Tuesday, Dec 17

Asad Rizvi

The pattern in the financial market suggest uncertainty and nervousness, as the direction remains unclear. It is difficult to judge FED's monetary policy stance based on release of data's this week. The market behaviour does not reflect true picture, as opinion is still divided and after the the most recent release of Payroll and Jobs data, FED officials have been less vocal on the subject. Therefore it is tough to get the sense or feeling about the direction.

Everyone, has its own assessment about FED' next stance, as the opinion is still divided about the timing of tapering. Some based on economic reasoning and few of them are dependent on their hunch feeling. Many argue that tapering is priced in, but common sense will tell us that draining out of liquidity on regular basis will have sever impact on the overall financial system that can spill over on the global financial market due to strings attached. Unless FED announces that its one time tapering or FED will see wait to see the market reaction before its next withdrawal/unwinding. 

This may not be as easy as one may think, but if we make an overall assessment of US economic performance, which was the core argument or condition by the FED members during their speeches, then there is no reason to delay scaling down of bond purchase by FED. 

Meanwhile, Euro-zone PMI did reflect better result, but unfortunately it was once again due to the strength of German economy that is pulling the engine versus others that remain disappointing, which is not a very healthy sign. Today's European CPI and Labor cost data will give some hint of inflation in the Euro region. German ZEW could once gain some lead to Euro.  

    

GMT 03:11  - GOLD @ $ 1241 = In Asia and in early Euro, Gold will find support around $ 1235-38 zones for a move towards $ 1246-48 zones. Break of $ 1230 risks for more losses. Beyond $ 1255 will threaten for more gains.

GMT 3:17 - EURO 1.3766 = We witness a very similar pattern as of yesterday if holds around 1.3740 and see a possible break of 1.38 for 1a test of 1.3718 zones before easing Or else 1.3690-00.

GMT 3:21 - GBP @ 1.6313 = Buying interest will be seen on dip around 1.6280, but requires to crack 1.6340 for 1.6270, which looks tough and could dip again. However. support is at 1.6240.

GMT 3:25 - AUD @ 0.8935 = May find resistance around 0.8950-60 for a test of 0.8900-05, break risks for another 20 pip drop. Good selling interest will be seen if move towards 0.90 levels.

GMT 3:32 - JPY @ 103.06 = Yen should find support around 103.20 levels for 102.70-75, break risks for test of 102.45 or else else test of 103.45.

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, December 16-20

Asad Rizvi

This is going to be an important week, as FED will be announcing its last monetary policy for the calender year 2013. Financial market will be anxious to know that if there is a change in its policy stance after attaining 7 pct unemployment rate, which is very close to FED target rate of 6.5 pct and improved economic performance. Though targeted inflation rate dipped. FED officials have been very vocal, linking potential reduction of its bond purchase with the US economic condition.

It is not yet know that if this is going to be FED Chairman Bernanke’s last meeting or not, but after the 2008 US meltdown, he shouldered the responsibility to introduce quantitative easing (QE) by paying a very high price through printing of money against all economic norms. 

FED has so far injected nearly US Dollar 3- trillions to save economy from disaster. It did give breathing space to the economy, which was only possible through introduction of 3-phase of QE in continuation during last 5-years that lacks plan and has no firm backing. This why despite Bernanke’s commitment in June this year that FED plans to do away with the tapering by March 2014. FED is still unsure about its unwinding program. 

After all the progress that the economy is witnessing, my view is that with better US economic conditions the downside risk has reduced to a greater extent that helped in lifting the confidence level. This is why market is pricing tapering. 

However, one fact that should not be ignored is that Bernanke is about to exit and Janet Yellen has been nominated to take the chair. Therefore, if FED wants more time, this could become another good excuse for delay in making tapering decision that gives FED good opportunity to linger on.

This should be the most eventful week of the month, as market will be in a holiday mood from next week onwards until the end of the year. Bias for US Dollar should be on the up and better US economic data will help the sentiment. But if FED does not announce tapering, it will cheers US Bond market, Gold will make sharp gain, US stock market will test new highs and JPY too could correct. US Dollar will be the net looser. However, there could be one more possible surprise that FED gives a January date for tapering.    

If FED decides to taper, then market will be keen to listen to Ben Bernanke’s press conference to get a clue about its future strategy, but if policy stance remains unchanged, then his press conference will be of little interest.

GOLD @ $ 1238.70 = This week, Gold move will largely depend on FED policy announcement. Prior to FED meeting I am expecting gold to trade in a $ 1275 and $ 1202 band, in between the resistance and support levels is $ 1255, $ 1268 and $ 1278 levels. Support is around $ 1218-20 and $ 1198. 

