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AfTeR GrEeCe MaRkEt WiLl disCuSs uS FiScAl CLifF

November 21, 2012

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GMT 15:15 – Ok Pals,
-Euro was choppy, but exhausted around 1.2835
-Aud target down from 1.0390.Target 1.0270 intact
-Yen did not break 82.70
-GBP capped at 1.5950
-Gold struggled around $ 1730. Could test $ 1718-20 zones, if breaks fall could extend up to $ 1714
Cheers until tomorrow
GMT 14:50 -pd, not possible to expore the crosses, as there are too many things happeing in the market and i have to keep track of the movements. However, i am cautios about sell Yen gainst USD & Currencies.
GMT 14:42 – manish could test $ 1720-22, but book your profit there is no clear direction as market is sandwich between Greece and US Fiscal Cliff
GMT 14:38 – down side where to book profit in gold as now24 gold how much down do u see -manish
GMT 14:30 – sir can share some knowldge on eur/jpy – pd
GMT 14:15 – pd, I am watching this move as failure to dip below 1.2790-00 risk for a test of 1.2850 zones
GMT 14:13 – sir euro at 1.2830 should go short or wait pd
GMT 12:50 – gold @ $ 1726 = Failing to break below $ 1723-24 risk for a test of $ 1731-32 zones
GMT 12:43 – view any change in gold then plze inform – manish
GMT 11:09 – Yen @ 82.35 = do not jump to buy, allow some more uptick possibly towards 82.50-60
GMT 10:20 -manish, this looks safe sell, but do sppy STOPS and book your profit on dip because there is still no clear direction from EU FM’s
GMT 10:18 – in gold view unchanged i sell at 1728 and sl keep 1733 ok- manish
GMT Jpy @ 82.07 = Yen buying level is around 82.35 apply STOPS at 82.70
GMT 7:29 – manish, view is unchanged.
Prefer to pick Top……..GL
GMT 7:28 – should sell gold at 1724 level now – manish
GMT 7:03 – pd, Yen is notorious in prest days, but this is really very tempting level. I am expecting 10-years traesury yield to strengthen tonight and so should Yen. Picking top is prefered. For STOPS you have o decide your loss sustaining capacity becuse @ 82 Yen is at such a level that even if ittouches 85 it will come down to 81………GL
GMT 6:58 – sir shall sell usd/jpy at 81.90?? pd

GMT 4:02 – AUD @ 1.0355 = 1.0390 is key. expecting a dip to test 1.0270 zones.
GMT 4:00 – JPY 81.87 = Next key is 82.70, which should not surrender, as looking for a test of 80.20-50. So prefer picking the bottom.
GMT 3:57 – GOLD @ $ 1725 = key $ 1732 failure to ove beyond now suggest break of $ 1715-17 could see more losses.
GMT 3:56 – GBP 1.5913 = Should hold below 1.5950 for 1.5860-70 zones or 1.5835.
GMT 3:55 – EURO @ 1.2770 = Failure to surpass 1.2820 risk for a test of 1.2670 on break of 1.2710.

Greece announcement would be a big event of the day and I am sure that rumor of debt reduction talks extending up to 2030 means the delay is due to some sort of disagreement forcing European finance minister to lengthen the period, which also gives hint that negotiating the deal is still a tough exercise. My hunch is that they could come with some announcement that will help the market temporarily before the crack appearing at a later stage. So its all guess work now, I am keeping my fingers crossed and waiting to hear the official statement.

Last night in his speech delivered at the Economic club in New York, FED Charmian Ben Bernanke looked comfortable and spoke with ease, probably his confidence level was high after Obama’s election victory. With a smile in his face he did not hesitate to inform the audience that the economic recovery is “disappointingly slow”, putting blame on congress pointing towards fiscal cliff that could lead to another recession, which is also causing uncertainty for FED to plan out its strategy.

Affirming that Fed accommodation policy will continue until sure of economic recovery, he rightly pointed out that Fiscal understanding will be good for the US economy in 2013 if agreement reached and without reaching a deal on fiscal issue FED can do very little. He gave a clear message that FED has no plan to hike rates and may continue its accommodating policy by maintaining its zero interest rate policy until 2015.

Bernanke was concerned about the pace of slow recovery in housing sector, but wants to continue to offer interest on excess reserves, which is not a major monetary tool because he fears no return will kill money market funds. Giving lot of emphasis on housing sector, he said price stability in housing sector is key as banks may still be fearing of price collapse and thus refraining from lending to for mortgage of property.

My understanding after listening to Bernanke’s speech is that after the the maturity of Operation Twist (OT) due in next 2-months because of shortage of short dated securities, FED instead of rollover of OT would buy mortgages and expand QE3 that would be in continuation of its current policy, but fiscal agreement is the key before Fed decides its next line of action. My view remains unchanged that understanding will be reached with some some adjustments as both (D & R) are aware that US cannot afford adventurism anymore.

In present circumstances it is difficult to make a currency forecast, surely delay clearly signals that it is tough to reach agreement, but in my view, initially I am expecting positive opening remarks and affirmative tone means initially Euro should get a boost and should hold 1.2740 levels. Only break of 1.2850 could see a surge towards 1.2930. Meanwhile any negative new will see a test of 1.2710 and break could see dip extending to teat 1.2650 possibly towards 1.2530. Market will remain choppy. I do not recommend any position taking unless we get a clear direction.

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