Thursday, October 31

Asad Rizvi

It seems that the market could not get clearer direction from FED FOMC statement, which apparently looks as if  it was almost repetition of its previous policy stance. This could be intentional due to all the confusion caused by shutdown that distorted the US economic numbers and hence, FED may have avoided giving tapering hint, as the timing may not be appropriate. There could be minor delay, but no shift in its strategy/policy.

Since US Central Bank did not alter its previous policy statement and by sticking to its earlier (September) sentence that the economy is improving at a "Moderate Pace". FED's tone is surely firm and confident, which could mean that FED may still be considering to initiate its winding program this year (Fed meeting on Dec 17-18). If we go by the FED statement, Fed certainly looked less Dovish this time.

Fed's problem is that it has been maintaining its short-term zero interest rate policy since December 2008 and so far the injected amount is close to USD 4 Trillion that has inflated its balance sheet, but the economic growth does not justify recovery matching the size of monthly liquidity injection in true sense that has numerous risk factor.   

What we should not overlook is that the US economic distortion during recent government shutdown was not caused by FED policy error, it was purely fiscal matter and politician should be held responsible for fiscal indiscipline. Fiscal issue is now a regular feature and would continue to haunt US economy at various intervals unless settled for ever, which is not a possibility and this should give enough reasoning to the FED and it official to start complain/defending at various levels. I think market will be eagerly waiting to hear the follow up speeches by the Fed officials for more clues. However, release of US economic data will surely provide more guidance about the trend.

GMT 2:56 - GOLD @ $ 1339 = Overall conclusion about MPS is that FED look less Dovish that should not help gold to make gains beyond $ 1360-65 and I am expecting big downside move on break of $ 1315-20 levels. However, FED officials taking the podium on Friday and next week will matter a lot and their speeches can influence the market, which needs to be monitored carefully.

During the day I see barrier around $ 1346-48, which should not break for a move down. Break of $ 1328-30 is required for a fall to test $ 1315-20 zones. Or else $ 1358.
GMT 3:02 - EURO @ 1.3730 = Top around 1.3750-60 and may struggle to convincingly move beyond 1.3790. See more downside risk on break of 1.3705 for a test of 1.3680-85 levels. I will not be surprised if 1.3640-50 is challenged.

GMT 3:07 - GBP @ 1.6033 = Only break of 1.6045-50 may pave another 20 pip jump or else unless move beyond 1.6098, Cable is likely to remain under pressure break of 1.5995 will pave way for a test of 1.5970-75 zones.

GMT 3:10 - JPY @ 98.44 = Japanese currency may not gain beyond 98.10 levels, but needs to clear 97.70-75 for a test of 98.90-95 zones or else 97.85.

GMT 3:13 - AUD @ 0.9496 = Aussie may struggle beyond 0.9525-30, but needs to break 0.9470 for test of 0.9440-50 zones or else 0.9550.

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, October 30

Asad Rizvi

Ahead of FOMC decision on interest rate or prior to the release of statement by FED, market may prefer to stay quiet. After a torrid 1st two-weeks of this month, caused by US government shutdown, FED may not afford risk of tapering and would like to buy some more time due to distortion in economic activity, which will be known after the release of October economic data next month. 

FED statement could be of key relevance if it gives time table or hint of its scaling down plan. FED is faced with a difficult task, as tapering soon or delay in tapering, both will impact the market one way or the other. Since market priced in delay, due to recent debt problems, any hint of cut in asset purchase plan this year by the US Central Bank will have bigger impact, as we do not know that Bernanke may would like to start tapering before he says good bye, unlike his predecessor Allan Greenspan who left all the dirt for his successor.  

"Monetary Policy Statement",  What to watch............

-How much is FED concerned about Most Recent Economic Activity

-About recent release of poor Economic Data

-Language about Labour Market

-FED Language not too Dovish or Dovish

-Any Change in overall FED Language

-And more importantly, any hint of timing to begin Tapering

GMT 3:04 - GOLD @ $ 1343 = The crucial levels to watch is support at $ 1320 on the downside, break sees $ 1275-80 and $ 1362 on the upside, break of resistance level will encourage for a move towards $ 1404 on break of $ 1385.

During the day prior to trading should be around $ 1335 - $ 1350. Buy lows sell high. However, we are heading for a choppy day.

GMT 3:16 - EURO @ 1.3740 = Should hold below 1.3890, break of 1.3710 will encourage for 1.3685. Meanwhile, move beyond 1.3825 will encourage for 1.3940 and break of support level will see Euro losses extending towards 1.3620 zones.

GMT 3:21 - GBP @ 1.6040 = As long as 1.6080-90 holds, Cable could dip to test 1.5990-00 levels, fall could extend towards 1.5960-65 levels and has major support at 1.5880. Break of 1.6120-30 is required for more gains.

GMT 3:26 - JPY @ 98.15 = Japanese currency is required to break 98.50-70 zones for more losses, which looks difficult. however it needs to move beyond 97.70 for more gains to test 97.10 levels.

GMT 3:29 - AUD @ 0.9479 = Aussie failed to gain strength and has a challenge to hold 0.9420-40 levels too test and break 0.9550 for more gains or else 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.

Tuesday, October 29

Asad Rizvi

It was quiet and cautions start to the week, as trading was seen in tight and narrow range ahead of FED policy announcement due tomorrow. Distorted data because of the delay in release of  economic numbers with most of the indicators pointing towards slowdown should not encourage FED to slash its bond buying target, which may be extended for a future date and hence, FED may opt for continuation of its extremely easy and friendly monetary policy.