I  will have one reservation if FED remains mum on tapering, because last December closing was @ $ 1687. There are good number of investors still holding gold purchased at much higher levels in hope of bounce back and due to year end closing if FED does not announce reduction in its bond purchase, they will try to push gold higher to support their balance sheets. Whereas, decision to taper will witness more selling pressure. Hence, on the up break of @$ 1288 will open doors for a test of $ 1325-50 zones and I will not be surprised to a move towards $ 1440 in the new year. However, the other possibility is that break $ 1190 will see deeper fall and possibly gold will head for new lows after the US meltdown.      

EURO @ 1.3742 = Euro may continue to show its muscles and is likely to find buyers on dip. This is because expectation of negative rate has receded for the time being. There are quite a few supportive factors, as we often talk of healthy foreign inflows, which means investors confidence in Euro-zone area. LTRO amount is constant decline that indicated healthier ECB balance sheet and reports are that there is a sizable amount of LTRO maturity due this month, it lead towards liquidity constrain. This is why until ECB announces another batch of LTRO, Euro will have the ability to bounce back after every dip or unless Euro-zone’s economy deteriorates. Obviously US tapering will remains on the market nerves and if FED refrains, 1.40 against USD will be achievable.

Initially, Euro will find resistance to crack 1.3825 levels, but is required to fall below 1.3650-70 zones for a dip extending towards 1.3580-00 zones.

On a broader perspective Euro needs to break 1.385 for a test of 1.4080-90 zones and on the downside 1.3540 will encourage for 1.3460.  

GBP @ 1.6295 = There are clear signs that BOE drumbeating for positive UK economy outlook will continue that should give edge to the currency until market realizes that the pace of growth is not sustainable. The real strength of GBP should be based on facts that overall job condition should improves, exports will have to make acceptable level of recovery and trade balance condition should improves. it may take some more time and the economy has to shows consistence performance.

However, with the current pace of in growth in UK, GBP will enjoy demand for investors. Though for upside move Pound needs to break 1.6225 and then 1.6490 for further gains. A fall below 1.6220-30 risks for test of 1.6150-70 zones and only break would encourage for 1.6075.  

JPY @ 103.22 = I have my reservations about JPY weakness, as Japanese currency has solid support around 103.95-00n and at 104.50. Prior to FED announcement any move beyond 104 should by good opportunity to buy Japanese currency with 80 pip Stop Loss, as break of 102.10 will accelerate gains for JPY versus USD towards 101.50-70.

AUD @ 0.8963 = Aussie could not avoid fall after RBA official showing unhappiness with the current levels. We could see another 150-200 pip drop before possible sharp recovery, as market has the tendency to check the seriousness of official statement. RBA can still afford rate cut, which a vital monetary toll unlike other developed nations.

However, AUD needs to surpass 0.9080 to regain its lost confidence, which may not be easy, as break of 0.8880-90 will challenge 0.8820-40 levels for 0.8790.    

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, December 13

Asad Rizvi

Today There is no Commentary as I have some technical problem. Hopefully this is temporary. However, I will provide signal and inter-act with you as usual. Thanks you.

GMT 3:25 - GOLD @ $ 1228 = Should cap below $ 1235 & may exhaust around $ 1232, break of $ 1222-24 is required for test $ 1215-18 zones.

GMT 3:48 - EURO @ 1.3759 = See resistance around 1.3780-90, should hold. Break of 1.3730-40 is required to test 1.3695-05 zones. Or else 1.3820.

GMT 3:55 -  GBP @ 1.6357 = Only break of 1.6380 may give a minor push towards 1.6405-15 zones, where there is strong resistance. However, fall below 1.6325 will encourage for 1.6295.

GMT 4:08 - JPY @ 103.74 = This rally can extend up to 104.05 before profit taking occurs for 103.40-50 or 103.20 or else will make another 25-30 pip gains. 

GMT 4:11 - AUD @ 0.8938 = Minor caution is suggested around 0.8900-05, needs to break for test of 0.8870 or else risks is for a test and break of 0.8860 for 0.8890-00 zones. of $ 1215-18 zones. Or else $ 1243.

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, 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.

Wednesday, December 11

Asad Rizvi

US Budget deal should provide relief to the US financial market and specially FED. In my view, it was one of the of the major cause of worry, which I had mentioned in my weekly post that was not discussed at length, as tapering talk was the dominating factor, but market was well aware of the issue. Bernanke in his last appearance in front of the Banking Senate Committee specially mentioned about fiscal difficulties. This deal that will slash spending and help in reducing deficit over a period of time will surely provide government and FED some breathing space.

