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Fed Official Keeps Market Guessing – Aug 15

August 15, 2013
After lot of hard work and injection of liquidity by the Central Banks the two-economies of USA and Europe have started to respond. The big moves that is visible is the US unemployment rate falling to 7.4 pct and now Europe coming out of recession after a long struggle to avoid collapse and yesterday’s Eurozone GDP Q2 of 2013 better than expectation is surely encouraging.
The real challenge for US financial managers would be when FED decides to pause before its next move to hike interest rates that may still take time. But Europe is not faced with a similar situation, as has long list of things to be done. 17- European Union countries that uses Euro currency is faced with difficult situation with high unemployment rate of 12.1 pct, fiscal imbalance and challenges faced by regions banking sector are some of the burning issue that can ignite fire anytime and therefore, Europe is still faced with a high risk situation.
Market is still undecided about FED’s intention and would be focusing on Fed’s Bullard statement for guidance, as yesterday he suggested to for a wait and see approach, which means economic data will be deciding factor. Today all eyes will be on the release of US economic data with a close watch on CPI data.
Meanwhile, Pound Sterling was the real beneficiary after the release of BOE minutes that was taken positively in the sense that it was not too Dovish this time. Drop in unemployment claim also mattered as it should help in easing pressure on jobs, as BOE is targeting unemployment rate at 7 pct that was in line of expectation of 7.8 pct. Hence, buying on dips may could be seen. Strong retail sales data should add to the current sentiment.
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GMT  GMT 3:04  – GOLD @ $ 1340 = The crucial level is $ 1318-20 for resumption of fall on break of $ 1327. However, we could see gold holding above $ 1333-35 levels for a possible test of $ 1346-50. Break risk for test of $ 1358-60 zones.
GMT 3:16 – EURO @ 1.3295 = Euro could inch up towards 1.3325-30 zones, but needs to break for a test of 1.3355-70 area. Or else, on the downside clear break of 1.3250-55 will pave way for 1.3220.
GMT 3:21  – GBP @ 1.5522 = Cable is buy around 1.5480-90 zones, with Stops on break of 1.5450. Break of 1.5555 could see a move towards 1.5580-90, but beyond that I would refrain from further buying.
GMT 3:26 – JPY @ 97.65 = Yen should find resistance around 97.40-50 and is failing to make further gains would encourage for a quick move towards 97.90-00 zones or else 97.20.
GMT 3:30 – AUD @ 0.9170 = Aussie could hold around 0.9130-40 zones for a move and break of 0.9190-00 levels for possible test of 0.9230-40 or else. 0.9110.

 

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