Economic data released on Monday confirms slow growth pace of US economy as growth in manufacturing sector slowed though industrial production showed some improvement. Pending home sales was also disappointing. Housing and labour are two key major areas that FED often mention in its report.

Today's weak US retail sales report could further put dent to US Dollar as all indicators are hinting slow growth in 3rd quarter, but I still believe that any weakness of USD could be a mild one, as currencies and commodities have already risen sharply to new highs and potentially could correct sharply. While tapering could only be delayed for few months and cannot be forgotten for ever.

GMT 2:23 - GOLD @ $ 1360 = Sell Stops $ 1366 for $ 1348...........

GMT 2:27 - EURO @ 1.3780 = Euro could not show enough muscles and may struggle to move beyond 1.3840-50 levels. It is likely to exhaust around 1.38 levels, break of 1.3650-60 will pave way for possible test of 1.3710-20.

GMT 2:31  - GBP @ 1.6094 = Cable is bit tricky right now, as break of 1.6110 will encourage for 1.6130. However, unless move beyond 1.6170 GBP will be under pressure. Levels on the downside to watch is 1.6030-40 that should hold or else crucial levels of 1.5970-80 could be challenged.

GMT 2:35 - JPY 97.62 = There is nothing much to add as 7.90 remains an important level for the next move towards 98.30, which is not a likely move to occur, but gains could be limited as long as 97.10 holds or else 96.80. 

GMT 2:41  - AUD @ 0.9533 = Close to important support level of 0.9500-10, which should hold, but needs to surpass 0.9580 convincingly for some stability. Break of 0.9470-80 levels could could cause more damage to the Australian 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.

Monday Oct 28 - Nov 01

Asad Rizvi

We saw an interesting end of the week, as market sentiment shifted from US shutdown to other global events such as writing-off of China’s largest bank bad loan that had tripled forcing Chinese Central Bank to tighten the liquidity. Another big topic of discussion is ECB stress test of 130 banks that may require providing 8 pct of the Capital, as the move will help to get closer to European Banking Union.

Though release of US jobs data, which is considered an important economic barometer that normally is a market mover did not have much impact on the market, as data uncertainty looms. Market has already priced in gloomier US economic numbers, as US government’s partial shutdown will not only distort the economic numbers, it is likely to have negative impact on US 4^th quarter GDP growth, which is likely to fall short by nearly 0.5 pct.

This week, there is release of heavy batch of economic data’s from all over the world. But market will be keenly waiting for FED statement that will be followed after the Fed decision on interest rate to get clue on its tapering stance.

Though all indicators are clearly pointing that FED will maintain its easy monetary policy and would continue with its asset purchase program due to softer economic growth in third quarter, but nothing is firm on tapering until it makes final announcement. However, the key to the FED statement will be hint of possibility of December tapering, which many believe that it will once again be delayed at least until 1^st quarter of 2014.

Current softness of US economy and with hint of further delay by FED to reduce its asset purchase amount would weaken US Dollar. US bond yields will gain and encourage commodities price to rise. Yen could also benefit from the news of tapering delay. But any hint of tapering coming soon will have adverse impact.

  

GOLD @ 1351.90 = In my last week’s note I have cautioned that the upside rally in gold would continue and this week too there is no change in my view, as uptrend to continue. Dip would opportunity to buy, but this week trading could be choppy with possibility of big move corrective moves.

Support for gold is at $ 1335 only break could see fall extending towards $ 13320-25 zones. However, see risk for a test and break of $ 1362-65 that would pave way for $ 1375-80, as rally could extend up to $ 1390-95 zones and only break risks for $ 1420. But break of major support levels means gold heading further down to test $ 1275.

EURO @ 1.3800 = Softer economic condition in 3^rd quarter and recent partial US government shutdown have strengthen the view that FED will delay tapering due to fiscal problems. This reality has given safe haven status to Euro, as it is also enjoying Capital inflows, which is one big factor helping Euro to make comeback after minor correction.

Last week’s call have been absolutely on the dot, as Euro did enter the 1.3825 before exhausting. I am expecting continuation of Euro’s upside rally, but would like to caution, as the European currency needs to surpass a major resistance levels of 1.3890-00 for 1.3950 or 1.4020. Failure to break resistance levels would see a down move and break of 1.3770-90 is required to test 1.3710, as 1.3640 is the next key support level that should hold. Range for the week 1.3640 – 1.4050.

GBP @ 1.6162 = The up move was in line of my expectation and as suggested Cable got exhausted below 1.6280, which needs to be cleared for the next up move. There is a possibility of dip, but 1.6080-90 should hold or else as strong challenge is around 1.6040. On the up GBP needs has next resistance at 1.6325, break would encourage for 1.6380. Range for week 1.6040-1.6410.

JPY @ 97.36 = Japanese currency is stuck in a range, but demand for JPY is likely to persist. As long as JPY offers resistance and fails to break 98.60, see risk for more gains. Break of 96.50 will encourage for a move towards 95.60-70 area. Range for the week 95.40 – 98.90.

AUD @ 0.9581 = Aussie have been struggling due to various unfavorable factors and needs to hold 0.9510 for stability. However, a move beyond 0.9680 for resumption of up move or else break of support levels would challenge 0.9440=50 zones. Range for the week 0.9440– 0.9750.

