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Well done again “Superman Mario Draghi” – Feb 08

February 8, 2013
 
GMT 3:53 – Euro @ 1.3410 = Superman Mario Draghi has once again played the role of a Central Banker with his balanced comments that helped in halting Euros rise. If you read the lines, Draghi was smart enough clearly hinting that if currency continue to rise policy makers will have to measure its inflationary impact and he went on to keep market on toes by saying that he is anticipating at least another interest rate cut within 1st half of 2013.
He started his press conference by hinting that he would continue with his accommodative stance. The message was enough for Euro Bulls to offload their holdings. He did day that Euro appreciation was sign of return of confidence and LTRO repayments is a sign of improved sentiments. But he hinted that inflation is still high and may take few months to fall below 2 pct and growth will be largely based on reforms probably linking combination of austerity package that includes spending cuts with better tax reforms  to reduce deficit that will certainly delay recovery as he said “Euro weakness to prevail on early 2013” 
He certainly did make verbal intervention, as he must be quite aware of the business cost and the consequences of excessively high exchange rate. Europe is still in a recovery path, minus Germany rest of the region is yet to make strides and this is just the beginning of German growth recovery, which is at a initial stage that will largely depend on global demand and Geo-political factors. 
I have one more important observation about his response to a question on weak Yen policy, probably relating to Japanese Government’s strong stance to support weak Yen. He said that one of the European officials concern about Central Bank independence is genuine and he strong support this view. It all points to finely balanced approach adopted by ECB President, which in my view in commendable. In my view, in present scenario,  Euro band of 1.30-1.40 should be the acceptable level to ECB.
EURO @ 1.3410 = I do not see a fall much below 1.3340-50 levels, which could be good levels to buy Euro, as I am expecting test of 1.3440-50, with chances of 1.3510 or else 1.3310 
GMT 4;16 – GOLD @ $ 1671.20 = Gold during Asian and European session could find resistance around $ 1675 and could target $ 1665-67. Only break of up-side resistance could see anothet test of $ 1680. However, I will not be surprised to see a fall and break of $ 1660 levels in New York session
GMT 4:03 – JPY 93.46 = Key will be today’s closing above 93.85, if fails and dips below 92.90, we could see a sharp Yen gains next week. range for the day 92.80 -93.8
GMT 4:00 – AUD @ 1.0282 = see strong support around 1.0240. Prefer buying on dips fo 1.0320-25 or esle 1.0210
GMT 3:58 – GBP @ 1.5719 = Do not see a fall below 1.5670-80 levels, as Cable has  potential to test and break 1.5760-70 zones for 1.5810-20
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