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For early hint pick BEN’s word on Inflation & Jobs – June 19

June 19, 2013
Today is the big day as FED Chairman Bernanke is expected to share his views on economic performance. There are two possibilities that either FED may opt to hold and may continue with its $ 85 billion bond purchase policy or may announce shift its policy stance.
As we all know that language will be the key, if he hints that FED will/plans/decided to scale down the size of its bond purchase in the coming months could upset the Doves or unless Federal Reserves Chairman announces delay in rolling back FED’s asset purchase program or hints that it may consider reducing the size in coming months, as economic recovery needs some more time. But one thing is for sure, Bernanke will be cautious, choosy with his words, a bit diplomatic and would try to maintain a balance  in his approach to avoid excessive volatility because such announcement always have significant impact on the financial market.
I think to have quick catch or earlier grasp of FED Chairman’s view on monetary policy, try to pick his word on inflation that could be the early clue about FEDs’ intention on its MPS. Anything such as inflation under control or not a worrying sign would be Dovish, but upward revision of inflation or something like inflation likely to pick up could be Hawkish. Similarly, BEN’s word on US jobs will be of key relevance. His utterance of better job condition’s support reduction in asset amount, whereas if he demands more improvement that would signal delay. It is not necessary that he may use same language. However, anything close could be a good hint to step in early in the market.
Prior to FOMC, activity should be thin due to lack of direction and investors prefer to be on the sideline, but some trades become more active in thin trading conditions, as volumes fall, which makes market choppy. But my money will be on US Dollar, as currencies and gold should ease, Squaring before announcement is my preferred strategy.

GMT 2:57 – EURO @ 1.3386 = I am expecting Euro to top around 1.3420 for 1.3350-60. 1.3450 should hold. The bigger picture for the day is that break of 1.3480 will open gates for 1.3640 and on the downside, a fall below 1.3260-70 will encourage for a test of 1.3170.
GMT 3:10 – GOLD @ $ 1366 = Gold could show some nervousness prior to FOMC announcement and looks top heavy around $ 1370-72. See risk for a fall towards $ 1354 possible $ 1345. Or else $ 1378.
However today’s bigger picture to watch is break $ 1338 on the down side that could accelerate move towards $ 1275. Similarly on the up side break of $ 1385-90 would risk for test of $ 1425-30 zones.
GMT 3:14 – JPY @ 95.22 = Prior to data 94.70-80 should hold for another move towards 95.80-00. However, levels to watch is 94.10 and 96.50.
GMT 3:23 – GBP @ 1.5625 = Needs to clear 1.5698 for more gains or else break of 1.5540 would risk for test of 1.5485.
GMT 3:28 – AUD @ 0.9475 = Looks tricky because if Aussie holds above 0.9410 could see a break of 0.9590. On the downside, only break of 0.9350 risk for a test of 0.9270.

Twitter  for Currencies & Gold Update                @asadcmka 

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