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, October 25

Asad Rizvi

Sentiment was mixed on Thursday, as tighter liquidity condition in China was painful for most of the the Asian stock market. Though better HSBC manufacturing purchase index data provided some relief improving overall market opinion and hinting revival of Chinese economy. It did help to halt Aussie slide, which made gains, but the rise fizzed out as Australian economy is too dependent on China. Market will once again watch liquidity condition in China, as continued tighter condition will have adverse impact on the economy.

While, European data was disappointing after the release of PMI numbers which gave mixed signal. France Europe's second largest economy is not keeping pace with Germany and is constantly struggling. Although, news from Spain is encouraging as the economy escaped recession this time, but consistency in Euro region is key to stability.

Economic data from USA is once again providing mixed signal and recent shutdown event will cause more confusion as economics numbers are expected to deteriorate and may not give true picture. Market is more keen to know about FED's scaling down plan, which should be dominating factor and will be discussed at length/often.

However, today data from across the the globe will be of key relevance, Germany will release IFO, from UK GDP could be trend provider for the British currency and release of notorious Durable good and Michigan Consumer Sentiment Index from USA could drive some trading activity in the market.    

GMT 1:28 - GOLD @ $ 1344 = Support $ 1336-38 is the key, which could hold but gold needs to break $ 13348-50 to enter $ 1353-55 zones or else $ 1327. 

GMT EURO 1:33 - @ 1.3793 = Euro has a strong barrier around 1.3825-30 only break would encourage for 1.3865. However, I do see risk that failure to break the barrier would challenge 1.3750-60 zone and fall could extend up to 1.3715-20 zones.

GMT 1:39 - GBP @ 1.6194 = Cable needs to surpass 1.6250-60 on break of 1.6230 or else I see risk for correction break of 1.6140 should pave way for test of 1.6050-80 zones.

GMT 1:43 - JPY 97.30 = Japanese currency needs to fall below 97.90 or else a move beyond 97.05 will encourage for test 97.60-70 zones. Break risk for more gains for JPY. 

GMT AUD 1:45 - @ 0.9597 = Suspect Aussie could make gains beyond 0.9640-50 zones or else would challenge 0.9680-90. However, key is 0.9540-50 if breaks 0.9510 will be challenged.

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, October 24

Asad Rizvi

Couple of factors that dented overall market sentiment was after the release of report regarding China's largest bank loan that tripled in bad loans was written off. It may have reminded market of overall position of non-performing loans of Chinese banks, which is already facing huge difficulty because of shadow banking problem. In such environment there is always risk of tighter regulatory control to minimise damage and smooth up the financial activity. China had already tighten its short term lending rate that clobbered Asian stock market. 

This gave shiver to the Australian Dollar investors, which is too dependent on Chinese economy that saw investors scrambling to buy Yen. However, report of better HSBC PMI number in China should help to halt the Aussie decline and Yen gain could ease.

Later in Europe, new about ECB stress test of 130 banks and financial institutions that may require banks to provide 8 pct provision of their Capital, as a hedge to protect loan losses, which was higher than market expectation halted Euro currency and stock market up move. The move will help to get closer to European Banking Union, which is a long pending issue.

Meanwhile, today's release of Euro-zone PMI will be crucial for next direction, a positive flash will help in resuming Euro's upside journey to new highs. But too strong European currency may not be the ECB recipe, so as Euro moves higher, market has to watch out as European official may come up with any sound reasoning to halt/slow Euro's rise.  

while, release of BOE minutes hinted note of optimism indicating better growth condition, which also means better job opportunities in UK, which also means inflation will pick at faster pace. They all support for Pound Sterling.

However, I would not ignore release of US economic data that could still be good enough to dent the current Bearish/Dovish USD sentiment.

GMT 3:16 - GOLD @ $ 1334 = I would still consider $ 1330-32 important support levels, only break risk for $ 1325 or $ 1317. However, I will not be surprised to up move, but needs to break $ 1340-42 for $ 1348. Prefer early buying.

GMT 3:22 - EURO @ 1.3787 = If support 1.3750 breaks, euro could dip to test 1.3710-15 zones before up again or else. 1.3680. Needs to clear 1.3825 or else another dip cannot be ruled out.  

GMT 3:27 - GBP @ 1.6195 = Cable has strong support around 1.6150-60 zones only break would see fall extending towards 1.6115. However buy on dips is preferred as see possibility of GBP moving higher on break of 1.6230 for a test of 1.6255-65 zones.

GMT 3:32 - JPY @ 97.28 = Japanese currency could make small gains but should exhaust around 96.80-90 zones. Needs to push above 97.98 for 98.30 or else. 96.50. 

GMT 3:34 - AUD @ 0.9653 = Aussie could resume its upward journey, but needs to clear 0.9690 for test of 0.9730-50 zones in coming days. Protection is around 0.9570-80, which should not surrender. During the day could trade in 0.9610-80 range, if fails to break the barrier.

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, October 23

Asad Rizvi

Though disappointing, but weak US jobs data announcement that was fewer by 32.000 against expectation of 180K did not cause havoc in the market, as net revision was in positive territory by 9K. Sentiment about US economy has been bearish for nearly 3-4 weeks. The data further confirmed that the US economy in Q3 was soft.

