Skip to content
Tags

, , , ,

Market Gets Breathing Space – Fed to Tapper Soon – July 11

July 11, 2013

Interaction with my Subscribers during the day…………

 

 5:38 AM  View remains unchanged, as the presure on USD is likely to ease gradually during the day………….
6:02 AM  EURO @ 1.3124 =Sell EURO around 1.3124-30. stops 1.3170……………….
t 6:44 AM  GOLD @ $ 1287.50 = If short gold watch for $ 1284-86 if fails to break I suspect we could see another move twowards $ 1295…………
 6:55 AM   EURO @ 1.3055 = Book your profit around 1.3050-55…….
7:15 AM   GBP @ 1.5070 = Book your profit around 1.5060-70. tough could dip to teat 1.5140-50………….
 7:17 AM   JPY @ 99.20 = Book profit around 99.20-30, as we seee erratic moves in JPY…………
12:23 PM   gold gold at 82 what should see next
12:25 PM   Stay away now. Let the market settle………………………
12:33 PM   Sir after data what about gold and currencies?
12:35 PM  GOLD @ $ 1287 = Risk for test of $ 1290-92, failure would see $ 1277-79
12:41 PM  Currencies is bit tight around currecnt levels as
Euro @ 1.3028 = has support around 1.3005-10, if holds could make another upside attempt towards 1.3070-80 zones or esle 1.2970
GBP around 1.5060-70 = Cable could surprise with another sharp up move, if holds support levels or esle 1.5020
 12:45 PM   sir what abt aud??
12:46 PM   AUD i = party is over…………..
12:49 PM   GBP @ 1.5085 = buy around 1.5060…
Gold buy around $ 1282  
12:50 PM   EURO @ 1.3015 = not keen due to European factor…Could dip further down…..
2:21 PM  Ok paks, thank you.   Cheers until tomorrow……………………

 

COMMENTARY

I am note sure about all the fuss and change in market sentiment as I did not find anything new. What is new about Bernanke’s statement as he said that Fed short term interest rate won’t rise. Tapering has nothing to do with interest rate hike, as both are meant for two different purpose. Tapering is necessary because Central Banks cannot print money forever, which is against all the economic norms, it is purely fiscal matter and hence, is solely government’s responsibility to take measures to correct the imbalance.

I don’t want to discuss too much on the tapering subject because it will take its own course. I do believe that there is no change in Fed strategy, because the condition attached to tapering is growth led and labour market recovery is late announcement, which is not part of FOMC minutes. Therefore, it is matter of time that when it becomes effective, this September or next March, which is not relevant. What is more important is that Fed will definitively act? What is not known is that when will Fed act? If we take a closer look, the writing is on the wall, as few of the Fed members have indicated that its asset purchase could be halted immediately, half of the Fed members thought that it would be appropriate to end asset purchase by year end and the remaining members, which is in minority were of view to continue in 2014.
Bottom line is that keep a close watch on US economic numbers, once we see continuation of strong US data market will start discussing Fed’s unwinding plan. US Treasuries will provide guideline, though differential between short maturities against long ones have narrowed after Bernanke’s speech, but do watch 10-years treasury yield that needs to comfortably fall, which I doubt, as I am expecting continuation of steepening of yield curve or wider gap between short maturity paper versus government paper of longer maturity that will indicate that market strongly believes in reversal and therefore, current move should be short lived.
Since the opinion on tapering is divided, the tug of war between Bulls and Bears will continue for sometime before market will start to realize that it is the economic performance that will count in the end. What we should also not forget is that European Zone and UK economy is in dolls drum, Brazil is struggling. Further, higher oil prices due to ongoing Egyptian unrest and summer demand for oil in USA may put pressure on oil prices that could cause damage to the struggling Asian economies. Hence, we could witness some more uncertainty until market settles down and acts on real factors.
 
Twitter              @asadcmka  ………………..  
 
 

GMT 1:55 – EURO @ 1.3078 = Believe current move is exaggerated, but trend is your friend.  I see strong resistance around 1.3150-80 zones and only only break risk for 1.3250. However, I would prefer to pick top of the range if seen for bigger fall. Break of 1.3005 will be 1st sign on weakness and break of 1.2940 will confirm the up-move was fake.
GMT 2:03 – GBP @ 1.5088 = 
Not sure if Cable’s higher level is sustainable should find top around 1.5140-80 zones, as break may see sharp up move towards 1.5250-80 zones, which is less likely to happen. Once 1.4950-70 surrenders, cable will be due for bigger fall. 

GMT 2:08 – JPY @ 99.40 = Doubt if JPY could gain beyond 98.50-80 zones and if breaks could see another attempt to test 97.80. However, looking for a move beyond 100.25 for 100.80-90. Break confirms more weakness for Japanese currency.
GMT 2:17 – AUD 0.9252 = Aussie needs to push beyond 0.9290 for 0.9350 zones, but doubt it has strength to move beyond. As break of 0.9140 see resumption of its down move.
GMT 2:26 – GOLD @ $ 1283 = Break of $ 1292-98 will open gates for a final up move towards $ 1315-25 zones. However, I am still expecting sharp sell of on any up move, as downside remains intact. Break of $ 1240-50 levels will resume golds downward journey.
 
Advertisements
Leave a Comment

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

%d bloggers like this: