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When to pause is FED’s prerogative and not market choice ! Aug 7

August 7, 2013

In my weekly outlook I wrote that FED officials would continue to confuse the market with their statements on FED’s asset purchase plan and this what Charles Evans and Dennis Lockhart have exactly done. Both seemed to be quite happy with economic progress, which I consider another signal to the market to get ready before it occurs. The debate about the timing to pause is irrelevant, as it is Fed’s prerogative and not the market choice.
Market is surely confused and bias too, as they do not look happy with the improved economic numbers, no one is talking about the excellent start to the week, as US ISM number surged and June Trade gap fell to 3 1/2 year low to USD 34.2 billion, which means possibility of upward revision of 2nd quarter GDP is bright. The reason of selfish approach is obvious, as better economic condition does not favour banks, financial institutions, borrowers and speculators because with Fed scaling back they all will be deprived of cheap money.
There is no major economic event today expect for BOE quarterly report and it’s Chairman’s address to the UK Parliament, which means US Dollar could come on demand and should be bought on dips. Gold could receive further pounding and Cable could come under pressure unless BOE inflation report show worrying sign of inflation because trend suggest that Mark Carney too will speak on the subject of forward guidance and if he does so he may have to adopt defensive approach that should suits the environment. 

Twitter   @asadcmka

GMT 2:03 – EURO @ 1.3294 = Euro could trade in a narrow range in Asian and European session, as it needs to clear for 1.3315 for 1.3335. See possibility that failure to move beyond 1st barrier could see a drop towards 1.3255-60 before up again. If dips earlier earlier then Euro is a buy with Stops around 1.3215-20 for another upside attempt.
GMT 2:10 – GBP @ 1.5324 = Cable has strong resistance around 1.5370-80, unless break risk is on the downside toward 1.5250-55. Fall below 1.5205 will risk for another bearish spell, or else if upside break occurs watch 1.5445.
GMT 2:17 – JPY @ 97.40 = Japanese currency needs to break 97.80 for 98.40 where is has strong support, which looks difficult, Failure would see more gains for the Japanese currency and is likely to hit 96.80.
GMT 2:21  – AUD @ 0.8958 = Aussie has support around 0.8915-20, should hold for test and break of 0.9010-20 zones for 0.9050. Or else 0.8870-80.
GMT 2:26 – GOLD @ $ 1278 = All indicators are pointing towards more losses. Should hold below $ 1285, break of $ 1268-80 levels will encourage for a test of $ 1262-64, as risk more losses will increase id $ 1250 surrenders. Upside break suggest test of $ 1290-92 zones before down again.  

 

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