It is estimated that the partial shutdown could hit this quarter GDP by 0.5 pct, as White House Council of Economic Advisers estimates nearly 120.000 job losses due to shutdown. Drop in unemployment rate to 7.2 pct could be good news as it gets closer to FED's target of 6.5 pct, but the fact is that the drop is caused due to fewer application for jobs from job seekers that had dropped out from the labour force. 

However, the risk is that Q4 too will be disappointing for US economy that will push over all sentiment bearish towards zone, as future US economic data will show distorted numbers. This has given further hope to the Doves for delay in tapering for possibly next six-months, though I am not too convinced/sure that how much would it cost, if FED decides to withdraw bond purchase worth USD 10-20 billion. I think any such decision would be more because of policy matter rather than anything else.

Today's important event will be BoE's minutes that will give feeler about the its assessment for UK economy. Recent data have shown strong domestic demand, although growth in the industrial sector has been at a slower pace. Emphasis will be on the need/focus of stimulus package, which may not deviate much from previous release of minutes because of recent UK economic slowdown.

GMT 3:04 - GOLD @ $ 1338.80 = Gold has support around $ 1334-35, if fails to hold could see drop extending towards $ 1330-32 zones.However, in Asia and early Europe, I am expecting a move towards $ 1345-50 that could stretch by another $ 3 before easing.  

GMT 3:10 - EURO @ 1.3788 = Euro has strong support around 1.3750-60 zones and is likely to test and break 1.3815 for 1.3835 or else 1.3730-35.

GMT 3:17 - GBP @ 1.6251 = Prior to BOE minutes, Cable is likely to find resistance around 1.6270-80 and could drop on break of 1.6030 for support level1.6210-15, or else 1.6320-25. On the downside break of support levels could see a push further down to 1.6170-80.

GMT 3:23 - JPY @ 97.74 = Should hold around 97.40-50 levels or else gain for JPY could extend up to 97.20-25 levels. Yen may not extend its gain beyond 96.90, as it needs to push above 97.95-00 for 98.25. 

GMT 3:27 - AUD @ 0.9736 = Aussie will enjoy its upward journey as a long as 0.9670 holds. I am expecting 0.9705 to hold, but need to clear 0.9780 for more gains or else will consolidate in given range.

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, October 22

Asad Rizvi

After some anxious moment seen during last couple of weeks, as US shutdown story was dominating the market, on Monday market opted for a quieter trading session, as US government successfully managed to temporarily avoid default. Market is now trying to access the damage caused to the economy by the economic unrest.

Today's jobs data will not depict the correct picture of the economy as the data is of prior month that was suppose to be released soon after the month end, but the delay in announcement is the result of closure of government offices as per rules. But anything beyond expectation could drive the sentiment accordingly, which means poor data will support talks of continuation of easy monetary policy and similarly strong data will favour tapering talk.

My feeling is that tapering this year could still be a possibility, as Bernanke will be under severe pressure after Paul Krugman calling Alan Greenspan "the worst ex-Central Banker in the world". This is because current FED Chairman is about to retire and he may not want to end up with a bad note after all the hard work and may not risk his credibility, which means unless payroll data is too weak, I will not be surprised if FED opts for scaling down before Bernanke leaves. Lot of people are betting on tapering delay because they expect this months (October) jobs data due after 1st week of next month will be show economic decline, what we must not forget is that there are lot of economic hurdlers in the coming months, which means more misery for US economy. Therefore, if there is going to be a delay on FED decision of its bond purchase then its not the matter of few months, it is going to be a long delay to suit the condition.

GMT 3:02  - GOLD @ $ 1314.50 = Prior to US jobs data Gold is likely to hold around $ 1307-10 levels and break of $ 1320-22 could push it towards $ 1325-27. However, the levels o watch is $ 1303 on the downside if breaks could see a fall towards $ 1280-85 and similarly break of $ 1330 risks for a test of $ 1345-50 zones.

GMT 3:12 - EURO @ 1.3664 = Euro should hold around 1.35620-30 levels, but needs to break 1.3685-90 for a possible test of 1.3502-07 zones. However, unless breaks 1.3740-50 levels, I do not see much gains or else will be heading for1.3875. Meanwhile on the downside support is at 1.3540.  

GMT 3:17 - GBP @ 1.6122 = Cable could find top around 1.6150 and needs to surpass 1.6180-90 levels for bigger gains. However GBP has support around 1.6030-40 levels. Break risks for 1.5970. 

GMT 3:23 - JPY @ 98.30 = Japanese Yen has support around 98.50-55 levels and unless 98.80-90 surrenders, the Japan's currency has the ability to make comeback and could challenge 97.50-70 zones on break of 98.05 or else 99.40.

GMT 3:33 - AUD @ 0.9646 = Aussie would continue to struggle to surpass 0.9680-90 levels and could dip to test 0.9600-10 zones, but needs to break 0.9570-80 for more losses or else 0.9720.

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, October 21-25

Asad Rizvi

I think the way US debt limit deal got extended, it will not be wrong to say that the problem is temporarily sorted out and there is more piling up in the pipeline? Surely another global financial mess has only been averted, as sequester issue will be raised and discussed in mid-December gathering and by the end of 1st quarter of 2014 market will once again start discussing expiry of US debt limit date.

