Friday, January 31

Asad Rizvi

It was somewhat stable market condition seen in the financial seen in the market after FED policy announcement. Emerging market did not behave erratically and is taking a breather, but risk factor cannot be ignored because of huge debt, Turkey has a large borrowing, which is due to mature this year and with sizable current account deficit, curtailing spending will not be enough measure to balance out the deficit and meet its commitment. Other emerging countries are also taking a breather. Therefore threat of contagion effect is still looming.

Meanwhile, US economy grew by above 3 pct in Q4, which is a healthy sign, people are consuming more, which means they are spending, though jobless claims was a bit higher than expectation. Overall its a better mix of US data and today too US economic data could could reflect better picture of the economy.

While, as UK economy continues to prosper, as mortgage approval rose to 6-year high, which depicts confidence in the UK housing market. But German unemployment and inflation gave blow to its ongoing momentum, risking deflationary pressure in Europe. It increases the risk for more accommodation in Euro-zone region and slowdown may not refrain ECB to act earlier than expectation, as liquidity condition remains tight in the Euro-zone region. Hence market will focus on next week's ECB meeting.

GMT 3:26 - GOLD @ $ 1242.50 = Gold could make small upside attempt towards $ 1244-46 before exhausting in Asia, but needs to fall below $ 1234-36 for $ 1230. However, risk for sharp upside try in US session could be a possibility in an attempt to avoid low monthly closing. But downside move is intact. Any upside violation could see rally extending towards $ 1254.

GMT 3:34 - EURO @ 1.3554 = Euro needs to push above 1.3575-85 convincingly for 1.3620, failure to move up would risk for a test of 1.3505, break will extend fall towards 1.3480 zones, but if dips further, support 1.3450 should hold for minor upside correction.

GMT 3:41 - GBP @ 1.6487 = Pound has strong resistance around 1.6510-20 and needs to clear for a test of 1.6550-60 zones, which looks tough. However, on fall strong support is around 1.6410-20 levels, which needs to break for 1.6370-80. There is risk that buying interest will emerge on dip. 

GMT 3:46 - AUD @ 0.8795 = The strength of Aussie is a bit surprising, but trend is your friend. I still see risk for drop and strong resistance around 0.8830-50 should hold, a a move below 0.8740 will extend fall towards 0.8710.   

GMT 3:50 - JPY @ 102.60 = As long as 103.50 and 103.90 is capped, JPY could make more gains. Break of 101.10-30 levels may  confirm more gains for the Japaneses currency.

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.

Thursday, January 30

Asad Rizvi

Finally ! There is no more confusion about FED stance. Bears are no more defending Janet Yellen that she is a strong Dove and will fight until her last breath against tapering. Bond market did not collapse as the bond Guru's were making claims of crash of bond market. Gold did not plunge after the 2nd leg of tapering announcement. This is purely smart play by Bernanke and his policies that had well managed the market to get out of rescission and for creating conducive condition for the jobs market. 

So far it has been proved that all the financial market Guru's were wrong in there assessment. There were probably adding pressure to delay tapering because they have been minting profits against almost free borrowing at the cost of depositors. 

From US perspective the meltdown in the emerging market is not a matter of concern for them, as FED may have a certain target to improve financial market condition and bring down the unemployment rate, which down to 6.7 pct from 9.9 pct since December 2007 and after attaining the desired level they are now trying to fix their books.

Asia made a bad beginning, as stock market is melting right now. Release of  weak Chinese HSBC Manufacturing number has added more gloom. Market will be watching European market and continuation of trend could be disturbing for the financial market. This is because FED tapering means no more additional cheap US Dollar funding that can lead to liquidity crunch, which will add sever pressure on foreign exchange.  

For next few days, all eyes will be on the emerging market. To defend their currencies, India was 1st to hike its rate followed by Turkey and South Africa to defend their exchange rate. The problem occurs for a country that is faced with with current account and totally depend on foreign funding. Hiking of interest rate does not feed the belly, which requires funding and this is what happened 21 years ago when Britain decided to exit from ERM, Pound Sterling plunged despite 2-rate hike on same day by nearly 5 pct. Cost of high interest rate is unimaginable for any economy that neither serves the purpose to defend currency that requires funding. Famous George Soros made US one-billion by betting on Cable. So watch emerging market for moves.

Bottom-line is that tone is bearish and market is uncomfortable, as they are focusing developments in the emerging markets. Asian start is threatening. Market to remain jittery and confused and nervous unless there is more clarity about the global market behavior, as FED has given a clear direction that it will not deviate from its task.

GMT 3:38 - GOLD @ $ 1262.50 = The only cause of support for gold is due to uncertainly in emerging markets. However, tapering has given more confidence that will help to achieve my medium to long-term target of $ 1000.

During the market will remain nervous, choppy and directionless. Break of $ 1268-70 will be required to test $ 1275-80. But doubt if that level will be reached unless financial market condition severely deteriorates, as I am expecting fall extending towards $ 1240-45 zones.

GMT 3:41 - EURO @ 1.3655 = Euro should hold below 1.3698 or else will test 1.3720-25 zones, as break of 1.3590 is required for a test of 1.3550-60 zones.

GMT 3:47 - GBP @ 1.6558 = GBP may hold around 1.6590 levels or else another test of 1.6630 cannot be ruled out. A break of 1.6590 is required for a fall to extend towards 1.6450 zones before buyers could re-emerge.

GMT 3:56 - JPY @ 102.32 = Needs to surpass 102.75 for 103.30-40 zones or else break of 101.50 risks for 100.25.

GMT 3:59 - AUD @ 0.8735 = there is more pain for Aussie, as it may struggle to move beyond 0.8780. Downside risk for a test and break of 0.8670 levels for more losses.

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.

Wednesday, January 29

Asad Rizvi

Here is another proof that why Durable Goods data is considered notorious. Despite report of good commercial aircraft sales in November the government sales number were said to be seasonally adjusted that caused the plunge. Another factor responsible for drop in durable goods number was due to disappointing auto sales in holidays season that pushed it into negative zone. However, the fall is too heavy that may impact 4th quarter GDP, which is due this Thursday. Higher Consumer Confidence number in January of 80.7 was a bit surprising due to environment.