Meanwhile, though no one is sure about the FED's mood on its bond purchase stance. I do not see any reason for FED to hesitate to start reducing its bond purchase, as they are back on target. Reaction shown by US Stock market and bond market players does not necessarily mean every wish will be fulfilled. It is purely a policy matter that will be decided by the FED officials.

While, market trying to find more clues about FED's next big move. The moves seen in foreign exchange market is still very surprising, as quite a few Fx traders are baffled with the weak US Dollar behavior. It is obvious that when all odds are in favour of USD then why Greenback is unable to make recovery. Specially the strength of Euro against USD is confusing the market, as European economy is still faced with numerous challenges. 

The worrying factor is that recent German data has started showing signs of exhaustion, whereas other major European contributors are still in a struggling mode. I can gauge few factors as flow of fund in the Euro-zone region is healthy. Market reacted to anther cut, which was not due so soon. ECB is only comforting the market with the possibility of another LTRO, which could be possible if banks are willing to expand credit through lending. Remember LTRO means excess availability of liquidity in the system, which is not made available. 

However, despite all the facts it is not easy to fight against the market trend, but I still do fear a plunge in Euro & GBP from top, which is yet to be determined that will not be seen for long. I would give another 100 pip upside margin as I cannot go against the market forces, but stops should be followed religiously, as fall could lead to a trap.

Gold is a different story, which is managed by hedge funds/investors rather than demand from any other source, as neither Central Banks are aggressive buyers nor Bulls can play their trumpet about India and Chinese growth, as growth in two of the most populous economies is down by more than 3 pct from all time high. The Geo-Political situation has vastly improved, so there is less tension around the globe. European currency is no more cause of concern. Hence, they are fully trapped, trying to average their buying and once tapering begins then I do not see any reason that why gold should not fall below $ 1000 levels in 2014 to probably $ 800 levels later.   

GMT 3:19 - GOLD @ $ 1257 = There is no change in my Bearish view for gold despite yesterday's up move that stretched beyond my weekly target of $ 1260. I am not expecting big surge in gold though in Asia another round of buying is possible, as gold should hold above $ 1250-52 levels for possible test of $ 1265-68 zones. Beyond the levels to watch will be $ 1275-78 that should not surrender. Break of $ 1240-45 will be extremely bearish for gold.

GMT 3:29 - EURO @ 1.3751 = Euro may hold above 1.3710-25 levels for another attempt and test of 1.3790-95 zones. Clear break is required to test 1.3825-30 zones, which looks difficult right now. Break of support levels will encourage for a test of 1.3670-80 zones. However, unless Euro falls below 1.3640, it likely to make an upside move to test new highs.

GMT 3:40 - GBP @ 1.6440 = Pound may still find buying interest on dip and may hold 1.6400-05 levels for possible upside test. Break of 1.6470-75 will push GBP towards 1.6495-05. Or else 1.6360-70.

GMT 3:44 - JPY @ 102.67 = JPY still looks threatening and if fails to hold 102.48-50 levels, this gains could stretch up to 102.30 unless clears 102.95-00 zones. 

GMT 3:46 - AUD @ 0.9134 = Support 0.9101-05 should hold for a test of 0.9175-80 zones. or else 0.9080.

           

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, December 10

Asad Rizvi

After going through statements by 3 - FED officials, I have a strong feeling that taper announcement after Dec 17-18 FOMC meeting looks like a good possibility. I think prior of official announcement FED officials will refrain from giving nod individually, as FED decision to reduce its bond purchase will be a big move that has huge risk at various levels  that should be carefully handled.

Last night, Fed's Bullard in his speech has hinted about the possibility of small taper to recognize improvement in labor market. Another FED official Jeffery Laker spoke to discussing tapering in its coming policy meeting next week. Similarly FED Dallas President Richard Fisher, never an ardent supporter of third time Quantitative easing having good sense about the risk of unnecessary inflating FED's balance sheet, which is a risky proposition spoke of withdrawal of its bond purchase plan, as he seemed convinced that there is plenty of cheap liquidity available. Out of three FED officials, Bullard is the only voting member, but others carry equal weight and could be delivering FED's message.

Surely all eyes will be glued towards next week's FOMC meeting, as there will be less support from limited data this week, as release of Retail Sales on the only major US data. 

