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Mixed Batch of US data could be Temporary – June 4

June 4, 2013
ISM Manufacturing plunging to 4-year low, first contraction since November may be bad news for the economy. The worrying part should be drop in production and new orders, but let us not forget that earlier number in April was 50.7, which was close to benchmark figure of 50 and below this mark is considered contraction of economy. We still have to give space because this should not be considered enough evidence that US economy is contracting. Manufacturing is sector is the key economy driver, but then what about the improvement in housing and consumer market during all these months. Recently, we have been getting mixed batch of US data’s that should have slowed the growth momentum, anyhow this is just one reading. Markit’s manufacturing purchase managers index  rose to 52.3, which was better than expectation. So its all square as of now. By the way, ADP Employment, ISM non-manufacturing and FED Beige Book will set the mood prior to Jobs data that should provide next direction.  
 
US Dollar suffered due to poor ISM Manufacturing data, as compared to better PMI announcement from Europe, but European economic indicators suggest that the region still has long way to go for economic recovery, job condition is pathetic and minor recovery is not the solution to the problem. Germans are worried about economic recovery and any slowdown in USA and Asia does not bode well for them. 
 
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GMT 2:29 – GBP @ 1.5318 = 1.5280-85 levels should hold for another up move towards 1.5360-70 zones, the rally may potentially extend gains to around 1.5395-00. However, a fall below 1.5225 would increase risk for more losses.
GMT 3:04 – JPY 99.56 = Needs to move beyond 100.20 for 100.80. See risk for a test of 99.05. Break will encourage for a test of 98.65-70 zones.
GMT 3:13 = AUD @ 0.9711 = Aussie has hit my weekly target of 0.9770 and now fate will depend on RBA announcement. Watch 0.9620-40 levels if hold we could see another attack towards 0.9880-90 levels this week. Or else a move towards 0.9420 would be a possibility in next 2-days.
GMT 3:23 – GOLD @ $ 1411 = Gold has good support around $ 1403-05 levels and needs to break for $ 1395. However, see risk for a test of $ 1420-22 zones, as gold gains could possibly stretch up to $ 1425-28 zones. If seen prefer selling for a drop.
GMT 2:50 EURO @ 1.3060 = Euro should hold around 1.3020-30 levels for up move, but I will remain cautious around 1.3110-20 levels, though there is minor risk for a spike towards 1.3145-50 zones. I would prefer to pick the top with Stops 1.3190. Break below 1.2970 would  confirm trading band 1.2880-.13080 until Thursday’s ECP policy announcement.
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