Today is another important day for the financial market, as FED is will be making its decision on interest rate, which is will remain unchanged, but it may stick to its tapering plan and is expected to reduce its bond purchase amount, as stability in the emerging market should give FED confidence to act to reduce its monthly bond purchase to USD 65 Billion. I still think unstable market may not have stopped FED to go ahead with its plan, though by token amount to maintain the momentum. 

Meanwhile, Pound Sterling may continue to show its muscles supported by good growth and signs of earlier tightening, despite BOE Governor trying to cool down the sentiment. FED's addition to its tapering amount may see a dip, but buying on dip will be preferred, as Cable will still find buying interest at low levels.

GOLD @ $ 1253.50 = Gold should stay below $ 1255-57 until FED announcement or may test $ 1262. A push below $ 1243 should extend dip toward s $ 1237. On a bigger picture based on FED tapering decision the two levels to watch are $ 1215 on the down side and $ 1286 on the upside.

GMT 3:32 - EURO @ 1.3654 = Euro may struggle to move beyond 1.3680-90, break would encourage for 1.3725, but care is required if moves above because it can make sharp up move if 1.3750 surrenders. However, I still see Euro easing but needs to push below 1.3610 for 1.3550.

GMT 3:35 - GBP @ 1.6577 = Needs to move beyond 1.6635 to attack 1.6680. However, buyer should emerge on dips and levels to watch is 1.6510 and 1.6450. Prior to European opening another upside is expected.

GMT 3:38 - JPY @ 103,28 = There is nothing much to add as 102,90 should hold. Break of 103.50 is required to enter 103.75-80 zones. Or else 102.65. Major levels to watch is 102.20 and 104.10.

GMT 3:41 - AUD @ 0.8808 = Any move towards 0.8850-80 should be good opportunity for position taking with 100 pip Stop Loss for 200-250 pip gain.

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.

Tuesday, January 28

Asad Rizvi

Market focus has now shifted to FED's meeting on its monetary policy stance that begins tomorrow. Data this week may not impact Fed's decision, as market did not pay much heed to fall in yesterday's New Home sales  that may have been caused by bad weather. Neither today's release of Durable Goods or Consumer Confidence numbers will have greater impact on the market. We could see strong Durable numbers with possibly weak consumer tone.

Meanwhile, there has been some halt in slide in the emerging markets due to measures taken by the respective countries. However, the economies are still faced with risk fearing tightening measures may lead to surge in interest rates and bond yields that may have adverse impact on the deficit economies. This cause of uncertainty will dominate until Fed announcement.

Meanwhile, Pound continues its upside journey on believe that today's release of 4th quarter GDP number will exceed expectations of 0.7 pct QoQ despite weak PMI data release earlier because retail sector has been doing good. Prior to data release Pound Sterling will find buyers on dip.

     

GOLD @ $ 1257.50 = There is minor risk that gold may hold $ 1253-55 levels for a move towards $ 1260, break risk for a test of $ 1263-65 zones. Or else $ 1248-50.

GMT 3:19 - EURO @ 1.3675 = Expecting a very similar move as of yesterday and is likely to hold below 1.3750. However, Euro needs to push below 1.3620 for 1.3580 or else, range trading will continue.

GMT 3:28 -  JPY @ 102.70 = May trade in 102.30 - 103.20 band. Unless break 103.80 convincingly risk is for more JPY gains. 

GMT 3:31 - AUD @ 0.8785 = Aussie got some life after Chinese bank funding. This rally should exhaust around 0.8820 levels unless makes a clear break of 0.8880, which dos not look a possibility.

GMT 3:33 GBP @ 1.6605 = It seems selling Pound is a sin as the currency easily finds buyers on dip. However, if fails to break 1.6630-35 zones for 1.6660 before data, Pound could dip to test 1.6570-80. Next two levels to watch is 1.6520  and 1.6690

 

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.

Monday, January 27-31

Asad Rizvi

Focus this week will be on FED Monetary Policy announcement, which is one of the major event of the month. Market is fearing further reduction in FED bond purchase amount that has caused turbulence in emerging markets.China is blamed to have given the lead after fall in its manufacturing sector. Extraordinary growth in China has helped emerging market and to some extent developed markets to sustain growth during crisis period, as its economy since last 3-decades grew at an average of over 10-pct annually that has now fallen to 7 pct.

Earlier in my “Global Outlook 2014″ post, I had already warned about the meltdown possibility. It is important to understand the maths. In true sense, China has engaged US in vendor finance, providing the money that helps finance the huge US fiscal and trade deficits, allowing Americans to buy more and more goods with the purported ability to make choices free from fiscal constraints.

China has strong economic ties with the emerging market economies and Australia is too dependent on Chinese growth. Similarly, Brazil, South Africa and other economies have close links with China and is suspect to weak Chinese growth. Basically its a contagion that may have adverse consequences, which can have spillover effect to all inter-connected economies.

Due to its financial size, USA is without any doubt global growth engine. It frequently provides financing facilities to global economies through cash injection and by enhancing swap facility limit for liquidity management so that they can meet its trading requirements. Now there is growing fear that withdrawal of FED bond facility will ultimately lead to liquidity squeeze if USA decides to do away with its bond purchase.

The meltdown in the emerging markets is the reaction of retail investors. The large size investors have so far managed to keep control on the nerves.  If the institutional investors decides to shift their portfolio, flight of capital could cause havoc because of draining of funds.

I think discussing this week’s other economic events will not be too helpful for guidance, as global financial market will wait for FED announcement. Delay or no change in FED stance/strategy  would mean correction, but increase in tapering amount would certainly mean more gloom for the Doves.