While, I am getting nervous with the Euro's move, which is heading upward against all odds. The Euro-zones economy is at risk. more LTRO money will be required to support the market, the threat of negative deposit is still looming over the heads and the US economy has flipped on the right direction. With all above factors I will not be surprised to see sharp reversal and one good reason may set the trap.Similarly Pound has entered a dangerous zone and finally Japanese Yen could be the surprise beneficiary. 

GMT 3:03  - GOLD @ $ 1239 = Gold may briefly hold above $ 1235 levels and break of $ 1242-43 may encourage to stretch toward $ 1245048 levels. However, there is risk of big fall and break $ 1228-30 could trigger down move.

GMT 3:07 - EURO @ 1.3760 = Sell Euro around 1.3774-84 with Stops 1.3810 for 1.3720 or 1.3690-00.

GMT 3:13 - GBP @ 1.6452 = Cable should top around 1.6465-70, I would not hesitate to sell with Stops 1.6490. A move below 1.6410-20 is required for more losses or else could re-test and break day's high.

GMT 3:18 - JPY @ 103.22 = There are quite a few support levels for Japanese currency 103.50 may not be easy to surrender, break will find another one around 103.80. On the downside JPY needs to push beyond 102.70-80 for more gains. 

GMT 3:26 - AUD @ 0.9107 = I would give some more margin for correction and prefer waiting to sell around 0.9140-50. Should stay below 0.9190. On the downside if support 0.9080 breaks, risk for a drop towards 0.9050-60 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.

Monday Dec 9 - 13

Asad Rizvi

After impressive US Non-Farm Payroll data and Unemployment falling to 7 pct, there is certainly strong case to argue that FED should start tapering, as unemployment is only half-percentage away from 6 ½ pct target rate. Recent US economic performance goes in favor of US Central Bank’s bond purchase plan to reduce the amount.

It is evident that the labor participation is up averaging over 185.000 this year, earnings are up, and confidence in the economy has improved as consumers are looking confident. Earlier we saw sharp surge and upward revision of US GDP.

US mortgage rates are already hinting that the recovery has surely accelerated, though share market is showing unusual resilience and did not react to the tapering threat probably sensing that corporate profit will rise due to improving economic conditions. But do not be too optimistic about the share market growth as FED tapering also means withdrawal of cheap liquidity that should have adverse impact when implemented.

Friday’s reaction to the US jobs data was very unusual, as there was no positive re-action to the US unemployment data. Market chased trend by avoiding economic factor. US bond market is the best example, as 10-year bond yield after a brief surge, fell back to 2.86 pct. Allan Greenspan once warned that “when the bond market begins to move, FED might not be able to control it”.

In my view, we could soon be heading for a sharp move. What may have stopped US Dollar gain is the absence of FED official’s statement on the recent US economic pick-up. In recent past we have seen them defending tapering against jobs condition and growth, both have showed remarkable recovery.

The biggest challenge for US Central Bank is that it has to seriously consider start easing up its conventional and controversial stimulus program that is pumping USD 85 billion a month. Further delay will question FED’s credibility, as it has earlier in June declared that it may end up tapering by March 2014 based on fundamentals, which is as per projection, since unemployment has hit 7 pct and GDP is on the rise. Housing market continues to flourish.

Furthermore, all indications are that next month’s economic data will show better economic performance due to holiday season that should inflate demand. Therefore, there is no reason to further delay tapering. If FED is no rush and decides to continue its bond purchase program, then it should tell the market that why it is misguiding by deviating from its earlier (June) announcement when it is meeting its target and why is Fed unable to implement tapering. Low inflation was never its target and this could be a lame excuse.

It is very surprising that the Dovish FED officials have once again failed to read the US economic trend correctly and have been constantly trumpeting fearing economic slowdown and needs for more liquidity injection. So far estimates are FED has injected nearly USD 3 Trillion.

While, earlier on Thursday, the unexpected did not happen as ECB went for hold, but following monetary policy announcement in his press appearance ECB President Draghi answered with confidence, despite European Central Bank struggling for economic recovery and making poor future projection for the Euro-zone region.

Euro to my surprise did not weaken despite hint if slowdown in European and good economic recovery in USA. I still believe this could be false up move. If market believes that tapering and early rate hike is priced in then this is wishful thinking because once tapering is announced, no matter whatever may the size, market will become nervous and jittery. Remember this is not going to one time tapering, liquidity injection will gradually halt that has many strings attached. One hitch that may have hindered US Dollar’s rally could be the legislative factor that has deadline date for a Budget deal of December 13.

