Wednesday, Nov 06

Asad Rizvi

Market focus is gradually shifting towards two major events this week ECB's MPS announcement and Friday's US Payroll data, though US jobs data may get little attention due to US government shutdown that will not help in providing true picture. Tomorrow's Euro-zone monetary policy could spring surprise with further easing or Dovish ECB stance after sharp fall in Euro-zone inflation number. 

Yesterday's European Commission report of further Downgrading of its region's GDP to 1.1 pct and painting more deteriorating economic condition have further dampen the sentiment, increasing chances of further easing. However, ECB may not announce rate cut tomorrow and may wait for developments in USA, but may keep tilt towards softer stance to keep market on their toes before it makes next move.

Meanwhile, US data continues to impress and with the release of strong ISM non-manufacturing numbers hinting healthy activity in US service sector further endorses FED's confidence in economy. I think lot of people are expecting payroll to dip towards 100.000 or worse and rise in unemployment number to 7.4 pct, anything better than the projected member will strengthen the tapering case and this is why US bond market is nervous and US treasury yields are surging. Today's release of US 3rd quarter GDP data should be kept in mind. Another observation about the recent speeches given by FED members are sounding less Dovish and the change in tone is obvious.   

While, release of UK PMI Index gave big surprise to the market by rising sharply to 6-year high, as the index rose to 62.5 in October indicating surge in new business activity, which is a positive news for the UK economy. Continuing tend will push growth higher and employment condition will improve. Today UK industrial production data will be released and another good data will give more comfort to the market unless activity has slowed down, which may not be the case.

GMT 2:53 - GOLD @ 1313 = Initially I am expecting $ 1307-09 levels to hold but needs to break $ 1317 for test of $ 1322-24 zones before correcting. However, break of  $ 1302 is required for a a push down to test $ 1290-93 zones.

GMT 2:59 - EURO @ 1.3485 = Euro is likely to consolidate and hold around 1.3460-65 levels for small up move and unless break below 1.3420, it should 1.3510-20 zones and only break will encourage for test 1.3540-45 zones before dropping to test lows.

GMT 3:03 - GBP @ 1.6070 = Cable will hold around 1.6040-50 and unless fall below 1.6000-10, it its likely to test and crack 1.6095 to enter 1.6120-40 zones.

GMT 3:06 - JPY @ 98.48 = Bias remains towards weak JPY an should hold 98.05 for 98.80-90. Only break will encourage for test of crucial levels 99.10-20 or else 97.70.

GMT 3:11 - AUD @ 0.9506 = Aussie should hold 0.9470-80 for a move towards 0.9550-60 zones, but may not find easy to surpass, as risk for corrective move could pull it down towards 0.9450 zones.

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.