Trading is currencies will largely depend on the behavior of emerging markets reaction and be moves in the stock market, as continuation of nervousness may encourage flows towards JPY, SFR and to some extent towards Europe. Surge in US may add pressure on USD. Gold could be naughty and volatile, as sellers may wait to pick the top to sell.

Apart from Durable goods, US housing and consumer confidence data may have weaker tone. But what I fear most and support the view that US Dollar will be the winner at the end of the day, as I am expecting FED to further trim from its monthly asset purchase amount. Market to remain choppy and volatile, so better watch out.

GOLD @ $ 1268.70  = Last week I have highlighted that demand for gold may stay due to Chinese buying as they will be celebrating Lunar year.  I still believe that this trend is temporary and should be short lived. The fate of gold future is not too bright, which is too dependent on FED tapering stance. Continuation of $ 75 Billion tapering amount may give gold another $ 40 - 50 jump, but reduction in FED bond purchase amount could see new lows.

Gold could initially surge to challenge $ 1275-80 zones before easing, but may hold around $ 1248-55. However, on a bigger note, during the week, break of $ 1298 will challenge $ 1232-28 zones  and break of $ 1235-40 will challenge $ 1190 for a move towards $ 1124.

EURO @ 1.3675 = Euro up move will depend on break of 1.3750-80 for 1.3850, which looks difficult. A fall below 1.3580 will encourage for a move towards 1.3490-00. 

GBP @ 1.6476 = Pound Sterling lost some of its gloss on Friday, after Carney's comment that BOE may consider other options for forward guidance. I think the pace of recovery is fast and strength of GBP does not bode well for country's export, so BOE Governor is trying to cool down the momentum. Analyzing recent UK data, GDP growth is likely to remain strong that may encourage buyers to re-enter the market. 

Initially, GBP may hold below 1.6550, as break of 1.6370 is required to open gates for 1.63. If dip is seen caution is required for bounce back, as 1.6240 support should hold for another upside attack. On the upside a move above resistance level could challenge 1.6660.

JPY 102.19 = JPY move will depend of two major factors this week. NIKKEI and USD Bond yields. Weak opening of Asian stock market could would help Japanese currency to make further gains, similarly further gains in US bond yields may push JPY higher and any reversal would have adverse impact on Yen. 

JPY needs to move beyond 102.80 for 103.50 or else there is risk for further JPY gains. Break of 100.70-90 zones may encourage to challenge 100 Yen. Bias strong.

AUD @ 0.8678 = I have always highlighted that Australian Dollar is too dependent on Chinese economy and weakness of cracks appearing in Chinese economy is bad news for Aussie. 

Aud needs to push above 0.8770-8- levels for 0.8820, which looks tough right now, as fall could extend towards 0.8550. If breaks, it should find support around 0.8480. Bias weak.

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.

Friday, Jan 24

Asad Rizvi

Yesterday's move in the foreign exchange market that weakened US Dollar was quite surprising after the reports emerging from China that its economy is contracting. Australian Dollar took thumping, but other markets did not react, instead gold made surprise up move. Though data released from Euro zones was encouraging to a certain extent, as growth in the manufacturing and service sector in France showed minor improvement, because in recent times, it's economy had some turbulent moments. German PMI surging to 32-month high once again encouraging. 

But the move in FX market was excessive due to mixed signal coming from other parts of Euro region, as Spanish unemployment rate continue to rise. USD got further thrashing in US session after the release of US PMI number that fell to 53.7 in January. Although Home sales rose by 1 pct in December, helping 2013 sales to a 7-year high, which was ignored.

There is no reason to believe that FED will re-consider its tapering strategy after fall in US PMI numbers. They surely have a plan and a target and if have decided to further reduce the tapering amount then nothing can stop them and I do believe that do have a plan. If FED decides to make second time reduction announcement then this should be a message and disaster for gold and bond market. 

This a joke that gold is surging on hopes that India will lift its import band on gold. India may delay its gold import plan because this week it had already announced to withdraw its currency notes issues before 2005. This will become effective from April 01, 2014, which will help to curb black market and corruption. This is big news and market is yet to react. Do not forget that smuggling in this part of the world is very common and gold purchase against old currency notes will become difficult. And most interesting part is that gold that would always rise due to China's economic performance is gaining despite cracks appearing in Chinese economy. 

Conclusion, this is mini-trap set before FED meeting, so that gold does not fall before FED meets and if FED does not announce  2nd tapering this will give another opportunity for gold to surge. My further reading is that gold will fall next week due to profit taking and selling by nervous weak buyers that will try to offload their holdings. Any increase in tapering amount will push gold to new lows.

GMT 3:31 = GOLD@ $ 1260.60 = Likely to hold around $ 1253-55 for another upside attempt, break of $ 1265-68 would risk for a test of $ 1275 zones. However, fall below $ 1245-48, will easy upside rally.

GMT 3:40 - EURO @ 1.3685 = This upside rally should be completed around 1.37 levels, as only break above 1.3750 could be threatening. Break of 1.3640-45 will encourage for 1.3625.  

GMT 3:45 - GBP @ 1.6631 = Cable has reached a dangerous levels and looks threatening around 1.6650 and is most likely to exhaust. A fall below 1.6565 will encourage for 1.6520. Upside break will see a push towards 1.6680-90 zones. Prefer picking top to sell.

GMT 3:48 - JPY @ 103.30 = JPY needs to move beyond 103.60-80 zones or else Yen gains will push it towards 102.90.

GMT 3:53 - AUD @ 0.8764 = The fall should hold around 0.8720-40 levels for a move towards 0.8780-90, break will encourage for 0.8810 or else 0.8705. 

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.

Thursday, Jan 23

Asad Rizvi

So far financial market witnessed a quiet week in the absence of any major data release. In currencies, it was GBP that enjoyed the most and yesterday's UK unemployment rate falling to 7.1 pct and fall in jobless claims gave further boost to Pound Sterling. Further BOE minutes suggested that despite quick fall in unemployment rate there is need to hike rates, which did not bother GBP that rose against USD and hitting 1-year high versus Euro.  

