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ECB to maintain Dovish stance that helps lending & weak Euro – May 07

May 7, 2013

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

 6:53 AM – sir shall go long gbp at 1.5530??
6:55 AM – View unchanged……….
 6:56 AM -GOLD @ $ 1458 = Book your profit around $ 1456-58 and buy at the lows……..Cheers
 8:54 AM – sir bought gold at 1458.. where to book profit??
9:03 AM – When I ask you to take a trading position then I always give signal about the next strategy and I keep a close watch on the move. 
If you are not comfortable then get rid of your position with $ 3 profit or wait for my post. 
9:10 AM – GOLD @ $ 1462 = Book your profit around $ 1462-65…………Cheers
9:12 AM – GOLD @ $ 1464 = Sell around $ 1464-66 Stops $ 1469
10:25 AM  -EURO @ 1.3115 = Book your profit around 1.3115-20….Cheers
10:33 AM – GBP @ 1.5525 = Buying around current level is not preferred. Could test 1.5480-90 zones …………
11:14 AM – gold sell signal view unchanged n where to take profit i want to keep limit
11:15 AM – Yes, hold your sale above $ 1464 with Stops $ 1469. Wait for next signal………..
11:31 AM – sir any selling levels for euro??
11:50 AM – EURO @ 1.3120 = pd, no change in view pick top around 1.3150 to sell Euro….
12:28 PM – GOLD @ $ 1451 = OK pals, book your profit around $ 1448-51 and Enjoy………..Cheers
12:43 PM – thankyou sir .. 
sir what about aud shall go long around 1.0150 or wait??
 12:49 PM – next in gold no buying here
12:52 PM – For Aussie pick at the bottom below 1.0150 levels…………
1:00 PM – manav, did you sell gold around $ 1664 and took profit or you are chasing the price only………………
1:22 PM – sir i sold and book profit at 1450 thanks sir and waiting for your next cal 
1:26 PM – excellent I am happy for you. 
I am still waiting for levels to pick…………
1:51 PM – yes sir i book at 1450 i keep limit as u give signal if pass then good but major my order pass thank u
 2:09 PM – Great mavav, sharing with me helps to undertand your trading strategy and I feel more responsible. Thank you.
2:11 PM – GOLD @ $ 1444 = Buy around $ 1438-40 Stops on break of $ 1433-34…………
2:13 PM  – GBP @ 1.5492 = Do book your profi around 1.5480-90 zones…………..
 2:47 PM – Sir, GBP falling.. Any main reason or still can go LONG here around 1.5440-50? Thanks
2:53 PM – Moeen, 1.5440-50 is the crucial level. However, apply Stops 1.5420. The fall is correction prior to MPS…………Cheers
3:09 PM – Ok pals, Cheers until tomorrow…………………..

 

===============

After last week’s monetary policy announcement, ECB officials are talking in same wavelength suggesting that bias is towards further easing. In his speech in Rome, Mario Draghi kept his tone unchanged and picked up from where he left in Slovakia, which call give some sense about the seriousness of issue. A clear warning has been given that if funding is not provided to small businesses or the needy, ECB will not hesitate to set negative bank deposit, which means that for banks to place their funds they will have to pay charges to ECB.
The message is quite clear because ECB that normally has Hawkish approach and uses its interest rates too; effectively, which is the only weapon in its sleeves that it can use freely has been released and hence, they are left with last bullet of 25 basis point. The problem is that Europe is in deep recession as growth and job condition has reached worst condition. 
Its earlier policy of demanding stiff stance to implement austerity measure caused more damage to the region’s economy that is faced with recession, as its economy continue to contract. The problem is that as I said in my Monday’s note that rate cut will reduce the borrowing cost, but will this stance be enough to provide much needed liquidity to the businesses struggling with their overstretched balance sheets.     
I my view, there is no second thought about further rate if European economy fails to pick up and they can stretch by going extra mile by charging banks for deposit placements. The policy maker’s stance will be Dovish to encourage more bank lending, which will help European currency to weaken as Central Banks normally avoid discussing currency. Therefore, my preferred strategy in the coming weeks would be to wait and pick the top to sell Euro. 
Meanwhile, in next 60 minutes, RBA will announce its decision on interest rate. Though there is a feeling of 25 basis point rate cut due to recent declining economic trend, but with global softening approach towards interest rates, Aussie will still have a big interest differential advantage and I will not be surprised to see investors rushing to buy AUD after short dip.    

Catch me on twitter        @asadcmka          More Later……………

GMT 3:36 – GBP @ 1.5544 = Strong support around 1.5510-20 zones, only break risk for test of 1.5480-90 zones, but I still believe that Cable will not fall unless 1.5440-50 holds. On the likely to exhaust before reaching 1.56 and needs to move beyond 1.5630 for bigger gains.

GMT 3:41 – AUD @ 1.0246 = The key level to watch is 1.0205, if breaks we could see a fall towards 1.0150, but I will refrain from further selling, as 1.0120 should hold. Break of 1.0340 will once again open gates for possible test of 1.0420-40 zones in coming days.

GMT 3:51 – JPY 99.02 = Should around 98.60-80 levels for another attack towards 99.55-60 or else 98.30.

GMT 3:58 – GOLD @ $ 1466 = Gold has resistance around $ 1472 and unlikely to move beyond for a test and break of $ 1455-57 levels for more losses or else. $ 1477 before down again

GMT 3:30 = EURO @ 1.3080 = Euro could still hold 1.3040-50 zones and may not surrender 1.3010 with ease. A break of 1.3120 is needed to a test of 1.3150, but selling will be seen on the up. Downside break of support levels will encourage for a test 1.2970. 

 
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