This is an unending issue, as the size of US debt is over 20 pct of the size of global economy that cannot  be cured  without  taking years of  combine  steps by increasing revenue and  simultaneously  by  decreasing  in spending. The problem is that the Revenue can never be increased because politicians would not be willing to take  unpopular   measure to  hike tax rate  or  introduce new  taxes  and  spending  will never  be  squeezed because   reduction  is  spending   would   increase  unemployment  rate  that  would choke  growth. This  is why, though money  printing can be reduced  to some  extent, but cannot  be  halted. Without  availability of funds, banks  Capitalization requirements  will not be  met, financial  holes cannot  be plugged, which means weaker balance sheets would ultimately lead to financial collapse. I do not want to call this fudging technique, as they are all  smart accounting  entries/techniques  required to show that the books are square and balance sheet healthy.

But is this the real side of the coin? Does this justify “AAA” or high rating status? Not really because it is artificially done. Then why rating agencies are mum on the subject and only Chinese rating agency had to take the extreme step to downgrade US debt to (minus) -A from A. Who cares that weather SEC recognizes Chinese rating agency "Dogong" or not, but the reality is that the global market reacted to the Chinese rating agencies news flash. We should not forget that China is the biggest stakeholder of US Treasuries and it has every right to call shots. Banks and financial institution’s preference should be to have its own strong team of expertise to calculate and assess real risk factor rather than being too depended on outside report.

The ongoing political  tension about US debt limit increase or cut has now become a very regular event. It is certainly  worth  asking  he rating  agencies about  USA's AAA  sovereign status. The  temporary debt deal could be good for few months or for  couple of years, but  the reality  is that  it did  not improve  the  deficit position and the ability of the country to repay debt in long term.      

With the overall development it seems that the chances of tapering delay has brightened that could be postponed until next year unless FED has decided to act. Washington agreeing to extend time limit of debt period will help stock market to stabilize, it will ease pressure on commodity prices, but US Dollar may not enjoy from this move.

Imagine, cost of recent shutdown is estimated to be around USD 24 billion, then with the monthly FED injection of USD 85, how much the US economy benefit in return? The question that remains unanswered is that FED has opted for easy monetary policy stance since last many years, for how long and how much does the FED want to support US economy and in return what are the expectations and gains for the US economy and where will it end ?

If we move ahead to watch the events of coming weeks, the slew of US data that has been delayed due shutdown will be released that will provide clearer trend.   

GOLD @ 1316 = Though US debt issue has been temporarily resolved, but the news has been supportive for gold. Chinese rating agency’s slash of US debt to minus “-A” also gave push to the Yellow metal. This week gold move will largely depend on US economic report. Especially the release of backlog of economic data will provide guidance.

Initially bias will be on the upside, but needs to surpass $ 1325-28 levels to test $ 1338-40. However, I do see move much beyond resistance level of $ 1340 or else $ 1365. On the downside $ 1297-00, should hold or else watch for break of $ 1290 for $ 1275.

EURO @ 1.3685 = Bias should be on the upside, as long as 1.3540 holds for a move towards 1.3780, break would encourage for test of 1.3820-50 zones. But rally could exhaust for a dip to re-test 1.3620-25. Any move below 1.3470 will delay upside rally. Range for the week 1.3520 – 1.3885.

GBP @ 1.6165 = Cable has strong support around 1.6040-50 and is likely to hold for up move or else may test 1.5950. I am looking for a move towards 1.6250-80 zones, only on break of 1.6220, but upside rally should exhaust for 150-200 pip sharp drop. Range for week 1.6020-1.6290.

JPY @ 97.69 = Japanese currency may not weaken beyond 98.70, as see risk for gains on break of 96.90 for 96.60. However, unless JPY surpass 96.10, risk for bounce back is possible, or else 99.20. Range for the week 96.10 – 98.90.

AUD @ 0.9674 = Aussie next resistance level is 0.9750, needs to break for a test of 0.9820. On the downside break of 0.9580 risks for a test of 0.9510. Range for the week 0.9510– 0.9820.

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, October 18

Asad Rizvi

GMT 3:10 - GOLD @ $ 1317 = Likely to hold around $ 1310-12 in Asia, hence buying on dip is preferred for another upside test of $ 1320-25 zones. This could be last up move of the day unless surpass $ 1328-30 resistance levels for a dip. Break of $ 1302 is required for $ 1290. Only break of upside resistance level will challenge $ 1338.
GMT 3:17 =EURO  @ 1.3663 = I will remain cautious around 1.3680-90 and refrain from further selling of Euro, as downside break of 1.3610 will encourage for 1.3580. Or else 1.3725-35 before down again.

GMT 3:20 -  GBP @ 1.6145 =  As  long  as  1.6070  holds, buying  on  dip  is preferred,  but Cable  would be  heavy around  1.6180-90 ans may struggle to move beyond or else. 1.6220.
GMT 3:25 - AUD @ 0.9613 = Aussie has  strong  support  around 0.9570-80, which my not be easy to surrender  and  could possibly test 0.9650-60 zones.
GMT 3:30 - JPY @ 98.01 = Japanese  currency may not  find  easy  to break 97.60-70 levels or  else may  test 97.10, which is not  a favoured move. But unless moves  beyond 98.50 for 98.80, the  currency  may  trade in a narrow range.

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, October 17

Asad Rizvi

GMT 2:48 - GOLD @ $ 1280 = There is a minor possibility that yesterday gold may have seen this weeks low and may hold above $ 1267 levels. I see support around $ 1274 to hold for a move and break of $ 1289 levels for more gains for a possible test of $ 1295-97 zones. Break of support level risks for a fall towards $ 1255.