While, today market could differently because of some important data release from Europe. Spanish unemployment and PMI data could provide some guideline, as couple of the ECB officials have shown their reservations about economic recovery in the Euro-zone region and seemed to be prepared for for stimulus.

While, data due today from USA initial jobless claims and existing home sales may not be major market mover, but any big change in number could give reason to move the market, which could be both ways, as market will be more keen in next weeks monetary policy announcement.

GMT 3:09 - GOLD @ $ 1235 = Gold may struggle to move beyond $ 1240 and may exhaust around $ 1236-38 levels. Break $ 1227-29 zones will encourage for $ 1220-22, as see risk of fall extending towards $ 1211-13 zones. Move beyond $ 1245 will delay down move. 

GMT 3:18 - EURO @ 1.3552 = Real challenge is to break 1.3560-70 zones for 1.3590-95, which looks tough. However, downside break of 1.3502 is required for 1.3470. While, upside break will open gates for 1.3625.  

GMT 3:25 - GBP @ 1.6572 = For now Cable may hold around 1.6595-03 levels, but needs to fall below 1.6540 for 1.6510. Upside break will challenge 1.6650. However, buyers are expected to hop in if dips. Major protection is around 1.6470-80 levels. 

GMT 3:29 - JPY @ 104.46 = JPY is likely to trade in a band may hold 104.25 or else 103.95 for 104.80-90. Break will encourage for a test of 105.20 levels.    

GMT 3:32 - AUD @ 0.8802 = Aussie will struggle to move beyond 0.8830-50 zones, break of 0.8765-70, will see drop extending towards 0.8745-50 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.

Wednesday, Jan 22

Asad Rizvi

Euro traded in a narrow range versus US Dollar, Pound Sterling, JPY and Aussie made good gains. Canadian Dollar got good bashing fearing deteriorating economic condition and in believe of softer policy stance caused by economic slowdown  due to weak exports and falling oil prices. I think bias will remain on the downside though rate cut will be to early decision, as Canadian Central Bank may wait for FED meeting.

There is very little to add as as there is no major release of US economic data this week. BOJ is likely to maintained its rate unchanged. In BOJ conference market will be trying to determine their thoughts on growth prospects and inflation. While BOE minutes and quite a few data due to be released from UK will provide direction about UK economy hat lost some of its strength in the later part of last quarter of 2013.

GMT 3:07 - JPY 104.36 = Key resistance for JPY is around 103.70-80 should hold or else could dip to test 103.20-40 zones. However, break of 104.80-90 will surely encourage for a tests of 105.20-40 zones. 

GMT 3:14 - GOLD @ $ 1242,30 = Gold my trade in a $ 10 band until NYK and my may find top around $ 1245-46 in Asian time zone before gradually easing to re-test $ 1234-38 zones. Upside break will encourage for a test of $ 1250 levels.

GMT 3:20 - EURO @ 1.3569 = Euro may find support around 1.3535-40 for a minor up move, break of 1.3595 is required to extend gains up to 1.3610-15 zones before dropping. 1.3510 is the major support level on downside. 

GMT 3:25 - GBP @ 1.6482 = The real challenge today will be to break 1.6510-20 levels that could threaten for a move towards 1.6575-95 levels. However,fall below 1.6400-10 will be sign of exhaustion and may Cable attack support level 1.6340-50.

GMT 3:28 - AUD @ 0.8866 = the expected up move has occurred, now Aussie needs to break 0.8910-20 zones, which could be tough and may fall to re-test 0.8820-40 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.

Tuesday, Jan 21

Asad Rizvi

Monday was a quite start to the week as New York was off, hence trading activity was seen in a narrow band with no unusual move. Today again market may wait to get some clue from the release of German ZEW economic numbers that will reflect institutional investors sentiment, Again its an important data, which is expected to show improving economic conditions in Germany, as European economy is too dependent on German growth, which will be followed by release of Euro zone ZEW economic sentiment. Later CBI data due to be released from UK and Redbook Index from USA may have minor impact on the market.

Interestingly, in a quiet environment as no major data is expected to to be released, market report by WSJ journalist that FED could trim its bond buying amount for second time that could be announced at the end of Jan 28-29 meeting could bring spark in the market. Watch if bond yield surges, as Japanese Yen has already started showing signs of nervousness. This should help in halting gold rise.

GMT 3:19 - GOLD @ $ 1252.90 = I would be cautious today as upside could be limited as gold has  resistance around $ 1256  and only break risks for test of $ 258-60 zones. However, bias should be on the downside and break of $ 1247 will encourage for  a test of $ 1240-43 zones.

GMT 3:26 - EURO @ 1.3550 = Euro needs to hold around 1.3565-70 levels for a test of 1.3510-20 zones. Break will encourage for move towards 1.3470-80. Upside break risks for possible test of 1.3610 levels.

GMT 3:32 - GBP @ 1.6427 = Cable is still in good demand, but needs to surpass 1.6475-85 levels for more gains. GBP will find buyer on dip. Break of 1.6405 will open gates or 1.6370-80. It should find support as long as 1.6330-40 is protected.

GMT 3:37 - JPY @ 104.65 = Bit tricky around 104.80-90. However, if breaks could test 105.10-20 zones. But if holds could test 104.20-30 zones and only break risks for 103.85.

GMT 3:40 - AUD @ 0.8815 = If fails to break 0.8830-40 could dip to test 0.8790-00 before up. Support 0.8770 should hold. Upside break will encourage for test of  0.8860-65 levels. 

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.

Monday Jan 20-24

Asad Rizvi

The effect of abysmal December US Payroll data is gradually fading, as I have earlier pointed out in my posts that one bad data cannot be the decider. Release last week's economic numbers does not depict poor health of the economy, in broader terms they fared well. This view got further boost during the speeches made by FED officials, as most of them showed confidence in economy and was less concern with one tome drop in Payroll number, which could be due to bad weather.  

