Skip to content

, , , ,

Sequestering facts in the web of data – March 4 – 8

March 4, 2013


GMT 8:01  (S) Sir where to go short in GBP and gold?
GMT 8:10 -GBP @ 1.5035 = Cabl could still make some more gains as it did not dip below 1.4980-90 levels. So i will prefer selling on the rise around 1.5080-00 znes.
GOLD @ $ 1576 = I am quite because the fall is as per expectation. Howver, $ 1570-72 is support level, which may not surrender during European session.
GMT 8:43 (S) Sir, What will be the good position to short EURO before USA Open? Thanks
GMT 8:49 – Patience…………………..
GMT 9:57 – GBP @ 1.5017 = GBP needs to push beyond 1.5025-30 leevls for 1.5070-80 zones or esle risk for test of 1.4970-80………..
GMT 10:06 –  GOLD @ $ 1579.50 = The upmove from day’s low could continue and could exhaust around $ 1583-85…………..
GMT 10:08 – Please note that I do not favor buying gold. I will wait to pick the top to sell……..
GMT 14:05 – GBP @ 1.5065 = If went long book your profit around 1.5065-70…Preffred selling level is 1.5080-9, as i am looking for more gains…………..
GMT 15:06 – OK pals, today I had nothing much to add due to thin market condition.
I am expecting Euro to top out around 1.3030-40, but should hold below 1.3980, as we could see new lows probable 1.2965.
Cable coulld test 1.5090 before down again.
Gold looks good for $ 1570, on the up $ 1582-84 should not hold. Risk for test of $ 1565 is possile.
Cheers until tomorrow………


GOLD $ 1575.70 = Gold continued to provide an opportunity to bears and I am expecting the trend to continue. Any up move this week will be an opportunity to sell the metal. If there is an up move, it should get exhausted around $ 1605-10 and only a break of $ 1630 will pave way for a more bullish move. Gold should fizzle out around $ 1590-95 and a break below $ 1548-50 will push it down towards $ 1520-25 zones. 
EURO @ 1.3022 = Euro is once again in a selling mode as long as it fails to move beyond 1.3250. However, bears will continue to dominate as heavy selling of euro is possible if it reaches 1.3150-80 levels. Our low end of weekly target was almost met and this week I am expecting a test of new lows: possibly 1.2905. A break could extend the fall towards 1.2655-60 levels. Range for the week: 1.2950-1.3480; 
GBP @ 1.5036 = Initially, pound sterling will remain in a fire zone and should hold below 1.5150-80. Risk for a deeper fall will increase if 1.4970 surrenders for a test of 1.4820-50 zones. Range for the week: 1.4820-1.5180; 
JPY @ 93.57 = We did witness some fine correction holding below 94.80 well to test 91.20. However, 94.80 will remain a challenging level; I do not see a comfortable move beyond or else 95.50. However, 91.20 could again be tested on a break of 92.50. Range for the week: 90.50-95.80.
AUD @ 1.0203 = AUD will remain under pressure as the Australian currency needs to push beyond 1.0280-90 zones for a move towards 1.0350, if seen should be the top of the range. However, I still see more decline to come; 1.0110 is the crucial level; if fails to hold, Aussie could fall by another 100 pips. Range for the week: 1.005-1.0380. 

The latest development that global financial market will be watching nervously will be reaction to the automatic spending cut, which is also known as sequester (a general cut in government spending).
The ultimate impact of a cut of USD 85 billion may know be known soon, as it stretches defence spending to discretionary domestic spending. But overall, sequester should have not have any big impact on the market, as comparatively the size is smaller than the USD 120 billion payroll tax cut that became effective on January 01,2013.
Last week, the major focus of the market was on Ben Bernanke’s 2-day testimony before the Congress, as the momentum started gathering after the release of Fed minutes that were followed by some hawkish statements made by some Fed members. It forced market to believe that the Fed is close to making a policy shift due to inflation fear. The Fed Chairman, realising the importance of his three phases of his quantitative easing (QE) programme that was 1st introduced in November 2008, out rightly defended his asset purchase programs. It was thought that he maintained a balance approach, but in his testimony, Bernanke went for an outright support of the Fed’s asset purchase programme, stating that the benefits are clear as he must be referring to improved job conditions.
The purpose of bond purchase commonly known as QE was to stimulate the economy. While it has many risks, as it can cause inflation if overdone, it could once again cause asset bubble risking further economic de-stability. My assessment about Ben’s testimony is that he was referring to the latest Fed minutes. He was making statement from a broader perspective. He was probably defending his all 3-QE programmes. With a dovish tone, he was indicating that any quick reversal could spoil the economic recovery.
Now it is clearly evident that the opinions of 12-member Fed are divided; all are not on same page and hence, next review of Fed’s asset purchase plan, which is due on March 19-20, should tell us more about central bank’s future plan.
But, one thing is for sure that everyone is well aware of the consequences of reversal of asset purchase program, which is a slippery slope. Once you are on it, it’s not easy to get off. This is why the Fed Chairman in his latest appearance at Fed research conference in San Francisco hinted that a premature exit could be an expensive affair for the economy.
While developments in Europe are not very encouraging as overall economic condition there is once again showing signs of a declining trend. Unemployment in Spain and Italy has reached the highest level with jobless rate in eurozone hitting 11.9 percent. The current economic slowdown has increased chances of a rate cut in the region, but with Italian election uncertainty fearing a hung parliament. I am expecting a supportive ECB statement rather than a rate cut, as they may prefer for a wait-and-see approach.
Meanwhile, pound sterling continues to suffer due to Britain’s downgrade by Moody’s to “AA1” from “AAA” credit ratings. The improved CBI index that points to better manufacturing activity could not bring any respite to the currency, as next day’s purchasing managers Index (PMI) survey showed a further contraction in the UK economy in February. Market is more focused on January’s BOE minutes, since out of 9 MPC members, 3 members, including BOE Governor, recommended for an expansion of asset purchase plan to Sterling 400 billion. I think if we do not see easing on Thursday March 07, the BOE could prefer to wait for its new Governor Mark Carney to join on July 01, this year.

Leave a Comment

Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

%d bloggers like this: