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Is there a shift in ECB Ex Rate Policy or Pro-Active Stance to Counter FED Tapering ! July 5

July 5, 2013
Interaction with my Subscribers during the day…………
8:33 AM –  GBP @ 1.4923= Book your profit around 1.4987-93……….Cheers
 8:39 AM  –   GOLD @ $ 1237.50 = If went short book your profit around $ 1236-37.50…..Cheers
8:52 AM –   EURO @ 1.2870 = Book your profit around 1.2865-70……..Cheers
9:32 AM   –  sir main level of gold 1220 break for down ?
9:46 AM  –  Nothing more to add………….
12:31 PM  –  Buy USD………………….
12:34 PM  –  GOLD @ $ 1230 = Should not surpass $ 1240-45 for break of $ 1200. Enjoy pals…………………………
12:35 PM   –  EURO @ 1.2830 = Sold hold below 1.2860-80……
12:45 PM   –   GOLD @ 1221 = If fails to push below $ 1218 could see a test of $ 1225-27 before fall below $ 1220 occurs…………………
12:51 PM   –    “”” YOU WIN AGAIN “”””
12:52 PM   –  euro sold 1.2830 stop loss 1.2865
12:52 PM   –  euro sold 1.2830 stop loss 1.2865
12:58 PM   –  pd, that is for you to decide, I have give a a crucial levl of 1.2860-80 to watch……………
1:05 PM  –  should square position?
1:07 PM  –  We could an attempt towards 1.2850 before another fall……………
1:14 PM  –   GOLD $ 1223 = Hope you have book profit on dip and sold around $ 1226. Apply Stops if $ 1235 breaks……………..
1:40 PM   –  Euro @ 1.2830 should ease……………..
3:00 PM   –  GIOLD @ $ 1213.80 = getting support around $ 1208. You can take profit or watch for the break that should pave way for $ 1202, but break of $ 1197 is required for bigger fall………..
 3:01 PM  –  Ok pals, end of another excellent week.
Have a nice weekend……………….. 

 

Commentary……….

After clear direction from BOE & ECB, it is obvious that the two European Central Bank Banks want business. Mark Carney known for his Dovish stance on his fist appearance was straight to point that growth is his priority, he does not support higher borrowing cost policy to hinder his plan and is in no mood to raise rates this year or next year.  Similarly, on this occasion Draghi did not hesitate to opt Dovish tone, probably realizing that European currency does not face any threat. 
The line of action adopted by the two Central Bank heads could be the result of US economic recovery, which continues to gather momentum that is helping to increase economic activity and simultaneously reducing unemployment. Both UK and Europe is faced with similar situation and the economic/job condition has worsened. It is also possible that they have picked this line from Japan’s aggressiveness of extremely lose monetary policy that has started delivering result in a very short span of time.       
However, Draghi’s tilt towards his Dovish stance with aggression that interest rates will even lower for extended period of time because of the downside risk easily hints that he got the mandate from his ECB colleagues to deliver clear message about ECB’s priority. Another possibility of ECB policy change could be in anticipation of FED tapering that could cause tremor in financial market and this could ECB’s pro-active policy decision.   
 
I think they are concerned about the exchange rate because of the global policy stance that includes currency trend. China has slowed down, economies of Brazil and India too are struggling and have fallen into the pit. SNB is constantly keeping a close watch on its currency to bolster Swiss exports and with UK slowdown, which is Europe’s major partner, it leaves very little room for ECB to prosper with its prevailing stance when the economies of Europe is not responding. Disappointing release of economic data from Germany, which is below the required growth level can tell in volume about European growth prospect, which is considered Europe’s growth engine. So policy shift in easing of exchange rate could be one huge possibility, as this one subject, which is not discussed openly to discourage speculative moves, though Joan this time behave differently.
Today, probably is the biggest event of the week as all eyes will be glued towards the US job data. After watching recent US economic data’s my vote is for a higher payroll number. There is lot of tapering talk based on data, which could matter, but FED decision will not be entirely based on today’s job data announcement. I do not think that a number announcement of 100.000 or 200.000 will influence FED on its scaling down policy, such a number would only drive market sentiment. It is the overall economic performance that should count/matter and so far the economic trend looks acceptable and unless it deteriorates, FED’s intention is clear. The big question is that when will FED start reducing the its asset purchase? 
Twitter for Currencies & Gold  Updates   @asadcmka
EURO @ 1.2899 =  Prior to NFP, Euro to remain caped below 1.2935-40 for a gradual dip towards 1.2875-80 zones. However, on a broader picture on the up, 1.2990 will be the level to watch. However, after I will be watching for a break 1.2840 for deeper fall next week.
GMT 3:19 – GBP @ 1.5048 = Cable will struggle to move beyond 1.5095-00 levels if breaks 1.5075 in European session and could test 1.4990-00 levels. Downside next support is at 1.4885 and if GBP breaks resistance level it could test 1.5160.
GMT 3:23  – AUD 0.9125 = Looking good to fall and should hold below 0.9160-70 levels, break of 0.9090 will encourage for a test of 0.9040-50 or below.
GMT 3:27 – JPY 100.22 = Signs of weakness is obvious, JOY should hold above 99.80, break of 100.6-70 will encourage for push towards 101.20-40 zones. Or else 99.20-40 will be tested in the late session.
GMT 3:32 – GOLD @ $ 1245 = Gold should not surpass $ 1250-55 range and likely to fall to test $ 12350-40 levels. Risk for sharp drop towards $ 1150-75 will be possible if $ 1120 support level surrenders. On the up break of $ 1265-70 threatens for more for another $ 10-15 gains before another fall occurs.
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