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Volatile Week Ahead – $ To Surge – July 1-5

June 30, 2013
Interaction with my Subscribers during the day…………
 4:16 AM   GOLD @ $ 1245 = Book your profit around $ 1245-45 anfd go Short around $ 1248-50 Stops $ 1255……..
8:01 AM   GBP @ 1.5206 = Sell Stops 1.5240
8:42 AM   GBP @ 1.5234 = OK, after the UK data Cable should hold around 1.5210 levels, but needs to claer 1.5260 for tet of 1.5280-85……..Or else 1.5185
9:53 AM    what in gold as i sell gold sl 55 ok sir
10:57 AM  GOLD @ $ 1240.50 = Suggest taking profit around $ 1238-40.50 as NYK is back……..
11:04 AM  GOLD @ $ 1237= If $ 1234-36 hold re-test of $ 1240-42 or else $ 1232
11:07 AM  New York is in US Dollar buying mood. Favourable data could see Gold & Currencies easing………………..
Do not go Long Cable around 1.5210 suggested earlier……
2:05 PM  Hi sir,  If short in EUR and GBP.. hold after USA data? Thanks
2:15 PM   Euro still needs to break 1.3005 for 1.2980. Barrier at 1.3060-65
But Cable may not surrender 1.5200-10 after possitive data……..
2:17 PM   what about gold and aud sir??
2:18 PM   GOLD @ $ 1238 = Gold has given enough opportunity to hold around $ 1234 and struggling to move beyond $ 1242-44 zones. Do not see move on the up side and coud test $ 1228-30 zones. But do apply Stops if $ 1249 breaks………..
 2:20 PM    Not in Aussies as tomorrows Rate announcement may see minor correction. However, downside in intact after and any correction would be opportunity to pick the top……………
 3:05 PM   GOLD @ $ 1245 = Suggest Squaring of Gold position around $ 1243-45t levels, as this move could extend up to $ 1250-52 zones.Should hold $ 1238-40 levels……………….
3:07 PM   Ok pals, failure to make gains could see USD easing.
Cheers until tomorrow………………. 

Last week discussion on Fed’s asset purchase program dominated the market, as various FED officials (Voting – non-Voting members) trying to share their view point/understanding with the market through speeches, which had very little role to play to ease market sentiment. When FED Chairman has already spoken on the subject of scaling down with a clear view then listening to such speeches make little or no difference, as FED’s change in its stance is obvious. One thing is quite clear that FED is happy with the current pace of US economic growth and future decision on easing will purely depend on the economic performance and not on pleading.

US economic data released so far have been quite satisfying except for the 1st quarter GDP growth that was revised down to surprising 1.8 pct from 2.4 pct, which was led by drop in consumer spending/personal consumption caused by tax factor, as US consumer spends almost over 65 pct of the money on services that had impacted the GDP causing dip.
But otherwise US economy is performing satisfactorily. Big ticket items such as airplanes, electronics and autos maintained its high growth level. Housing market has been doing remarkable well. US Initial Jobless claims constantly below 350.000 are another good sign for the US job market. So bottom line is that what is the overall consensus of FED Voting members on policy matter, which will be based on the performance of US economy and nothing else.  
Overall global market condition is quite messy and jittery after Ben Bernanke’s last press appearance and if FED decides to scale down, things are going to be worse specially in Asian zone, as Chinese already lowered its growth rate got another blow last month when its overnight lending rate surged beyond 15 pct due to extremely tight liquidity condition, as PBOC probably panelized banks involved in shadow banking transaction that I mentioned in one of my last week’s post got some respite after Chinese Central Bank injected liquidity. This has unsettled China’s stock market. Japan stock market, which is another major Asian market, is still volatile. India too faced with deficit problem received hammering as it is prone to foreign funding. Similarly, news from developed market is not very encouraging.
With holiday mood during weekend in USA, we could be heading for an interesting week due to release of important economic data’s and BOE and ECB monetary policy announcement. Monday could set the market tone of the week with the release of Chinese, European and US PMI data. ADP and Initial jobless claims will be keenly watched to have better sense about Friday’s US Payroll and unemployment data.
I think keeping in view this week’s event, there is every possibility that US Dollar will remain in demand. Release of economic data’s from Europe will set the mood for ECB policy stance though expected to remain unchanged, but market talk about ECB considering FED type QE may add pressure on currency and positive US jobs data could give another good spin to gold and currencies, bad US data will provide opportunity to pick the top. Poor US data will only see shift in talk on tapering until next.
GOLD $ 1233 = Saw a perfect fall, hitting and extending target $ 1210 to hit the lows of $ 1180 before making comeback due to half yearly close position squaring. Gold will continue to suffer and may see more bearish spell unless jobs data comes to its rescue. China’s banking system has a huge structural problem that cannot be corrected overnight, which leaves small/medium size banks exposed. Basically to give some idea about the type of problem, one example is mis-matches of gap position, which could be long position managed though short term funding, which is why liquidity squeeze risk for default or borrowing becomes costly.
In such a situation Peoples Bank of China (Chinese Central Bank) will not do adventure buying of gold and may refrain from Fx & Gold market. India too is at the helm of FED tapering decision. Rupee is under severe pressure, which makes gold less attractive. Latest data from USA suggest sale of gold coin has dropped. So why buy a dead metal that offers no return and potential for further fall.
This week gold will remain suspect to economic data and we could see another volatile week. Bad payroll data will give opportunity to off load gold purchased at higher levels and may encourage new position taking. Hence, strategy will remain unchanged, pick top to sell.
Initially I am expecting a move towards $ 1245-50 zones and only break would encourage for test of $ 1260-65.  However, if seen selling area is around $ 1245, but needs to fall below $ 1202 for new lows.
EURO @ 1.3009 = Bias is on the downside. Should find top around 1.3095, break 1.2910 will extend losses towards 1.2850 or else 1.3150-80 before down again. Range for the week 1.2820 – 1.3180
GBP @ 1.5207 = BOE announcement on Interest rate due this week under new boss Carney that happens to be result oriented and has tilt towards Dovish sentiment. This should keep pressure on Cable. Break 1.5260-80 zones may not be possible, as push below 1.5120 will open doors for test of 1.50’s. Cable Range for the week 1.4920- 1.5290.
JPY @ 99.15 = We could see weaker tone, as JPY will be sold on up. 98.40-50 should hold for a move towards 99.80, break will encourage for 100.80 or 101.20 or else 97.60 before easing. Japanese Range for the week 97.50 – 101.80.
AUD @ 0.9132 = Aussie move will depend on announcement of RBA policy/statement, but fall looks unavoidable.  Levels to watch is 0.9260, if break could test 0.9350, but should soon exhaust. On the downside break of 0.9020 is required for test of 0.8920-50 zones. Range for the week 0.8920 – 0.9450.
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