Therefore in near term, US economic indicators and intention of FED officials suggest that it will gradually reduce its bond purchase as per plan also known as measured tapering. The decision on the size of reduction of amount will depend on economic recovery and FED may only reconsider continuation of its easing policy if the economy deteriorates badly. It is now becoming obvious that FED is trapped in a vicious circle and wants to put a halt on it's inflating balance sheet, because FED is well is ware that it  has no available alternate to reduce the size of the balance sheet caused by its unconventional monetary policy. 

To give you a better sense, FED's current balance sheet size of USD 4 Trillion means that the size is bigger than the size of German economy. Since its introduction of unconventional easing policy stance in 2008, FED has so far added almost USD 3 Trillion. It is true that the printing of money or creation of new money helped FED to manage it's over USD 17 trillion debt, but it did not help to reduce or guarantee re-occurrence of future economic/financial difficulties.  

The real problem for the US economy is low revenue collection and to match the spending's if we analyse the USD GDP composition by sector, Agriculture is 1.2 pct, Industry is roughly 20 pct and the remaining part is services that includes large part from the financial sector, which is mother of all the ills that needs to be corrected and balanced according to meet the economic and fiscal needs. Such imbalance certainly has its consequences and the economy has to pay the price unless checked and corrected.

Meanwhile this week, European data may play bigger role because of ECB fear of deflation and slowdown. Release of PMI form the Euro-zone region will give more clue about the business environment in the region, as performance of its manufacturing sector will be keenly watched that should show improvement, as gains in service sector will push business confidence higher.

Rating agencies will be releasing its review of Germany and France, as Moody's have already upgraded Ireland's sovereign ratings. Release of BOE meeting minutes will be another major event that will reflect better picture of its policy stance, as it is reaching its 7 pct unemployment target rate at a faster pact with inflation being another key subject of discussion.

GOLD @ $ 1253.70 = Gold remained under pressure and during the week, as it was successfully picked by sellers for selling on the bounce back. However, late weekend buying due to constant demand because of Chinese Lunar that begins on Jan 31 that helped gold to close higher. This trend will continue, as sellers will take advantage and is likely to dominate selling on the rise. This is temporary move and not change in trend, as FED tapering will spoil the Bear party in near to medium term.

This week too we could see some upside move, as break of $ 1262-65 will encourage for a test of $ 1272-78 zones. However,  Break of $ 1242 is required to challenge support level of $ 1233-35, if surrenders, gold will take further dip towards $ 1220 zones.

EURO @ 1.3539 =  Euro needs to hold above 1.3450-70 levels to make another attempt towards 1.3640-60, which could be possible on break of 1.3610. However, a move below 1.3410, will extend fall towards 1.3350.

GBP @ 1.6411 = Cable needs to hold below 1.6490 to ease buying pressure or else will burst to test 1.6550-80 zones. However, a fall below 1.6270-80 will encourage for more losses.

JPY @ 104.40 = JPY is still required to move below 105.70 for more weakness and test of 106.50 levels. Risk for more gains will increase once 103.10 breaks for 102.20.

AUD @ 0.8769 = I see huge support for Aussie around 0.8650-70, which should hold for 0.8850, break will encourage for 0.8910. If support levels surrender next on the downside is 0.8580.

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.

Friday, January 17

Asad Rizvi

US Dollar once again traded in a narrow trading band against Euro. It lost its sheen versus JPY, as rising US bond yield and weak Nikkei support strong Yen. Cable is finding tough to climb as UK economy has shown some signs of fatigue and today's weak Retail sales could further dampen the sentiment. Aussie took another round of beating, as there is a risk of rise in unemployment that that could fore RBA for another rate cut. While today's economic data will provide some more hint about US economy's next direction.

The reason for USD consolidation in NYK could be due to poor bank result announcement by the US banks hitting stocks that gave strength to US bond and Japanese Yen some more breathing space. Market still looks unsure after last week's weak Non Farm Payroll data and trying to make adjustment. Despite some uncertainty, there is no confusion about US economy that has so far shown clear signs of growth.

GMT 3:06 - GOLD @ $ 1243.50 = In Asia gold should hold around $ 1240 levels for a move towards $ 1246-48 zones, which good for quick trade and profit should be taken, before falling to test $ 1240-42 zones, but needs to break for $ 1235. Upside violation risks tests of $ 1253-55 zones.

GMT 3:15 - EURO @ 1.3617 = We are faced with similar situation as of yesterday. Euro may find top around 1.3530-50 zones and is required to surpass for .670-80 zones. However, a fall below 1.3570-75 is required to test crucial 1.3540-50 zones. Bias is still on the downside.

GMT 3:20 - GBP @ 1.6337 =  Watch support 1.6310 only break risks for test of 1.6270-80. On the up barrier is at 1.6260, then 1.6390 and lastly 1.6425. But selling pressure should dominate on the rise. 

GMT 3:23 - JPY @ 104.30 = I am expecting JPY to hold around 104.40-60 levels for 104.05. Break will encourage for test of 103.80-90 levels. Or else 104.85.

GMT 3:27 - AUD @ 0.8806 = Aussie has weak tone, but should remain locked in 0.8770 and 0.8830 range. Top and bottom can be picked with 30-35 pip Stop Loss.

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.

Thursday, January 16

Asad Rizvi

FED Beige Book that collects data from 12-Federal Reserve Districts further confirms that the US economy expanded at a reasonable pace in large part of the country in November 2013 and there good chances of improvement in coming in the days ahead. It is quite encouraging to know that overall growth in real estate and manufacturing continues to enjoy uptrend due to large orders in aviation industry and big rise in auto-sales. Hiring pace is increasing and people are shying to spend.

It is quite encouraging that US economic growth in on ascending mode and continuation of of such trend will give further boost to the economy. The year 2014 began with a firm tone, we have seen most of the FED members opting for a Hawkish tone unlike that we saw in 2013. One of the non-voting FED Chicago President Charles Evans went to such an extent that he expects unemployment to fall below 6 pct in 2015 though committing to keep low for longer period of time.

