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FX & Gold Weekly Outlook Dec 31 – Jan 04

December 30, 2012

LATE UPDATE……………

GMT 2:33 – Hi all, please note that due to holidays and illiquid market condition, trading activity will be very thin. There is always a possibility of both ways erratic moves. Therefore, to avoid risk I do not recomend active trading. Choice is surely yours.
Monday Dec 31 – Japan Closed
Tuesday Jan 01 – Global Market Closed
Wed & Thurs Jan 2 -3 Japan Closed
GMT 7:16 – (Subscriber) sir today range of euro ?
GMT 7:20 – Lot will depend on fiscal cliff realted news, but as we get close to year end, Euro will soften. Similarly any possitive development should help Euro to recover………
GMT 7:23 – (Subscriber) sir shall sell usd/jpy here with stops 86.60??
GMT 7:42 – see Japanese currency gaining in the absence of BOJ as Japan is closed. But the currency has the tendency to ease due to strong government easing approach………
GMT 11:51 (Subscriber) sir i short gold at 1668 should book profit or wait ?
GMT 11:53 gold @ $ 1657.90 – book your profit and sell on the rise again…..
GMT 15:07 – -Ok pals, many thanks for your support.
-The accuracy rate have been around 90 pct.
-Hope you all had a profitable year.
I wish you all and your families
a very happy and properous 2013
With Warm Regards
Asad Rizvi
GMT 13:16 (Subscriber) Thanks Mr Rizvi for your great support all the year long. Happy new year to you to0 with best wishes.
Happy New YEAR 2013 to all

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Join me on Twitter for Latest Updates…..@asadcmka

Today’s senate gathering is the last ditch effort of reaching an understanding on fiscal issues or else series of tax increases and government spending cuts will come into effect on Tuesday, Jan 01. Even if the legislators are able to successfully negotiate the deal there will be a big hitch, as negotiators are required to obtain approval through voting in house, which is past was a difficult proposition.
As I have quite a few times pointed out in my earlier posts that there are two angles about this deal, i.e., reaching an understanding on fiscal cliff will ease global pressure on riskier asset, but deadlock will lead to rush by investors/traders for safe haven liquid US Dollar that could destabilize global financial market.
Obama cutting short his vacation to join negotiations is surely an effort and seriousness shown by the US policy makers to avoid fiscal cliff, but unless announced what is not known is that is there going to be a deal before Dec 31st or will it go over the cliff and if it goes over the cliff, will congress opt for 2-weeks grace period and make a pledge to announce.
This will be known in next few hours time, but then this type of disappointing news will have negative impact on the global financial market that could witness sharp selloff of currencies, stocks and gold.
Meanwhile, there are some important economic data’s due this week. On Monday HSBC’s Manufacturing Purchasers Index (PMI) will be released and on Wednesday, NBS (PMI) China Federation of Logistic Purchasing will be announced that indicate about the health of Chinese economy. Both are important Chinese indicators, as China is one of the major driving forces to provide clue about the global demand. Especially at a time when signs of economic growth in Euro-zone region are depressing, as it is constantly shrinking. The Euro-zone economy has so far shrunk for six-straight months.
Similarly, some of the major US economic data’s are expected that will provide better picture about the US economy. On Wednesday there are quite a few announcements, out of which PMI is the key data that will guide about business condition in manufacturing sector.
On Thursday, US Automatic Data Processing (ADP) Non-Farm Employment Change data is a helpful indicator that measures the change in number of employed people in USA that will be followed by US Unemployment claims data, which probably fell sharply due to Christmas holidays and is expected to well again due to improving job condition. But Thursday’s FOMC minutes may have larger impact about the market, as it will provide better sense of FED’s last November’s dovish approach as in its FOMC meeting FED opted for QE4 by announcing to purchase additional USD 45 billion US bonds.
However, on Friday barrage of US economic data will be released, but all eyes will be on US Unemployment Rate data.
GOLD @ $ 1655.60 = Gold is stuck in a narrow range struggling to move beyond $ 1670 levels. Strong US data was surely one factor that was holding gold to make gains with selling interest seen on its rise. Fiscal cliff and year end squaring are the big factors that have thinned down the volume. My perspective on fiscal talk failure differs. Like others I do not see gold surging on safe haven demand on fiscal talk failure that will reduce economic activity which should lead US economy to recession. Because we have to take a note of the fact that fiscal talk failure also means liquidity crunch due to tax hike and spending cut means reduction in economic activity, which should be bad news for gold Bulls. However, surprise agreement will bring Bulls back in the ring. But later in the week FED’s FOMC minutes and US unemployment report could help gold to test the support and resistance level.
As long as $1675-80 levels hold, risk is for a test of $ 1630-35. A break of this level will encourage for a test of $ 1590 or $ 1570. However, push beyond $ 1690 will suggest gold is ripe for another Bull Run.
EURO @ 1.3215 = As long as Euro fails to move beyond 1.3350, see risk for more losses. A break of 1.3110 will encourage for 1.3020. I will not be surprised if fall is expended to 1.2960. Range for the week 1.2920 – 1.3390
GBP @ 1.6153 = Cable came under pressure due to poor economic data pointing weakness in UK economy. The levels to watch is 1.6280, as long as it holds below, see risk for deeper correction, a break of 1.6040 will encourage for a test of 1.5920-40 zones. Range for the week 1.5920-1.6310
JPY @ 85.88 = We may have seen the top around 86.60. However, only break of this level could see a push towards 86.95. Suspect break of 85.10 could see a bigger fall, as failure of fiscal talk may provide reason for deeper correction. Probably test of 83.85. Range for the week 83.50 – 87.20
AUD @ 1.0371 = Upside should be capped below 1.0480-90 levels as break of 1.0275 could bring more bearish spell for the Australian currency though could bounce back from 1.0250 or fall could extend towards 1.0180 zones. Range for the week 1.0150 -1.0520

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