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Sequester drama will be short lived – March 01

March 1, 2013

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GMT 9:22 – GOLD @ $ 1572.30 = Book profit around $ 1571-72.50……..Cheers

GMT 3:35 – GBP 1.5175 = Prefer buying o dip before data as 1.5150 should hold for another test of 1.5210-20 zones, as cable could potentially surge to test 1.5280-00 zones. Should hold 1.5110.
GMT 3:39 – AUD @ 1.0229 = Risky above 1.0250-60 and needs to break above 1.0290 for more gains. Only break below 1.0202 open gates for 1.0180.
GMT 3:49 – JPY @ 92.70 = Yen should trade below 93.45 levels and the key level is 93, which should hold, but needs to fall below 92.40 for a test of 92.15 .
GMT 3:57 – GOLD @ $ 1578.50 = Bias is on the downside, as strong resistance is around $ 1582-84 levels. A fall below $ 1574-75 will open doors for $ 1568-70 or else $ 1586 before down again..
GMT 3:30 – Euro @ 1.3075 =  During Asian and early European session Euro will find resistance around 1.3110-20 and requires to break above 1.3145 more gains. On the downside fall below 1.3040 will give space for 1.3010. However, any move towards 1.3180-00 will be good opportunity to pick the top to sell.     

The sequester drama will finally end up with another extension date after reaching some sort of face saving understanding between the two parties because world cannot afford financial adventurism. We saw this happening earlier in Europe, which is another good example. Though locked in different situation about a year ago, but they did manage to avoid financial deadlock by imposing tough condition backed by window dressing programme. To support my if we look back there is zero progress with regards to implementation of plan and the economies are on constant slide.
Nothing is in place, every country is violating the conditionalities. Greece, Spain, Italy and now France, they all are unable to implement the promised austerity measures and the agreed targets. No political government have the will to impose new taxes, no government is willing to cut spending, as it will result more misery, take Greece as an example. Also because printing of money is an easy way to escape. Tighter condition cannot be imposed on so called developing nation, though it is much easier to forcefully implement in a non developed country. You know why, because they all are walking in a thin rope and if implemented big economies will collapse.
Meanwhile, foreign exchange market will concentrate on the release of economic data for guidance. Bernanke with his Dovish approach did succeed in applying breaks to the market’s Hawkish mood, but market players will be keenly looking at the economic numbers because Ben has a single vote and his wish cannot be imposed against the majority if they decide to shift their policy stance, which will be respected.
I think Europe will continue to face difficult times with Italian uncertainty adding to the regions economic woes, which will make its currency vulnerable/volatile. A nod on sequester could give Euro some breathing space that would be the time to pick the top and sell currency. However, Cable will be looking for one small opportunity to surge and a positive PMI data could provide some breathing space and a bad number should give  a chance for bottom hunting.

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