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Gold to Struggle – Aussie Could Bounce Back – Aug 6

August 6, 2013

After a disappointing NFP data last week, new week started with a firm tone after the release of ISM Purchasers Managers Index showing strong growth in service sector, which is surely growing at a fast pace. The modest economic recovery is still evident indicating positive US economic performance. There could be some short hiccups for the US economy, but that should not bother.
Whereas, earlier European data showed mild growth, but lot of mending work is required for its long journey. Europe economy is brittle and risky too. Therefore, I do not see ECB policy change in short to medium term, as it may opt for Dovish approach for a longer period of of time.
Meanwhile, market is waiting for RBA announcement on interest rate in next couple of hours. A 25 basis point cut looks inevitable because of the struggling economy. But its too early to discuss another 25 basis point cut by the end of the year, which will largely depend economic performance. The worrisome factor is inflation risk that counter argument for another rate cut. But growth remains a big challenge for Australian Central Bank that depends heavily on Chinese economy , which is a worrying factor for the global economy.

GMT 1:36 – EURO @ 1.3264 = Euro is locked in a 1.3230 – 95 band and needs to break for either 1.3190 or 1.3335. In Europe bias is slightly on the upside.
GOLD @ $ 1305 = Any upside rally should exhaust around $ 1308-11 zones before New York opening and could dip to test $ 1296-98 zones. Upside break would risk for a test $ 1320, which is ideal level to sell, as break of $ 1288-90 is required for bigger fall.
GMT1.44 – GBP 1.5354 = As long as 1.5305 is protected bis is on the upside, but needs to clear 1.5398 for a move towards 1.5440-50 zones. fall and break 1.517–80 support level risks for more losses.
GMT 1.50 – JPY @ 98.04 = Failure move beyond 98.40 risks for more gains for the Japanese currency and break of 97.60 will encourage for a move towards 97.35, which can extend up to 97.10 zones.
GMT 2:00 – AUD 0.8932 = Aussie may have seen temporary bottom around 0.8840 levels and only break of this levels could see fall extending towards 0.8750 before up again. However, move beyond 0.8990 will encourage for a test of 0.9030 or test of 0.9080-90

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