Thursday, December 12

Asad Rizvi

The US budget deal continue to haunt stock market on belief that it provides more pace to FED to consider reduction of its bond purchase, as shutdown fear has been eliminated. About few months ago fiscal indiscipline in USA was one one major cause that may have hindered FED to take firm action on its bond purchase. 

If we have a closer look at the market indicators, this is what market is clearly hinting that it is prepared for taper. Look at 10-years bond yield, it is close to 3 pct. Gold is dicey, as it easily find sellers on the up. Oil, despite better global economic condition, which means healthier corporate activity is on decline and Global Stock market too is showing signs of nervousness. Unlike past, there is every reason to believe that this time FED has enough reason to act. 

Lot of people are betting linking tapering on today's retail sales, which makes no sense to me, it is simply economic gimmick used by few analyst/economist, as they are short of reasoning to fill their daily post. Economy is not based on one single factor and if spending for a month has slowed down it does not necessarily mean FED will change its plan. It is simple common sense that it is economic growth and jobs that matter, both have been meeting its target. So Retail sales will only help to derive market sentiment and data good or bad should not bother FED officials to take action based on spending, as Friday's Payroll data have already provided enough room and made FED's job easier.

Other US data's due to today, specially Initial Jobless Claims numbers should not be ignored, which in my view could be another big factor and market mover that should add to market sentiment.  

GMT 3:13 - GOLD @ $ 1254.50 = Gold may struggle to move beyond $ 1257-59 levels, though could hold around $ 1247 levels in Asian session for another $ 5-7 up move before fizzling out with chances of test and break of $ 1241 to test lows. Or else $ 1263-65 before down again.

GMT 3:21 - EURO @ 1.3792 = Euro has support around 1.3760-70 zones and may hold for a test of 1.3815-20 zones. However, as it move up the pace should slow down unless able to penetrate 1.3845, which does not look a possibility. Break of support level will encourage for 1.3730-40 zones.

GMT 3:25 - GBP @ 1.6360 = Cable is surely loosing its upside moment and has heavy top around 1.6385-90 and is likely to gradually dip, but needs to fall below 1.6310-20 for 1.6285. Or else on the up 1.6420-25 remains a barrier.

GMT 3:32 - JPY 102.56 = There is no change in my weekly view, as JPY would continue to make new gains unless pushes beyond 102.98 for 103.38. See risk for JPY gains from 102.75-80 levels for test of 102.10 and may dip further down to test of 101.95-00 zones.

GMT 3:36 AUD @ 0.9017 = We have witnessed sharp drop, but Aussie has strong suppoort 0.8975-80 that should hold gor a test of 0.9055-60 zones or else 0.8955. 

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.