However, keep a close watch on emerging markets that should show signs of nervousness, as prior to any move its stock market will once again start melting and currencies will come under pressure and do not trust US bond market as holder of US treasuries could soon start losing its patience. More importantly, this time speeches from FED official should provide the real lead.  

  

GOLD @ 1229.70 = As per expectation gold did not break the upper band of my target. Tough it had tested new lows of the week before making small recovery by the end of the week, which does not look sustainable. Unlike currencies, gold is presently too dependent on cheap liquidity in the absence Central Bank’s buying speculative buying. Gold will certainly take beating in the coming weeks, as weak demand for the metal should add to the selling pressure. Therefore, any upside move is considered a good opportunity to sell.

Gold should hold below or around $ 1245-50 levels and only break risk for a move extending towards $ 1258-60, which is not a favored scenario. However, a fall below of $ 1208-10 may challenge $ 1193 and break would risk for $ 1158.

EURO @ 1.3702 = The up move is not unexpected as Euro has reached the top of my weekly range. Only break of 1.3740-50 risks for extension of rally this week towards 1.3825. I am expecting this move to exhaust soon and will not be surprised it does not reach the top as my given range. Break of 1.3650-60 will threaten test of support 1.3610. A fall below this support line will encourage for a dip towards 1.3540. Range for the week 1.3410 - 1.3825.

GBP @ 1.6346 = If GBP fails to break below 1.6220 levels there a risk of another test of 1.6440-50 zones and this rally could even stretch up to 1.6510. However, if it fails to move beyond 1.6420, Pound may not be able to avoid downside. Range for week 1.6140-1.6520.

JPY @ 102.83 = Japanese currency may challenge any move beyond 103.25 and only break would risks for a test of 103.60-80 zones. A break of 102.05 is required to test 101.35. Range for the week 101.10 – 103.80.

AUD @ 0.9101 = Initially I am expecting Aussie to make gains and should hold 0.9050-70 levels for a move towards 09150-80 levels. Only break here could see a move extending towards 0.9220-50 before exhausting. On the down side strong support is around 0.8980-00. Range for the week 0.8950-0.9250.

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, December 2014

Asad Rizvi

This time it was bit unexpected, as ECB President sounded less worried about deflation.Though he said ECB revised down 2014 inflation to 1.1 pct from 1.3 pct and in 2015 from target expectation of 2 pct to 1.3 pct, fearing risk to economy persist and justifying earlier rate cut action that takes time to reap positive result. The statement saw Euro reeling almost 50 pip drop.

However, Euro made sharp recovery despite his answer to a query that ECB is open to option of negative deposit rates and another round of LTRO. Euro may have gained strength for two or three factors, as Draghi said that ECB in 2014 sees Euro zones growth at 1.1 pct against previous estimate of 1 pct and on the question of exchange rate he once again said that ECB watches Euro, but it is not part of policy. Though his statement on exchange rate is debatable, as this subject of exchange rate is not discussed in public. Central Banks cannot sit on sidelines leaving exchange rates at the helm of speculators. His endorsement that that there is good inflow in the Euro-zone reason was third supportive factor for Euro. The end, result was as per expectation as there was no rate rate.  

Today's US payroll data is considered one of the most important event of the week, as it could once again open the debate that if FED will be considering tapering on its December 18 gathering or not. This should not be a big issue as it will largely depend on the jobs data. Earlier release of US economic data's especially ISM and ADP point to better better jobs condition this time, but quite a few things are unclear and distorted due to US government shutdown that does not depict clear picture. 

However the possibility of FED's considering scaling down its asset purchase program or not will be based on facts that if the Non-Farm Payroll data is somewhere around or below 150.000, it will reduce the chances of tapering this year. But a number close to 200.000 or beyond that looks a good possibility will increase chances of December or January (next year) tapering. Fed is surely looking for a solid reason to act and we could be close to tapering because December-January economic numbers are generally healthier in two months due to holiday season.

Bottom line is that poor Payroll data will give US Dollar downside spin and hence, Currencies, US bond and Gold could rally, but strong jobs data will give Hawks opportunity to cheer and celebrate.  

GMT 3:21  - GOLD @ $ 1226.60 = Gold is likely to remain in a $ 1212- $ 1235 band until NYK. The levels to watch today is $ 1202 and $ 1248. Breakout on the downside will open gates for $ 1152, but is required to clear $ 1193 and on the upside break of $ 1248 could challenge $ 1268.  

