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Euro Could Take Severe Bashing – May 03

May 3, 2013

Interaction with my Subscribers during the day……………

 

 8:34 AM – after data gbp should buy ?
 8:39 AM  -Yes , View unchanged. Cable is up…….Pick bottom
9:17 AM – EURO @ 1.3135 = Sell Euro around 1.3135-50. Stops 1.3190……
 9:41 AM – gold sir what to do
9:45 AM – You did get the opportunity to book profit once during early Europe. Hope you did buy again on dip, do book your profit around $ 1478-80 and if breaks pick top around $ 1482-85 levls to sell before data…………………..
 10:00 AM – GOILD @ $ 1478 = could test $ 1481-83 levels……..
10:14 AM – GOLD @ $ 1483 = Book your profit and go short around $ 1485-88….
10:14 AM – GOLD @ $ 1483 = Book your profit and go short around $ 1485-88….
10:27 AM – Selling aroun d $ 1488-90 looks Good Stops $ 1495…..
10:34 AM = sir, If short in Euro and long in Gbp where to TP? Thanks
10:39 AM – sold at 1487 where should book profit or wait for data ?
10:40 AM – moeen, I am good at crosses. But this is good position to carry for some time……………..
10:42 AM – For the moment support $ 1478-80 is key if holds could make another upside attempt………..
12:31 PM – Hold your Euro sale @ 1.3135….Cheers
If holding gold $ 1457 is teh level if breaks $ 1440-45
12:33 PM – SHORTs of YEN sir ?\
 12:35 PM – Yen is now close to my target 99.15…..I would buy beyond 99.50
 12:35 PM – EURO @ 1.3063 = Book your profit around 1.3040-45………..
12:38 PM – GOLD @ $ 1460 = Book your profit around $ 1458-60…..Cheers
12:38 PM – JPY @ 99.13 = book your profit. Traget met…cheers
12:39 PM – GBP @ 1.5488 = Should hold around 1.5460-70………..
12:46 PM – sir booked at 1461 where to go short again
12:47 PM – GOLD @ $ 146.50 = Pick your level to sell. On the up $ 1470-72 should hold. $ 1475 is the key
1:04 PM – view on australia ?
1:06 PM – wastage of time at this hour…………..
 1:19 PM – sir gold sold at 1468 stop loss 1476 is it ok
1:41 PM – Suspect we could see a test of $ 1472-74…………..
1:42 PM – GBP @ 1.5580 = book your profit around 1.5580-90…cheers
1:48 PM -sir euro at 1.3116 should go short agian?
2:03 PM – sir i cleared at 1465 shoud sell 1472 or 1474?
2:06 PM – EURO @ 1.3120 = prefer selling around 1.3135-40. Stops 1.3185
2:21 PM – GOLD @ $ 1473 = Prefer to wait for $ 1475…….
 2:48 PM – sir sold at 1473 where should book profit 
2:51 PM – pd, $ 1457 is the crucial level to watch, break will certainly add pressure. So watch and if not comfortable book your profit around $ 1461-63 level
3:04 PM – OK pals, another great week. Enjoy your weekend…………………..Cheers

 

Finally, ECB left with no choice and had to slash its rates by 50 basis point. I had already mentioned in my weekly (Monday) outlook note that price stability is the key responsibility of European Central Bank and it does not have too many tools like FED or BOE. Hence, it is difficult to stretch extra mile and offer stimulus package because Euro region rules are extremely tough and to amend rules ECB will require permission from their respective governments.
But, Draghi in desperation has signaled that he still has a card in his sleeves and if required, he will lower the deposit rate, which is currently at Zero pct. The means that he has indicated that market should be prepared for negative rate that will compel banks lend money or in other words banks should be ready to expand their balance sheets. Today’s release of European Commission Economic Growth Forecast Report will tell us more about the economic performance in the region in coming days.
This is quite a sensible move by ECB and I support negative interest rate policy if banks does not lend money to small or medium size business without which neither jobs will be created nor revenue will be collected. The biggest advantage of rate cut is that it will substantially reduce cost of funds because European debt is in quite a few trillions and funding high cost of borrowing without increase in revenue collection is disaster for the future generation. This ECB action should break the backbone of banks sitting on liquidity and not willing to expand its balance sheet. Neither, this is good news for European currency Bulls, as currency will come under pressure if it offer no return.
After the monetary policy announcement by FED and ECB, focus will shift towards US payroll data. Interestingly yesterday’s jobless claim has given a glimmer of hope that payroll number could be better than market expectation. I will not be surprised if previous number is revised upwards. As I have been saying for quite sometime that the cause of poor US economic data is due to impact of sequester and tax adjustments I am hoping for improved economic number in coming months. However, poor data will give opportunity to sell USD and sold weakness should be temporary.

Catch me on twitter        @asadcmka          for Latest Updates………..

GMT 3:15 – EURO @ 1.3074 = We could see support 1.3030-40 holding until payroll data with cap around 1.3110, unless European Commission Report paints a bleak picture of the economy. Bad report could see a fall extending towards 1.2970-80 zones. Meanwhile, see risk that break of 1.2940 could extend losses. On the up Euro should get stiff resistance around 1.3180 levels and needs to break for more gains.
GMT 3:21 – GBP @ 1.5528 = Cable should find support and buying interest around 1.5480-90 levels and 1.5450 should hold for 1.5575, as 1.5625 is the key resistance levels. However, break of support could extend fall towards 1.5410.
GMT 3:25 – JPY 97.98 = May find hard to break 97.40 unless payroll data is weak. Strong job numbers could see a push towards 98.60-80 zones, break could encourage for 99.15. Or else 97.10.
GMT 3:27 – AUD @ 1.0274 = Gradually inching up but resistance is at 1.0320 should hold below or else 1.0340. Support is at 1.0220.
GMT 3:32 – GOLD @ $ 1475 = ECB policy stance supporting gold at the moment, as next move depend on payroll. For now $ 1468-70 should hold for possible test and break of $ 1480 and rally could extend up to $ 1483-85. However, move above $ 1490 will give space for more gains. However, I am still looking for this short rally to exhaust needs to fall below $ 1460 for resumption of downtrend.

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