GMT 3:07 - EURO @ 1.3547 = Support 1.3502 should hold, as Euro is likely to make gains towards 1.3585-95 zones and only clear break will encourage for 1.3640. Or else 1.3470-80. 

GMT 3:17 - GBP @ 1.5977 = Cable is buy on dip, as strong support is at 1.5920-30. Looking for a test and break of 1.6020-30 for 1.6050. Or else 1.5880.

GMT 3:23 - JPY @ 98.62 = JPY looks weak and may not have enough strength beyond 98.35-45. Expecting a move towards 98.98-05, break will encourage for 99.40. Or else 98.15.   

GMT 3:26 - AUD @ 0.9541 = Aussie is a buy around 0.9510-20 for 0.9570 or else 0.9480-90 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.

Wednesday, October 16

Asad Rizvi

GMT 3:40 - GOLD @ $ 1279 = There small risk for up move if gold holds above $ 1272-74. The rally could extend up to $ 1287-89, if reached should exhaust for a move down break of $ 1267 risk for sharp fall. or else watch for a break of $ 1297-99 levels.

GMT 4:16 - EURO @ 1.3512 = The delay in agreeing to extension of debt limit will certainly exert pressure on USD and hence Euro could be the beneficiary. However, any Euro up move should be at a slower pace because of overall slowdown in Europe. Though German confidence level is inching up, but it is not enough Market will remain choppy and nervous due to uncertain market condition. News flash from Washington will surly move the market accordingly.

Euro has strong support around 1.3470-80 zones, should hold for a gradual move towards 1.3560-70 area. The key levels to watch are 1.3410 and 1.3625.

GMT 4:24 - GBP @ 1.5970 = Cable is suspect around 1.6010 and unless move beyond 1.6050-60 levels. see risk for a drop needs to break 1.5890 for more losses towards 1.5850.

GMT 4:27 - JPY @ 98.52 = Today's trend is very similar to yesterday's range given of 98.10 -- 90. Break would see 75 pip either way move.

GMT 4:32 - AUD @ 0.9520 = Aussie is struggling to continue its one sided uptrend and may struggle unless make a clean break of 0.9570-80 levels. However, support is around 0.9450-70, which may not be easy to surrender.

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, October 15

Asad Rizvi

In my weekly note I have pointed out that history suggest that US debt ceiling limit has always been raised. It can never be blocked for longer period of time or the global financial system will collapse. Because negotiators know that they do not have a choice and will have to sail on the same boat when its is their turn if they win next elections. Hence, It could be conditional, intentional or sensational, with some delay and with hue and cry. The is why they have to make rumbling noise to gain political mileage to avoid possible protest.

This time it could be different, because the risk is that if the deadline date passes, US will have to face default that will have sever negative impact on the global financial market that has been struggling against recession and slowdown for past several years. I think negotiators will avoid being blamed for causing catastrophe. Therefore, extension of US Debt Ceiling is almost a done deal, as default is not affordable. Its matter of time, as we still have 70-hours to hit the debt ceiling if not raised by Congress.

Though stock market has responded in a hope that negotiations now looks a good possibility after some of the developments in Washington, but as the issue remains unsettled and as it gets closer to the deadline time, market could react, which could soften the Stock market and the Greenback. But reaching of agreement on extension of US Debt Ceiling Limit will ease off the pressure on US Dollar and market will immediately start concentrating on economy. 

GMT 3:26 - GOLD @ $ 1274 = The basic to understand is that if an agreement is reached on US Debt Limit Deal, gold will fall and if delayed or signs of trouble, then gold will surge sharply. I am expecting gold to hold around $ 1280-85 levels in Asia and may exhaust below $ 1280 for a test of $ 1257-63 zones on clean break of $ 1267. 

GMT 3:33 - EURO @ 1.3562 = Initial support is at 1.3530, may hold for small gain, but 1.3598 is the crucial level to watch, only break would encourage for a test of 1.3640 or else, on the down side break of support levels risks for test of 1.3470-80 zones.

GMT 3:39 - GBP @ 1.5996 = As long as 1.5960-70 holds there is minor risk for a test of 1.6020-30 level, break is required for a move to extend towards 1.6060. However could exhaust for dip. But break of support level risks to challenge 1.5910.

GMT 3:45 - JPY @ 98.46 = JPY is likely to remain locked in 98.05-90 range, breakout could see see a 100 pip move either way.

GMT 3:48 - AUD @ 0.9433 = Aussie is in a Bullish mode and should not fall below 0.9370-80, as potentially the move could extend beyond 0.9475. 

GMT 3:48 - AUD @ 0.9533 = Aussie is in a Bullish mode and should not fall below 0.9470-80, as potentially the move could extend beyond 0.9575.

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, October 14-18

Asad Rizvi

Any Short term solution to the temporary US shutdown will be a time buying strategy to avoid possible global financial turbulence. Temporary extension of debt ceiling limit expiry date and funding would further confirm that the US government and the opposition are not willing to compromise on the issues and they are no closer to the agreement. If talks are unsuccessful then President Obama can use his constitutional right by signing the bill to increase debt limit that will have validity until November 22, but the government shutdown will remain in place. 

It is mindboggling that why the politicians prefer to wait until last moment and why they always chose/agree to extend date. It means that negotiations during all these years have been unproductive and agreeing to a future date is a formality and face-saving strategy.

Then what is the purpose of creating fuss and agreeing to meet again at a future date ? I thing the idea behind such meetings/gathering is to show the world that they are extremely concerned/serious about the issue, which according to historical fact is untrue. But probably because they are well aware of extent of damage that has reached to unmanageable limits they know that they do not have a choice and have to agree at some point to normalize the market.