GMT 3:30 - EURO @ 1.3668 = Euro may hold below or around 1.3690 levels prior to US payroll data and could possibly dip towards 1.3635-40 zones. However, on the upside break of 1.3725 risks for a test of 1.3845. While, a fall below 1.3610 will once again challenge the strength of European currency for 1.3530.  

GMT 3:38 - GBP @ 1.6331 = Pound Sterling could make gains despite USD weakness. 1.6380-00 still look tough and break may encourage for another attempt towards 1,6450-80 zones. However, a dip and break of 1.6305 will encourage for 1.6250-70 zones, a move below 1.6220 is required for deeper fall. 

GMT 3:42 - JPY @ 101.87 = Yen gains could continue against USD as it may find support around 102.20-40 zones. Test and break 101.50 is possible for a visit to 101.20-30 zones. However, failure to hold support levels will see JPY moving towards 102.90.

GMT 3:45 - AUD @ 0.9063 = I do not see much respite for the Aussie beyond 0.9080-90 levels and only break will see a move towards 0.9130. AUD requires clear break of 0.9005 for 0.8970 or 0.8940.

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, December 5

Asad Rizvi

The recent release of US economic data suggest that the growth performance in USA is at an acceptable level, though there can be an argument that pace of growth may not be at a desirable level. It is a reality that the rate of success is not at a faster pace because there is no real money in the system. All funding is generated through artificial means by printing money without back-up, which is inflating the size of FED balance sheet that has reached extreme point, as no effort has being made to match spending through revenue collection, as increasing of tax is a political risk for the any government/opposition. 

But the problem is that FED has to apply break at some point, as FED balance sheet has probably reached a saturated point and has to slow down the speed to minimize to reduce the damage, as FED cannot continue to practice and apply this undesirable addicted method for the chosen few forever. Therefore, the short answer is that tapering has reached an unavoidable point and is required to act, it does not matter when.

Meanwhile, BoE and ECB will be making monetary policy announcement. BoE is unlikely to act, as the growth pace is at an acceptable level. For ECB it should be too early to announce policy changes, though credit expansion in Euro-zone is too slow, deflationary pressure still persist. German growth, which is considered the engine of Euro-zone region has shown sign of slowing down, which may not be good news. Economic prospects in Euro region is not very encouraging, CPI was again below 1 pct mark that may exert pressure on ECB President Draghi and instead he may opt to use Dovish tone to buy time and to send a clear message to the market about ECB's future strategy, as it is too early to think of negative deposit rate.

However, market will continue to to focus on the release of economic data's, though MPS is an important event of the day, but since tomorrow's Payroll data could provide future FED guideline on tapering, sentiment could later in the day shift towards developments in USA.

GMT 3:19 - GOLD @ $ 1239 = There was clear upside violation in gold as it is again required to move and close above $ 1245-47 that could be worrisome factor. During Asia/European session gold should find top around $ 1243 to test $ 1230-32 zones. Clear break is required to re-teat $ 1221 zones.

GMT 3:26 - EURO @ 1.3591 = Euro should hold below 1.3610-20 and unless break 1.36650 could be tough to attain. On the downside Euro is required to push below 1.3540-50 zones, as break of 1.3510 could encourage for a test of 1.3450-80 levels.

GMT 3:31 - GBP @ 1.6374 = I do not see easy break of 1.6395-00,as risk for fall is intact, a move below 1.6440 will encourage for deeper fall towards 1.6295-05 zones. or else 1.6430-40 levels remains a big challenge to crack. GMT 3:38 - JPY @ 102.35 = We could see a similar pattern as of yesterday, but today Japanese currency should soon regain its weaker tone and will be sold on gains. Sell JPY against USD around 101.90-00 with Stops 101.50 for test of 102.85-95 levels.  

GMT 3:43 - AUD @ 0.9048 = Aussie may not find easy to surpass 0.9080-90 zones as another dip and break of 0.90 is possible for 0.8970-80 and could exhaust at earlier levels. Only break of 0.9120 could bring some more relief for AUD.

    

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, December 4

Asad Rizvi

Current release of US economic indicator do suggest that US economy is gradually picking up after the slowdown that was seen in recent months. Today too, there are batch of some important economic data's that are due to be released, which should tell us more about the performance of US economy. 

ADP employment change will give a sense about private sector job condition, as earlier months numbers will be revised that should not be ignored.Trade balance number should do well due to fall in oil prices. Since Non ISM that gives sense of business environment does not influence GDP and may not have major impact on economy, but result of over 50 is considered good and do watch the employment component of the data that may give a feller about Friday's Payroll. However, New Home Sales that will include two-month data because of Government Shutdown should give feeler about Housing activity, as there  is a perception that Home Sales may have fallen due to higher mortgage rates. Late release of FED Beige book will provide latest economic condition, as this this survey is collectively done by 12-Federal Reserve Districts.

