourage for a test of 1.3640-80 zones. Range for the week 1.3420 -
1.3680.
GBP @ 1.6220 = Investors confidence
has helped Cable to main its strength, but the challenge lies around 1.6270-90,
which could be tough to crack for another 100 pip gains. Support around 1.6110
is key levels to watch break will encourage further losses to test 1.6050 or
next major support around 1.5970. Range for week 1.5970-1.6380.
JPY @ 101.26 = Though I am not
sure that how much role Japanese economic data will play in its next move, but
since Japanese officials talk a lot about inflation, release of CPI, which is expected
to rise may have some role to play on Japanese currency, as weak data will
demand for more accommodation.
However,
one major area that needs to be focused sharply is the inverse relationship is
between JPY and Nikkei. The strength of Japanese Stocks is one of the causes of
its currency weakness. There is risk for Nikkei to exhaust that has been on the
up since quite a while. Weak Japanese stock market would mean shift from Nikkei
to JPY.
It
may not be easy to surpass 101.80-00 levels and break will only encourage for
102.50. If JPY could gain beyond 100.40-50 levels 99.70-80 will be challenged. Range
for the week 99.80 – 102.60.
AUD
@ 0.9163 = Australian Dollar prone to economic
events in China was hammered after poor Chinese economic data. It was further
clobbered after RBA Governor showed his uneasiness about the currency and
therefore AUD may take small breather before making downside attempt, unless there
is domestic recovery or external support for the Aussie.
AUD has strong resistance around
0.9260-80 levels and only break will encourage for 0.9350. However, risk for
fall will increase on break 0.9010-30 levels for 0.8920-50. Range for the week
0.8920– 0.9380.
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.
JPY @ 101.82 = All of you that went Short in JPY should lock their profit around $ 101.82-88 and you may try Long around 102 levels with STOPS 102.28. But do watch the rally before making Long entry because buying at higher levels will give you more space push your Stops higher.....
ReplyDeleteGIOLD @ $ 1238.20 = The key for now is $ 1235-37, break risk for test of 1230-32 zones or else could make another attempt towards $ 1243-45 levels.......
ReplyDeleteIn gold shall go long or for another sell wait for some up move
ReplyDeleteGOPLD @ $ 1229.50 = Book your profit around 4 1227-29 and wait until there is more clarity............
ReplyDeletewhy do you always have to go aginst the trend when I am saying risk for fall..
GOLD @ $ 1231 = If fails to move beyond $ 1235-37. Risk is for a test of $ 1220-22 levels.................
ReplyDeleteGOLD @ $ 1231.60 = Though gold is loosing its momentum. Prefer to stay square...............
ReplyDeleteSir, Is it okay to go long on EUR and GBP?
ReplyDeleteMy prefred level to buy GBP is below 1.62..................
ReplyDeleteEuro is stuck around 1.3540........I would prefer to buy around 1.3520-30............
GOLDC @ $ 1234 = For a quick one Sell around $ 1234-36. Stops $ 1238.....
ReplyDeletePrefer buying Euro around 1.3520-25 Stops 1.3475.......
ReplyDeleteSuggestion on JPY Sir?
ReplyDeleteNo change in view.......If you long Yen like couple of other friends, book your profit around 101.50-60..........
ReplyDeleteGBP @ 1.6201 = Long Cable around 1.6190. stops 1.6140..................
ReplyDeleteGOLD @ $ 1230 = Book your profit around $ 1228-30....Cheers
ReplyDeletewhich currency Safil...............
ReplyDeleteGBP
ReplyDeleteGBP @ 1.6185 = Ok buy GBP around currenct levels. Stops 1.6140
ReplyDeleteWe are witnessing a typical Monday market, where activity is almost dead after ECB offical's statement that ECB is ready to further cut rates............
ReplyDeleteGBP @ 1.6193 - I not comfortable holding GBP position anymore. suggest squaring around 1.6193-98.....................
ReplyDeleteEURO @ 1.3524 = Prefer offloading Euro position around 1.3524-29..................
ReplyDeleteabout gold
ReplyDeleteGOLD @ $ 1235 = sell around $ 1235-37. stops $ 1241...............
ReplyDeleteHope no one is sitting with Long Euro & GBP position. I gave you timely signal to get rid. The party was spoiled by the ECB official statement.
ReplyDeleteEuro should hold around 1.3470 & GBp around 1.6140-50........
JPY view unchanged heavy around 102............
GOLD @ $ 1241.50 = I know S/L is hit, this rally should exhaust around $ 1244-45. If you enter into new trade next Stop should be @ $ 1251
ReplyDeleteOK pals end of a dull day in currency as we could not benefit due to ECB official statement.
ReplyDeleteGold @ $ 1241.50 = Trade in gold was 2-win against 1 loss and 4th is pending eith take prifit around $ 1240-42 or wait for $ 1235, do apply Stops.
Yen @ 101.65, either take profit or wait for test of 101.50-55, but apply buying level as S/L...........
Cheers until tomorrow.................