To further elaborate my point of view, though I am not sure if the imposition of debt limit is helpful for fiscal accountability or not, but if we look at the decade old history, since 2002 the US debt ceiling limit has been frequently raised from USD 5.950 Trillion to USD 16.699 that was hit in May this year. Currently US Treasury is paying bills through some extraordinary measures. So what does the congressman discuss when they meet? Who should be held responsible for fiscal indiscipline as both the parties have won US elections and have represented the country during all these years? What progress and compromises they have made after they got elected. This should be made public because it the future generations that will have to bear the brunt. Political scoring will do no good to the nation or the economy.

History suggests that debt ceiling limit that came into effect in 1917 is simply a documentary requirement asking for approval to spend more money, without revenue generation at same proportion that causes debt ratio to rise. Since last 4-decades, obtaining permission for debt ceiling enhancement has became a regular feature.

Meanwhile, market is surely heading for a crucial week, as both, temporary short-term arrangement and default will dent the market sentiment. Weak asset could face turbulent times and it is especially worst choice for stock market and emerging market economies. It can have spillover effect on the developed economies too, unless surprise agreement is reached on the ongoing debt crisis.   

While, due to incomplete economic data information released from US, some of the economic figures released in US may not be of much relevance for the traders. However, release of economic data from Europe and UK may give some reason to trade. Market will remain directionless and uncertainty to prevail.  

GOLD @ 1271.33 = Well, I did warn last week that market will remain choppy and gold could move either way. I do not see any change in trading pattern, as gold moves will remain volatile. Last week, talk delay on debt crisis did not help gold buying, as the damage was caused by FED FOMC minutes, which clearly indicated that more Fed members are in favor of tapering. Therefore, any up move should be temporary, as gold cannot avoid pounding in future.

Upside break of $ 1285-90 zones is required for a test of $ 1300-05. Break would encourage for another test of $ 1322-25 zones. However, bias is on the down side, break of $ 1255-60 will see a push towards $ 1235. If the support fails to hold, test of $ 1191 is unavoidable in medium-term.

EURO @ 1.3541 = Euro should find support around 1.3440-50, only break risk for 1.3360. However, Euro needs to move beyond 1.3610 for 1.3650. Range for the week 1.3350 – 1.3710.

GBP @ 1.5950 = Cable is likely to remain under pressure. It needs to move beyond 1.6050 for 1.6155. However, resistance will be met on up moves. Break of 1.5860 risks for more losses.  Range for week 1.5810-1.6155.

JPY @ 98.56 = Japanese currency needs break 98.90 for test of 99.30-50 zones. Buying demand is possible on weakening of JPY that could push Yen towards 97.80-90, break is required for a test of 97.20-50. Range for the week 96.70 – 99.80.

AUD @ 0.9464 = Aussie may have enough legs to move beyond 0.9570-80 and could exhaust around 0.9540-50 zones. On dips 0.9350 is the strong support levels and only break would see losses extending towards 0.9280 before correction occurs. Range for the week 0.9250– 0.9580.

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, October 11

Asad Rizvi

Republican leaders proposal to offer temporary six-weeks extension to the debt ceiling limit prior to meeting US President may have given sigh of relief to the market, but this needs more clarity to cool down market sentiment. The Republicans are aware that they are risking blame of the damage caused to the economy when it is already on the recovery path. Take yesterday's US jobless claims data that has shown sharp increase in claims because of processing problem in California region caused by shutdown. IMF, Japan and China have voiced their concern about grave consequences to the world economy in case US defaults.

The world stock market may have responded to the temporary stop gap arrangement, but there has to an announcement tonight before market resume its activity next week and any delay to announce temporary extension of debt ceiling limit may once gain cause jitter in the market. However, six-week is too short period for mid-term investments and it may provide good opportunity to plan offloading of risky assets. 

As many have started to believe that tapering is unavoidable, IMF and World Bank President also spoke on the tapering issue, which means it has been discussed at other important financial forums or they are at least they have been informed about US plan. But six-week delay would surely mean that debt limit extension until November, which could further delay tapering unless it has been decided by FED to act.

At a time when there is ongoing battle on debt ceiling limit issue, the release US economic data becomes irrelevant, which is incomplete due to partial shutdown and quite a few of them are not being released. Therefore, fiscal uncertainty will continue to dominate the financial market.    

GMT 3:05 - GOLD @ $ 1293 = Choppy trading to continue. Failure to surpass $ 1295-97 in Asia will see dip towards $ 1283-85 zones.  But fall should not extend towards $ 1275. There is a risk for correction in NYK, a move beyond $ 1302-4 is required for more gains.

GMT 3:10 - EURO @ 1.3539 = Euro should find top around 1.3550-60, but needs to break 1..3505 for a move towards1.3488.Or else 1.3595-00. 

GMT 3:14 - GBP @ 1.5983 = The rally could extend  up to 1.6000-10, but 1.6030 should be tough to crack and should dip back to teat 1.5940-50 zones. or else 1.6060.

GMT 3:19 - JPY @ 98.52 = Potentially JPY should further weaken and move towards 98.90-00 zones, but should first correct towards 98.30-40 zones and then push for 99.30. 