Meanwhile, expected correction in Japanese Yen has occurred, as market went extremely short in JPY, it was supported by almost 2.4 pct fall in Nikkei that have been enjoying run up due to availability of ample of liquidity, which is part of monetary policy to stimulate economy. Tough I disagree that healthy stock market has anything to do with growth and economy.

While, there is lot of talk about the extraordinary performance of UK economy that has helped Pound Sterling to surge, but in my view there is no unusual growth, instead higher GBP could give dent to its exports and recent decision by BOE to halt funding to housing sector to arrest Bubble/Inflation may turn out to be bad news for the economy, as slowdown in UK housing sector could hamper growth and ultimately hit employment. Therefore, in my view, bad UK economic data will become good excuse to offload its Pound Sterling holding. But unless on the downside 1.6220-40 surrenders, GBP has the potential to test new highs that cannot be ruled out.

However, Europe will lead the release of economic data's. PMI, GDP and Retail Sales data will be released and they are all key indicators, which is expected to show improvement. Any disappointment will change market mood in expectation that ECB could turn Dovish, as it will announce monetary policy tomorrow.  

GMT 3:27 - GOLD @ $ 1222 = Gold is currently locked in $ 1210 - $ 1230 range and needs to break for either way move.Break of two levels will encourage for either test of $ 1193 or $ 1242. However, in Asia gold should remain capped around $ 1228, but may not have enough legs to clear $ 1213-15 zones.

GMT 3:36 - EURO @ 1.3590 = The key level today is 1.3560-70, which if holds could see a push towards 1.3630-40 zones or else fall could extend towards 1.3530-40.

GMT 3:42 - GBP @ 1.6391 = Cable may initially hold above 1.6360-70 levels for test of 1.6425-35. Break of 1.6480 will threaten for more gains. However, needs to fall below 1.6320-40 for more losses.

GMT 3:46 - JPY @ 102.56 = As long as 102.80-90 holds risk for test of 101.80-90 is possible. Japanese currency may find support around 102.65 levels.

GMT 3:49 - AUD @ 0.9065 = Needs to push beyond 0.9095 for 0.9115, which looks tough for now as break of 0.9035 will pave way for 0.9010.

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, December 03

Asad Rizvi

It was a pleasant day for the world economies, as release of economic data's reveled positive developments hinting growth across all over the globe. But it was continued positive sign from USA that led the market with US Dollar making gains against currencies and metals. US 10-years Treasury bond yield too surged by almost 5 basis point to a one-year high of 2.80 pct.

Prospects of growth also helped oil prices to make some recovery. This week is loaded with important US economic data's that should give more clarity about FED's bond purchase plan.

While, in my weekly note I pointed out that Cable could be top heavy around 1.6420-50 zones, GBP could not make further gains despite UK Manufacturing sector showing strong signs of growth, as PMI rose to 3-year high of 58.4 from 56.5. If today's release of UK data shows sign of weakness, Pound Sterling could make some more correction, as strong USD has also halted its upside momentum, but GBP will surely find buyers on 100 pip drop due to investors love for the British currency.

Meanwhile, Reserve Bank of Australia will announce its Monetary Policy shortly and is unlikely to make changes, but it will be the language that would matter. Today it is anybody's guess after barrage of verbal bashing received against the currency to weaken the tone, I think the tone could be neutral that should help Aussie to make small upside correction. Strong language could send Aussie reeling down by another 100 pip before investors could step in to buy cheap AUD, as there is no scope for Hawkish talks in favour of strong AUD.

    

GMT 3:20 - GOLD @ $ 1221 = The fall is quite in line of my weekly forecast and is close to my target $ 1215-18. It has temporary support around $ 1212-15 levels, but may find stiff resistance around $ 1225-28 zones, only break will encourage for $ 1235, which is not a favoured move, as downside risk will increase on break of $ 1210 for test of $ 1202 zones.

GMT 3:08 - EURO @ 1.3532 = Euro may struggle to move beyond 1.3575 and is likely to dip and test 1.35 levels for a possible move towards 1.3475 zones Or else 1.36 

GMT 3:17 - GBP @ 1.6361 = There is a minor possibility that Cable could initially hold above 1.6325-35 levels for a test of 1.6375-85 zones, Only break would encourage for another test of 1.6420 area. However, break of 1.6305 levels risk for a test of 1.6270-80 zones.

