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Did Bernanke warned Gold Bulls by hinting that Ultra loose monetary policy is not forever ! July 19

July 19, 2013

Interaction with my Subscribers during the day…………

 

10:58 AM   sir should go short euro at 1.3115 now as it breaks 1.3105??
11:04 AM    I am not convinced that we see 1.3080-90 first, as Euro could still inch up towards 1.3140-50……….
11:13 AM   GBP @ 1.5277 = Book yur profit around 1.6277-85………….Cheers
11:13 AM   arouud 1.5277-85………….
11:38 AM  sir should go for short euro ?
11:40 AM  1.3135 or wait for up?
11:41 AM    View on Euro is unchanged………….
 11:44 AM   sir morning view still posibilty of euro could top 1.3180
11:49 AM    My friend, when we have discussed Euro levels in afternoon. How can morning view be vaild.
Morning view is base for the day but there are so many factors that takes place between morning and evening and I have adjust accordingly.
Gold behaviour is also totally different in NYK
Keep note of my tips. this will help you in future
I have sad this several times…………..
11:57 AM   One more think that I would like add is that if I do make a post then normally view is valid………..
12:05 PM  about gold
12:07 PM   Well, no change in view, possibke break of $ 1283-84 can trigger sharp fall…………….
 2:06 PM   GOLD @ $ 1296.50 = The up move has occured, book your proft. Pick to to sel. STOPs $ 1304……….
2:12 PM  Euro likley to remain in 1.3080-1.3150 band. Only break will see 25-30 pip move either way.
Cable heavy around 1.5285-90.
Gold view unchanged……….
AUD & JPY view unchanged………
Cheers until tomorrow……………….

 

COMMENTARY

 

Finally Bernanke phobia will be over and market should start concentrating on economic factors. In his 2nd day appearance in front of the Senate committee, Fed Chairman played smart to cool market sentiment by providing a clear message that despite unemployment rate falling below 6.5 pct, FED will hold interest rates near Zero pct for a longer period and hinting that tapering factor will largely depend on economic recovery.


My reading is that the timing of announcement clearly suggest that at current growth pace, FED may not hesitate to start its unwinding program. Fed is well aware about the poor 2nd quarter GDP growth, which is estimated to be around or below 1pct due to slow growth caused by known fiscal factors (Sequester & Tax) that will be announced on July 31 and this information should be priced in. But if GDP number shows improved growth, it will help tapering sentiment. Importantly, prior to September meeting, there are 2-jobs data announcement that should provide better sense about the economy.

Bernanke made very interesting comment on gold, he said that no one understand gold prices and that he doesn’t pretend to understand them either. On the question about fall in prices, he said that it could mean that people have more confidence in outlook, he was surely referring to economy. Once again I am connecting his statement with tapering, as he could be hinting that FED will reduce its asset purchase amount, as economy gets better and this could be sort of early warning to Gold Bulls.
What everyone is forgetting is that FED is aggressively buying bonds since 2008 and the size of its balance sheet has grown by over three times to nearly USD 3.5 trillion and @ USD 85 billion per month Fed’s bond buying adventurism amounts to USD 1 trillion annually. More importantly there is a cost factor and ultra loose monetary has its implications on the economy. So there has to be an end.
Meanwhile, Moody’s upgraded US ratings to stable from negative is positive. On the data front its more or less flat day after yesterday’s US initial jobless claims showing better job conditions. Overall despite Dovish behavior by the FED Chairman did not weaken US Dollar, which means USD has found support and should gradually makes gains, as release of economic data should be the driving force behind USD next move.

Twitter    @asadcmka

GMT 3:42  – EURO @ 1.3137 = We could be on the last up leg towards 1.3190, if 1.3105 holds. However, only break may encourage for 1.3230, which is not a favored move as, Euro should exhaust on the rise. Break of 1.3105 levels will encourage for 1.3065.

GMT 3:50 – JPY @ 99.95 = Its once gain the NIKKEI factor due to weekend Japanese election helping Yen to make gains. 99.40 is the level to watch that should hold for resumption of Yen weakness or else 98.90. I am expecting re-test and break of 100.50 for 100.98. Break would confirm more losses for Yen.
GMT 4:06 – GBP @ 1.5228 = I am expecting 1.5190-00 to hold for a test of 1.5270-75 beyond that cable is a, or else  1.5155-60.
GMT 4:07 – AUD @ 0.9184 = Aussie looks heavy around 0.9220-40, break of 0.9160 would encourage for a test of 0.9135.
GMT 4:16 – GOLD @ $ 1293 = Gold could test $ 1295-98 zones and is likely to exhaust for a drop toward 4 1285, break will encourage for test of $ 1275-78 levels. Else on the up watch for $ 1308

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