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Market will Remain Nervous & Jittery – June 21

June 21, 2013

After FED Chairman’s announcement that it plans to scale down the size of its asset purchases, market will remain choppy for sometime, as normally it takes time to digest any big news. In real sense, for the financial market what else could have been bigger than this news? Bond yields have surged, stocks plunged, global currencies are under pressure, gold and silver are not finding buyers. Stability could take time.
I think the quantum is so huge that sizable part of market players were not prepared for Fed’s announcement believing that Fed may linger on as long as possible. One thing that market should not forget is that nothing is forever and everything has a expiry time. Yes, if still Fed thinks it is yet not appropriate time to taper down, it can extend the maturity period, but again every instrument has an end date.
Meanwhile, in a chaotic situation, US Dollar was the real beneficiary and Pound Sterling showed stubborn attitude after healthier retail sales data. Cable is one currency that can give surprise by maintaining strong tone and specially in crosses before once gain loosing its gloss. Whereas, Australian, Brazilian, Turkish, Indian and Asian currencies came under sever pressure, as it could not stand Fed’s decision because of fear of liquidity crunch.
However, gold, which is dead asset that offers zero return and is still unnecessarily glittering received late pounding in the absence buyers. It remains under threat of selling pressure and the bad news is that if FED tapering starts sooner than later, it will have negative impact on gold and possibly stronger US data will allow FED to end all its purchase by mid-2014 or could even be earlier. Such development should nit be ignored as it could be demise for gold holders

Twitter for Currencies & Gold           @asadcmka

GMT 2:46 – EURO @ 1.3244 = Mild push towards 1.3265-70 is possible, but needs to break for 1.3295, as I am expecting anther dip towards 1.3190 zones.
GMT 2:55 – GBP 1.5518 = Strong support around 1.5480-90 should hold for test of 1.5540-50 zones. Gains could extend up to 1.5570-80, as 1.5440-50 may not surrender easily.
GMT 3:00 – JPY @ 97.16 = Japanese currency may hold around 97.60-80 zones for gains, but needs to break 96.50-60 for 96.10 or else 98.40-50.
GMT 3:06 – AUD @ 0.9236 = Aussie is yet not out of woods and may find sellers on the rise. Though we could see minor correction and willing to give space until test of 0.9280-90 zones. Break of 0.9170 would encourage for 0.9110 or else 0.9230=40 before down again.
GMT 3:17 – GOLD @ $ 1290 = The correction is a possibility and the levels to watch is break of $ 1295 for $ 1305-08 where gold has resistance and only break would allow move towards  1320-25 zones. However, in Asia/Europe another drop towards $ 1270 is a possibility on break of $ 1282, before surging prior to NYK opening.

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