Today' release of US inflation data and US initial jobless claims should be a good guide, as both tops FED agenda, since higher inflation and stable economy is FED's priority. General view about the US economy is that despite poor jobs data for which weather should be blamed, overall trend is still solid like a rock.   

   

GMT 3:21 - GOLD @ $ 1240.50 = I would try to pick top and sell around $ 1240.50-43 zones, as only break $ 1248-50 would threaten for more gold gains, which is not a favored move for $ 1232-34. Break will encourage for test of $223-25 zones. 

GMT 3:28 - EURO @ 1.3620 = Break of 1.3525-30 is required for a move towards 1.3655-60 zones. But beyond that levels, which is a remote possibility, Euro is a sell. However, needs to push below 1.3570-75 for next barrier around 1.3540-50 levels. 

GMT 3:34 - GBP @ 1.6371 = Pound should be capped around or below 1.64 levels for a move towards 1.6330-35. Break will see will fall extending towards 1.63 zones. Protection around 1.6450-60.

GMT 3:39 -  JPY @ 104.90 = JPY has entered a tricky zone 104-90-00 may hold for re-test of 104.60-70 levels, but should hold 104.40 or else could see a push towards 105.30-50 zones, where JPY has strong support.

GMT 3:44 - AUD @ 0.8812 = AUD should hold 0.8770 for a test of 0.8850-60 zones. However, if support level breaks 0.8740-50 may hold.

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.

Wednesday, January 15

Asad Rizvi

Fed officials did not show their reservations about the tapering plan. Lockhart had a mixed view, he probably wants improved job conditions and inflation to pick up though sounding optimistic about the growth prospects in USA. Similar opinion was viewed by Plosser, as he said the economy is on a "firmer footing" than few years back. Fisher too endorsed that the economy is making progress, both are FED voting members thus year. This is huge confidence that has been shown towards US economic recovery.

Earlier, market was trying to have feel about the release of Retail sales data, which was better than expectation that rose by 0.2 pct. Auto sales surging by 0.7 pct against 0.4 pct rise. Gradually the mood of the market is once gain turning Bullish, leaving aside the last weeks poor Payroll data.

In the absence on any major release of data from Europe, I think today's FED Beige Book will give another feeler about the US economic condition as the report is gathered by 12-Fed Reserve Districts. This is  voting members an important report, which is combined and released after gathering views from economist and experts on economy. Sentiment is once gain gradually turning Bullish. US Bond Yields, Gold & JPY has reacted.

GOLD @ $ 1241 = Sell gold around $ 1241-44 levels. Stop Loss $ 1248. for test of $ 1233-35. Break will encourage or $ 1228. Or else $ 1252.

GMT 3:34 - EURO @ 1.3631 = Euro move is in line of expectation, only break of 1.3650 risks for 1.3675. However, there is more downside risk 1.3580-90 is the support level that may hold or else 1.3550 will be challenged.

GMT 3:40 - GBP @ 1.6424 = A move beyond 1.6450 is required to test 1.6470-80 zones. However on the downside strong support is around 1.6380-90, break would encourage for a test of 1.6350-60 levels.

GMT 3:44 -  JPY @ 104.38 = Likely to hold around 104 levels for a gradual move towards 104.70-80 zone. Break of 103.70-80 risks for 103.50, which does not look a possibility.

GMT 3:48 - AUD @ 0.8922 = I am expecting support 0.8890-00 to hold for attest of 0.8950-60 zones, or else 0.8850-60 before up again.

             

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.

Tuesday, January 14

Asad Rizvi

It was JPY that was due for correction made gains against the US Dollar. US 10-year bond gain yields was a big supporting factor that helped Japanese currency to rise after surprise fall in US NFP numbers. JPY gain is not very surprising, as I have been hinting in my posts since last 10-days that Yen is due for correction and it cannot continue to take beating in a hope that Japanese government will be soon making stimulus announcement. Now they have to act, such verbal statements will be less effective.

In another interesting move US 10-year bond yield has gained substantial strength upsetting Bullish view after the release of US Payroll data in a hope that FED may slow the pace of tapering. This could be an effort by major bond players to bring change in sentiment, but may not the reality, as one or two weak data will not help to change the policy. If we look at the recent release of US economic data in boarder perspective then overall US economy is doing well and poor Payroll data is just one bad event. In an immediate response after the release of bad Payroll data the two FED officials have already focused on continuation of FED ongoing FED's strategy, its two other official Plosser and Fisher are due to make speeches, they will provide more direction.

Today's release of Retail Sales will be one of the major data announcement of the week, which should guide market for its next move during rest of the week.

GMT 3:44 - GOLD @ $ 1252 = I do not see gold stretching beyond $ 1254-56 and would prefer selling. Needs to push below $ 1247-48 for a test of $ 1240-42 or else $ 1258-60.

GMT 3:58 - EURO @ 1.3662 = Euro has resistance around 1.3690-95 and may hold, but is required to push below 1.3625-30 levels for 1.3580-90 zones or else could retest the resistance level or else 1.3720.

GMT 4:03  - GBP @ 1.6386 = Cable may struggle to move beyond 1.6425. A fall below 1.6310-15 will see more losses. Or else 1.6455.

GMT 4:07 - JPY 103.47 = JPY is required to move beyond 103.70-90 levels for a move towards 104.40, which looks difficult as it can potentially make another attempt to test 102.50-80 zones.

GMT 4:11 - AUD @ 0.9033 = We may have seen the top and Aussie could exhaust around 0.9060-65. However, as long as 0.8970-80 holds, it could make another small up move. Break of 0.9090-00 will threaten for more AUD gains.

 

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.

