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FED to Scale Down, Sooner or Later Does not Matter – June 27

June 27, 2013
Market is still trying to assess the timing, seriousness and urgency of Fed’s tapering plan. News from developing countries is not very encouraging for the global economy. China is still a worrisome factor as it is not easy to gather economic data information with ease. Though Europe is in its recovery path and is gradually overcoming the recessionary phase, but this does not guarantee Euro zone recovery, which remains a suspect due to  uncountable factors. ECB may still have to go for further easing therapy to check its temperature if Euro regions economy is unable gather momentum at a faster pace.
 
While, surprisingly huge downward revision of US 1st quarter GDP growth may not be good news, but had minor impact on the market, as the data reflects past performance of the economy, which everyone knew was not very encouraging due to tax factor and impact of sequester. Market probably realized that Bernanke may have some idea about the coming GDP data and despite that he looked confident. This is why we did not see any nervousness in the market. 
 
Recent release of US economic data should give better idea about the market. I will put more weight to today’s release of initial jobless claims numbers that may give more sense about job condition, which is Fed’s top priority. However, one thing is for sure that FED is in firm mood to reduce down the asset purchase amount, so what difference does it make weather it starts unwinding in next 3 months or in after six-month, the trend is clear, which will largely depend upon the economic performance. Watch for the Fed official speeches that will continue to confuse the market, but it not the speeches that will determine FED’s next line of action its the US economic performance that will matter most.

 

Twitter for Currencies & Gold     @asadcmka

 

GMT 2:50 – EURO @ 1.3028 = Euro may hold around 1.3010 levels for a gradual up move towards 1.3065-80, but needs to break for 1.3115 or else 1.2965.
GMT 3:04 – JPY @ 97.71 = Japanese Yen  could have a weaker bias today and should hold around 97.40 for a move towards 98.30-35, break will encourage for a test of 98.70-80 levels or else 97.10.
GMT  3:08 – GBP @ 1.5339 = May exhaust around 1.5370-90 zones and only break will encourage for 1.5325. However on the downside break of 1.5270 is required for a test of 1.5210.
GMT  3:13 – AUD @ 0.9329 = Likely to hold above 0.9280 for a test of 0.9375-80, break will encourage for test of 0.9415-20 levels. or else 0.9250.
GMT 3:22 – GOLD @ $ 1237 = Gold is tricky today, as possible break of $ 1247 could see a test of $ 1255-57 zones. However, downside is intact, if fails to break $ 1247 selling could be seen, as fall below $ 1222 will encourage for test of $ 1217.

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