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Tapering Talk Should Dominate Bernanke’s Agenda – Euro Is Overvalued – July 10

July 10, 2013
Interaction with my Subscribers during the day…………
7:14 AM  GOLD @ $ 1254 = The expected upmove has occured. If long suggest taking profit and wait for tot to go short around $ 1256-58. $ 1265 should not surrender before New York……………
7:28 AM Hi all, I have made amajor mistake.
Please read “Euro may not surpass 1.2820-40 zones until US session”,
and Not SURPASS as posted earlier. Thanks…………………….
8:14 AM   Euro @ 1.2828 = if long book your profit around 1.2828-35 and go short. Stops 1.2890………………
 8:15 AM  GBP @ 1.4922 = If long book your profit and go short around 1.4925-35……..STOPS 1.4970
 8:16 AM   AUD @ 0.9227 = Prefer short around 0.9240-50 levels Stops 0.9290
8:16 AM   hi sir,  YEN sell here ?  Thanks
8:17 AM  JPY @ 99.96 = Sell around 99.90 Stops 99.40…………….
 8:42 AM  JPY @ 99.92 = see risk for test of 99.55-60 zones on break of 9.75-80……..On the upside break of 10030-40 is required for Yen to ease……
9:36 AM   Hold your positions as I am expecting USD to recover and make a comeback any moment…………
12:15 PM  sir gold view unchanged??
12:23 PM   pd, since it remained in a tight range between $ 1253-58, market could be trying a bit upside, but view on gold remains unchanged,
1:17 PM  JPY @ 100.36 = book your profit around 100.36-42………
2:36 PM   after fomc n brenanke will u post any message on gold or only tommorow
2:39 PM   Tomorrow pal……………
2:47 PM  Hi all,  Please note that like every year from tomorrow until end of Ramadan I will be taking early off an hour earlier.
Thank you for your support.
3:06 PM
Ok, market could be wayward, as expeced fall did not occur, there is a possibility of testing new highs before the release of of FOMC Minutes. Suggest sqauring of all positions.
Do apply Stops if you wish to hold positions.
I will see if I can make myself available at the time of release of FOMC minutes………… 

COMMENTARY

Release of minutes from FED’s June policy meeting will be one of the major event of that day that will be followed by it’s Chairmans speach in next 150 minutes, as market will be looking for further guidance about its asset purchase plan.
Foucs should soon shift to Bernanke’s speech that is expected be more or less interpretation of FOMC minutes released earlier in the day, which will largely be based on the tone on minutes. Fed language is likely to put emphasis on economy. After reasonably satisfactory US economic recovery and with such a strong payroll numbers it would not be easy fopr the FED Chairman to turn into Dovish mood.
I think this is wishful thinking of Doves caught by surprise with FED Chairman’s strong tone in favour of tapering in his last appearance to plead for delay in tapering.  Market is half prepared for Fed’s downsizing of its asset purchase plan. Any aggressive Bernanke’s tone to taper will disappoint all the big fishes unless he applies brakes that should move the market other way. 
After going through the Fed San Francisco Bank President John William’s statement, it seems that scaling down is now topping FED’s agenda. One hint that I can pick is that FED will surely taper, but will do it gradually because he is being quoted, “FED isn’t sure that the cost of its new purchase are being captured by models or even how much the asset purchase are helping the economy”, which means FED is aware that tons of money is being and unnecessary/surplus liquidity injection has its own consequences. Further if FED is really serious to conclude or reduce the pace, then why wait, fasten your seat belts and start driving the car. 
Meanwhile, yesterday Euro got another blow after Asmussen one of the ECB council member supported Draghi’s view of maintaining low interest rate for extended period of time that could be beyond 12-month period, which was later denied through statement released by ECB. This is nothing new, as such occurrence frequently happen to halt excessive moves and to maintain a balance in the market approach. We should not forget that Draghi and Asmussen are two most responsible members of ECB.
I don’t want to go into mathematical or number debate, but in real sense if we look at the parity at the time of launching time European currency, in my view, Euro is still over valued because at the time of launching European economy was in much better shape as compared to present times. My argument is based on country and corporate ratings by the rating agencies of then versus now, since then majority of the Euro-zone counties have been downgraded or are on negative watch. Then economies of  Europe was prospering, Euro-zone countries were not facing bank capitalization issues, they hardly breached deficit target neither were faced with debt problem. Today weak economies of Europe are struggling to survive and to maintain pace, they are not competitive to match market. And unemployment is mother of all the ills. So what is the fun of maintaining Euro’s current strength? China is an excellent example that does not bother about what the world has to say about its currency.  
Twitter              @asadcmka  ………………..  
GMT 3:05 – EURO @ 1.2779 = Euro may not surpass 1.2820-40 zones until US session, key level during the day is 1.2710-20, break risk for 1.2620. Upside break of 1.2895 is required for extension of rally and to gain another 100 pips.

GMT 3:12  – GBP @ 1.4867 = Break of 1.4898 is required for extension of move towards 1.4920-40 zones or beyond. Cable has support around 1.4820 & should hold this level during Asian and European session or else 1.4750.
GMT 3:17 – AUD @ 0.9151 = Aussie for the past 2-days have been struggling to break 0.9190-00 zones, failure to break would challenge 0.9105 for  possible test of 0.9055 or else 0.9240.
GMT 3:21 – JPY @ 100.97 = As long as 100.60 is held we could see another attempt towards 101.35-40, break will encourage for 101.80-85, but once breaks could see sharp move toward 102.50 or else 100.20.
GMT 3:30 – GOLD @ $ 1247.50 = We are heading for another choppy day. Until US session any up move should exhaust around $ 1252-58, as risk see for a test of $ 1235. On a broader prospective the upside level to watch will be $ 1265-70, but favor down move, as break of $ 1208 and $ 1190 will conform that gold is heading for new lows. Or else $ 1318-20
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