Monday Jan 13-17

Asad Rizvi

Weak US Non Farm Payroll (NFP)data was a biggest surprise of the the week that fell against expectation by almost two-third to 74.000, slowing sharply and hitting 36-month lows, confusing many market participants about FED's latest monetary policy stance. They may have started believing that the growth is not projecting true picture of the US economy. Interestingly unemployment data, which is focused by FED, as a benchmark tool for tapering purpose improved by 0.3 pct to 6.7 pct getting closer to the FED target of 6.5 pct

Winter is partly blamed as one of the cause for weak NFP. Some of the reports suggest that fewer people have been applying for jobs and few suggesting that old old could be an added factor. If winter is the bigger cause then in January, so far the cold snap has been harsh too, which could mean possible drop on January NFP too. 74.000 is a very low figure and it is also possible that in such sever cold condition was not proper gathered. Hence, I will not not be surprised to see upward revision next month.

After going through various comments, which is mixing up with emergency unemployment insurance or debt with FED stance, it is important to understand that they are two separate Fiscal and Monetary issues. It should be clear that Fed has nothing to with the governments fiscal stance. 

What is more important from Fed's point of view is that the overall economic expansion is at a desirable pace. The signs are obvious that economic recovery is likely to gather momentum in 2014. One of two bad months is not the policy decider. If we go through the FED members speeches, they seemed least bothered about drop in NFP and are much focused on growth. Therefore, as soon as we get news of more positive data, there will be shift in market sentiment. Healthy data will encourage FED to increase in the reduction size of its bond purchase. Poor data may see continuation of its $ 75 billion monthly bond purchase for couple of months, but I do not see any reason for continuation or increase in the bond size from $ 85 billion.

    

GOLD @ $ 1248 = Gold rallied back on Friday after weak Payroll data. But this upside rally will be short lived, as strong US data in coming days will negate upside move. I do not see any reason for unusual rush for gold and seller will once again get good opportunity to pick the top. 

On Monday morning, I am expecting Gold gold to make further gains to test $ 1255-60 zones. However, I see no reason that will help to push gold beyond $ 1265-70 levels during the week. On the downside, $ 1235-36 will challenged, break of $ 1228-30 risks for $ 1215-20. If moves up, $ 1278.

EURO @ 1.3669 = Last week's ECB's policy announcement was quite in line of my expectation with no major change, but certainly tone turned more Dovish. I have often discussed in my various post that flow money is surely towards Euro-zones, but this it not being utilized to stimulate economy. The real problem is that there is no credit expansion and tightening impact due to maturity of earlier borrowing by banks is increasing the cost of lending, which is in negation of ECB policy stance. All the German  hard work is not enough for the rest of the Euro-zones region, which has loads of problems. Germany economy also relies on foreign growth, as it cannot solely grow on domestic demand, which may not be sufficient to match the needs. Therefore, European currency is still faced with certain risk, as it is too dependent on availability of Central Bank's liquidity for Capitalization an lending. Credit expansion is a must to ease job condition in the Euro-zone region. European recovery may sound music to ears, but challenges are uncountable.

Euro gains should exhaust around 1.3750-80 levels and only only move beyond would risk for more upside move, which is not favored. Fall below 1.3570 will open gates for more losses and a move below 1.3510 will encourage fo deeper fall towards 1.3420-50 zones.

GBP @ 1.6481 = UK Data released last week was disappointing due to soft PMI and wider deficit and this week too poor release of retail sale and inflation data could add pressure on British currency. Pound has strong resistance around 1.6495-00 and needs to clear convincingly to test 1.6570. However, I see increase in risk for fall on break of 1.6350 that could push GBP towards 1.6180-20 zones.

JPY @ 104.17 = In the absence of stimulus package, Japanese Yen is too dependent on two factors, Nikkei and US 10-year bond yield. There is a risk for deeper JPY correction as long as 105.20-50 support levels hold. A push below 103.10-20 will encourage to attack 102.40.

AUD @ 0.8994 = Aussie could push higher and has 1st support around 0.8920 with major at 0.8850. Move beyond 0.9020 will encourage for 0.9090, but should soon exhaust if moves higher around 0.9110.

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.

Friday, January 10

Asad Rizvi

After listening to Draghi's press conference, Europe is clearly not out of woods. Germany's growth pace is not enough to counter Euro-zone problems that may have softened temporarily, but could re-emerge, as there are plenty of risk factors that cannot be ignored. Deflation is the biggest threat that is looming over the Euro-zone region and this is why there was a minor shift in ECB stance, as its President was sounding more Dovish. He clearly hinted that if the trend continues ECB will have to use all the allowed available monetary tools. 

The story is different in USA. If we try to keep a track of recent release of US economic data, it clearly indicates that the economy is growing at a much healthier pace. ADP data released this week that covers activity in the private sector was encouraging hinting good growth, which means better job condition in USA. Similarly data of manufacturing and service sector industry is also supportive. It all point to another improved economic condition in USA. Hence, today's US job data should not disappoint the Bulls, as yesterday's initial jobless claims was another good proof of improving job market in USA.

GMT 3:06 - GOLD @ $ 1235 = Sell around $ 1236-38, with Stop loss $ 1242. for test of $ 1227-30 zones.

On a bigger note Needs to fall below $ 1215 for break of $ 1202 for $ 1192. While move beyond $ 1248 risks for a test of $ 1255-60 levels.

GMT 3:16 - EURO @ 1.3512 = Euro could potentially move towards 1.3535-50 zones before data and should hold above 1.3570. However move beyond 1.3680-90 would risk for sharp gains towards 1.38 zones. Similarly 1.3510-20 is the key level on the downside, break will threaten to test 1.3450. 

GMT 3:20 - GBP @ 1.6477 = Bullish sentiment for Pound Sterling is intact and during early Euro may hold above 1.6440 and 1.6410 should not surrender for a move towards 1.6490 or 1.6510. On the downside, unless 1.6310-20 surrender, buy on dips is preferred. 

GMT 3:29 - JPY @ 104.90 = is currently too dependent on Japanese stock market moves, as it awaits for more stimulus package. Unless 105.30-35 zones is cleared there is risk for Japanese currency making more gains. Break of 104.55 risk for a test of 10410-20 zones or possibly 103.80-90 levels before easing.  However, break of support level may challenge 105.80 for 106.40.