GMT 3:23 - JPY @ 103.07 = I see strong support for Japanese currency around 103.35-40 zones and will not be surprised to see correction and move move towards 102.40-50 zones before further weakening of Yen or else 103.75.

GMT 3:27 - AUD @ .9083 = Watch 0.9040 if holds we could see test of 0.9150 or move extending towards 0.9180-20 zones. Downside break risks for 0.8970.

   

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 Dec 2 - 6

Asad Rizvi

Last week we saw mixed activity in the market with USA in holiday mood after Thanksgiving Holiday. There was no major release of economic data’s, but few releases such as housing, building permit and drop in jobless claims were encouraging, though data relating to confidence level did not get the required boost due to US shutdown.

Report of low confidence level should not be a matter of concern, as it is the reflection of past performance. Whereas rise in building permit is a healthy sign that should give further boost to this week’s Payroll and jobs data and beginning of holiday season that will be followed by Christmas shopping, which should improve the overall economic performance in coming days.

After subdued economic performance and incomplete economic data release following US shutdown, indications are positive, as market will be witnessing better economic performance. Softer oil prices and favorable weather condition helped prices to ease that should narrow down the trade deficit number. Surge in building permit is encouraging for the housing sector growth that should depict more home sale.  

Meanwhile, two major events of the week will be Monetary Policy announcement by Bank of England (BOE) and by European Central Bank (ECB). BOE is unlikely to act and is not expected to make any policy changes because when the direction is right, combination should not be disturbed. Similarly, it is too early for ECB to announce policy changes, although European currency is too strong, credit expansion is not keeping up its pace with the desired level of growth and deflationary pressure persist.

While, economic data release from Europe will be watched with interest, but Germany that has been big support for the Euro-zone region, rang alarm bell last week, as its retail sales fell sharply against market expectation of rise in number. German Unemployment data gave further blow when it rose by another 10.000.  

Hence, I will not be surprised to see Draghi using Dovish language to taper down the sentiment. So in all probability it is going to be verbal rather than anything in practical.

GOLD @ 1250.70 = Last week, gold saw a dip, as per expectation almost hitting target $ 1225 before correcting. I do not see change in trend this week too, as prospect of better jobs data and strength of US Dollar should encourage seller to dominate during the week until US Payroll announcement.

Initially, I am expecting $ 1260-68 levels to hold for a move down to test $ 1225-30 zones. Pressure on the downside will mount once $ 1215-18 surrenders, for a bigger fall towards $ 1180-85 zones. However, move beyond $ 1280-85 will delay down move to challenge @$ 1308-10 zones.

EURO @ 1.3590 = Euro has strong resistance around 1.3680-00 only break would risk for test of 1.3720-50 zones. However, bias this week should be on the downside, but needs to break 1.3505-10 levels for 1.3440, break here will risk for more loses. Range for the week 1.3380 - 1.3750.

GBP @ 1.6368 = In its six-monthly report, withdrawal of Bank of England’s support for mortgage funding after signal emerging of strong growth in UK. It seems that the UK Central Bank has learnt a lesson and has decided to take pro-active measure to avoid possible housing mess, which also leads to faster inflation. BOE is less worried with the strength of Pound Sterling that also helps to keep a check on inflation. However, last week consumer confidence gave mild blow to the bullish sentiment when it unexpectedly fell, but November, Nationwide UK House price continued it’s upwards journey that supports BOE’s recent stance and is Bullish for GBP unless economy starts to melt.

GBP could still find buyers and may find strong support around 1.6240-50 levels and only break here would risk for 1.6120. Though we could see a move towards 1.6420-50, but strong US Dollar sentiment may halt further rise. Range for week 1.6120-1.6450.

JPY @ 102.42 = Injection of liquidity through massive buying of Japanese government bond, which is part of Japan’s structural reform helped Yen to weaken. Furthermore, Japanese investors are allocating more risk overseas through purchase of foreign bond, which is also exerting pressure on Japanese currency.

Though weakness of JPY to continue, Japanese currency has strong support around 103.05-20 levels, it needs to break for a test of 103.80, failure to test would encourage correction in Yen, but 101.40 should hold for continuation of weakness of JPY or else 100.50. Range for the week 100.50 – 103.80.
AUD @ 0.9107 = I am expecting Aussie to hold 0.8950-80 levels and see risk for a move towards 0.9170-80 or 0.9235. Break here could see a possible test of 0.9310. However, if support level surrenders a move towards 8.910 cannot be avoided. Range for the week 0.8910 - 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.