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Wiedmann Rings Alarm Bell – EURO – GBP & GOLD to ease YEN to Gain – April 18

April 18, 2013

All is certainly not well in Europe and the struggle will remain a challenge over next decade. This was not the exact language used by the European official, but this is what BUBA President meant. Draghi has been saying this on most of the occasions, the difference is that unlike Mr. Draghi who always sounded more confident posing as if he expects recovery soon, the German officials worry is genuine and close to reality that the Euro regions problem is not going to be over in short term to medium term and may not be resolved next year or even in 5 years and would stay for longer period , its all about interpretation, but this is the real truth that Europe is in shambles.

I think Europe will soon come into limelight and most recent downgrading of Germany to “A” from “A Plus” by Egan-Jones is a bad omen. Europe is extremely brittle and suspect to any negative news, I think after Weidmann’s warning on possibility of a rate cut, all eyes will be on release of European economic data’s, which is alarming because Germany that was doing OK have started to crack and with German election nearly 5-months away, Europe may experience some turbulent times.

Meanwhile, FED Beige Book may have provided some relief to the officials after showing positive signs, as reports hinting that in FED’s all 12-districts, consumers are spending and job condition has not worsened.  I think, US economy will soon once again be back on track, as the impact of sequester an tax will gradually fade.

Meanwhile, gold volatility to continue and this mornings fall is not a surprise to me because after positive notes provided by FED’s 12-districts on economy I see no reason for gold to firm. Ideally tops should be picked to sell unless there is enough evidence that the US economic recovery will be short lived, as positive US economic data will increase the probability of withdrawal/unwinding of Fed’s ongoing asset purchase plan.

GMT 3:04  – EURO @ 1.3046 = Euro should find top around 1.3070-80 zones, as break of 1.2970-80 is required for a drop to 1.2935. Move beyond 1.3120 would delay the down move.
GMT 3;12 – GBP @ 1.5248 = Cable may struggle to move beyond 1.5270-80 zones before data and could test 1.5205-10 zones. Break risk for a fall extending towards 1.5175. Or else 1.5315-20 before down again. 
GMT 3:18 – JPY @ 98.12 = I am expecting a very similar move that we saw yesterday. 98.40-50 should be tough to crack and break of 97.60 would encourage for a test 97.10-20 levels. A move beyond 98.90 will encourage for another attempt towards 100.
GMT 3:21 – AUD @ 1.0305 = With strong protection around 1.0240-50, we could see a move towards 1.0345-50 and would prefer to buy around 1.0270-80.
GMT 3:26 – GOLD @ $ 1363 = We could be heading for another choppy day as gold should hold below $ 1377-82 levels for another downside attempt towards $ 1350-50, break could extend drop towards $ 1335-40, as $ 1310 remains a key level on the downside and only break of this level break may trigger sharp fall.

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