GMT 3:32 - AUD @ 0.8903 = Aussie is required to surpass 0.8925-30 levels for a visit to 0.8950-60 zones or else 0.8880-85.

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.

Thursday, January 09

Asad Rizvi

FED minutes and encouraging reports from the private sector (ADP) that jobs condition in USA is is getting better did not impress the market, as market could be trying to digest the news and waiting for Friday's Non Farm Payroll report for more clarity. FED language clearly depicts that its committee members are now convinced that bond purchase is not doing the trick of helping growth and is more of a burden as it inflates FED balance sheet, which means it is a costly and risky affair against a very heavy price. Fed minutes also gives a hint that the confidence levels about the overall economic outlook has certainly improved. 

One big reason for the confidence in US Bond market, which is largest in size is that it is refusing to accept the fact the FED will completely unwind, as quite a few major players still believe that FED cannot afford end of its bond purchase plan that could lead to financial market collapse because of liquidity crunch. 

In my humble view, it is because of the experimental size of tapering, which is tiny at moment to prepare and have better sense of the market. When FED says that the impact of benefits is slipping over time, it clearly hints that bond purchase is no more affordable proposition and since it is linked to economic factors, a good data on Friday or later could do lot of damage and shake the confidence and so will, as the size of tapering get any bigger. It is surely tough to defend 10-year US bond yield of 3-pct or below that could easily surge with the passage of time by another 50-100 basis point, as bearish sentiments will gradually dominate and a move of 25 basis point will become acceptable to market.

Two major events of the day is monetary policy announcement by BOE and ECB, which is unlikely to change rate, but some of the developments is UK suggest that market should keep an eye on the size of BOE bond purchase amount. ECB has a tough task ahead due to German growth is not helping the region to recover as a desired pace and low inflation is now a real cause of worry. ECB may not act, but Mario Draghi very good at choosing his words could use his artistic language to pamper the market and may sound Dovish and talk of liquidity injection. Therefore, a small cut in Refi rate and talk of easing will push Euro further down, but just a press talk will encourage buyers to European currency.   

GMT 3:14 - GOLD @ $ 1226.90 = In Asia again $ 1222-23 should hold, as only break of $ 1218 could be threatening. However, suspect any move beyond $ 1233-35 levels, as selling will dominate on the up. I will not be surprised to see break of $ 1215-18 in NYK for possible test of $ 1202-05.

GMT 3:37 - EURO @ 1.3580 = We could be heading for another choppy day. I am expecting Euro to hold below 1.3620 levels until NYK. Break of 1.3540-50 zones will encourage for a test of 1.3525 levels, which should hold or if surrenders 1.3490 zones could be tested before a bounce back occurs. On the up, 1.3660-70 is the level to watch that could be tested later in NYK session before down again.

GMT 3:41 - GBP @ 1.6450 = Bullish condition will prevail until 1.6320-30 surrenders. However, support 1.6390-00 should hold for a possible test and break of 1.6480 or 1.6515.

GMT 3:45 - JPY @ 104.90 = Jpy is looking for direction a break of 104.60-65 could see more gain towards 104.30-40 levels. However, a move beyond 105.250-30 could extend losses. 

GMT 3:48 - AUD @ 0.8880 = This move that I have talking since last couple of days happened. This dip could extend towards 0.8835-50 zones, but caution is suggested if seen, as Aussie has potential and could test 0.8910-20 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.

Wednesday, January 08

Asad Rizvi

The US trade data that fell by 13 pct in November to USD 34.3 billion has once again reiterated confidence that the economy is in the right direction. It will surely help to revise 4th quarter GDP upward and further endorsing FED's tapering plan. Such positive data will give broader space to FED to consider unwinding at a faster pace. Though decision on FED tapering should be split, as every FED members may not be in agreement, but its the majority that rules and this why tapering took place. 

Today's ADP Employment Change data could be the leading indicator. Better than expected release of numbers will encourage Hawkish sentiment. However, poor data unless too bad may not have larger impact, as market would wait for the release of Fed minutes that will provide a clearer view. 

Lot of people are carry same view and talking of FED new Chairwoman Janet Yellen's past role, as and ardent Dove ignoring/forgetting that the decision on tapering was taken in her presence. She has to lead from front and suppress her wishes wishes if any and enter the real world, as she is answerable/responsible on all monetary matters and will have to behave and act accordingly. Then I would also like to add that the new FED Vice Chairman Stanley Fischer carry's different ideas and does not believe forward guidance is beneficial for the economy and hence, may demand unwinding at a faster pace. Bottom line is that QE will be more data dependent.

On the other side of the continent, softer release of European inflation data was not good news for ECB that has a desire for faster growth. It also increases the risk that though European Central Bank will not amend its rates tomorrow, but Mario Draghi will have to adopt softer or Dovish tone and speak of possibility of rate cut fearing deflation.

GMT 3:14 - GOLD @ $ 1228 = In Asia $ 1223-25 levels may survive for a feeble upside attempt, but is likely to hold below $ 1233-35 levels. However, there is a risk of fall and break of $ 1218 is required to test major support level $ 1202-05, if surrenders we could see more losses. Or else $ 1242.

GMT 3:24 - EURO @ 1.3622 = Resistance remains around 1.3650-60 zones, break would encourage for a test of 1.3690 area, but 1.3720 is the key that should not be challenged. However, Euro may suffer more losses if 1.3570 breaks, as 1.3520 is the next key support level.

GMT 3:29 - GBP @ 1.6392 = Pound has support around 1.6360-70, break could see fall extending towards 1.6330-40 zones. However, needs to make a clear break of  1.6430-40 for more gains, but may exhaust or else 1.6480.

GMT 3:37 - JPY 104.91 = Only break of 105.10-20 could threaten for more JPY losses. Should hold 104.60-70 zones or else 104.40.  

GMT 3:40 - AUD @ 0.8920 = May struggle to move beyond 0.8940-50 zones, as risk for 0.8880-90 is intact break could see fall extending towards 0.8850, which is a very strong support zones for Aussie. On upside break, watch  0.8980.

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.