GMT 3:24 - AUD @ 0.9479 = The current rally should exhaust around 0.9500-10 and unless move beyond 0.9560 risk is for  bigger correction. However, during the day the level to watch is 0.9430-40, break would encourage for 0.9410.  

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, October 10

Asad Rizvi

As the shutdown drags on, uncertainty is looming. Congressman are gathering in White House and few Republicans are invited to Join Obama on Thursday, which means another day is lost in discussion that can extend up to Friday, which is suppose to be the last of the session, as Congress will officially be closed for vacation. If the issue is not settled and the snow does not start melting by weekend, the market could react negatively.

Meanwhile, after the release of September FED FOMC minutes that clearly says that most of the FED members were of view that FED should start consider scaling down its bond purchase. This is not at all shocking and I stick to my earlier view that expiry of debt ceiling limit is the real cause of tapering delay. Fed had to avoid tapering because of the timing, as soon as understanding on debt limit is reached, Fed will be in a comfortable position to reduce its asset purchase probably by December this year. Tapering is a done deal, the only worrying factor that could lead to delay is the fiscal drag, which is causing damage to the US economic recovery. Hence, after the release of Fed's September FOMC minutes it makes very little sense to discuss Yellen's Dovish stance, as it is the majority that rules.

Meanwhile, Cable got the hammering after weak UK manufacturing data and industrial production data. Hint of UK slowdown came after the release of Trade Balance and Production figures. Today's decision on UK policy rate is likely to remain unchanged and with mildly Dovish stance, Cable may not be able to make correction.

Overall the current weakness of US Dollar is largely due to ongoing fiscal tussle that could drag on a bit, but as soon as an agreement is reached USD should recover.       

GMT 3:16 - GOLD @ $ 1304 = I do not see enough room for up move, as gold should not surpass resistance levels of $ 1310-12 and may exhaust around $ 1307-8 for $ 1295 or for a test of $ 1285-90 zones. Only break of resistance may see a move towards $ 1318.

GMT  3:21 - EURO @ 1.3498 = Euro may struggle to move beyond 1.3520-30 and is likely to dip towards 1.3460-70 zones. 1.3420-40 is the key support area. However move above 1.3570-80 risks for more gains.

GMT 3:25 - GBP @ 1.5925 = Cable needs to move beyond 1.5970-80 zones or else more gains is possible. Break of 1.5885 will encourage for a test of 1.5840-50 levels.

GMT 3:29 - JPY @ 97.73 = Yen may not ease beyond 98.20 with comfort and Japanese currency needs to push below 98.80 for more losses. However, Yen could later recover to test 97.40-50 zones.

GMT 3:33 - AUD @ 0.9404 = Aussie is in corrective mode and may not hit 0.9450 unless fall down towards 0.9350-70 zones before taking a breather. 0.9320 should not surrender for another up move. 

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, October 09

Asad Rizvi

As US debt limit shutdown is the topic of discussion, let me begin with a small note on Yellen, as according to one of the White House official, she is likely to be nominated to replace FED Chairman Ben Bernanke. She is considered a strong Dove and many in the financial strongly believe that will maintain Bernanke's extremely friendly Monetary Policy Stance (MPS). What everyone is forgetting ys that she is a true professional. FED's loose MPS is policy decision not taken by an individual and is only decided with the consent of all the 12-Voting members with a clear majority.

Bernanke could be an ardent supporter of easy monetary policy, but he it is not his sole decision maker and that is why he was compelled to start tapering talk that FED could taper. Scaling down of asset purchase will be FED's decision based on majority votes. If Yellen is nominated, then growth and job creation will remain a big challenge and her priority. 

Back to shutdown, as we are getting close to Oct 17, if US government is unable to resolve the issue and fail to raise the debt limit by that time, it will severely impact the US domestic financial market as well as foreign borrowers. China and Japan have shown grave concern and are worried about the unresolved US default issue that has entered 9th day. Partial shutdown has already started hitting the US economy, which will be known at a later date.

However, though focus may have been mildly shifted towards Yellen's nomination as Fed Chairman, there is no respite for the equity market, all over the globe stocks are nervous and are declining. But by New York opening traders will once again start concentrating on the release of FED FOMC minutes. In such an uncertain situation when Gold and JPY are not enjoying heavenly status market may be looking for investments in CAD, Aussie and Skandi.

GMT 3:05 - GOLD @ $ 1317.70 = Gold will remain choppy. Only break of $ 1314 could see a dip towards $ 1308-10, before up or else $ 1301-03. Meanwhile break of $ 1325 is required to test $ 1330. Move beyond $ 1335 risk for sharp up move , while on the downside failure to hold $ 1285 risk for bigger fall. (Refer weekly outlook for clearer trend).
GMT 3:12 - EURO @ 1.3565 = Suspect that failure to move beyond 1.3595-00 risk for a drop and break of 1.3540 for a possible test of 1.3520 zones and break here risk for 1.3485 or else 1.3650-55.

GMT 3:17 -  GBP @ 1.6067 = The key level is 1.6090-95, which may hold, Break of 1.6010-20 risks for 1test of 1.5980-90 zones or else 1.6130.

GMT 3:22 - JPY @ 96.27 = Yen needs to fall below 97.60 for more losses or else break of 96.80-90 will encourage for a test of 96.50 zones. Break of 96.30-40 will see sharp gain for the Japanese currency.

GMT 3:26 -  AUD @ 0.9430 = Aussie has support around 0.9405, should hold for test and break of 0.9450 for 0.9470-75 or else 0.9380-90 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.