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Euro & Aussie to ease, Yen could give Surprise – Sept 12

September 12, 2013

It has been another quite session in terms of any major economic data release, as market has been trying to determine the next coming move. But in the foreign exchange market the day has been dominated by Pound Sterling and commodity currencies, as during the week US Dollar’s upside rally gradually faded will the cooling down of Syrian tension.

Recently we have witnessed consistent economic progress in UK, yesterdays drop in unemployment rate combined with few claims by the jobless in Britain confirmed economic gains, suggesting that if the trend continues then Bank of England may have to re-consider rate hike earlier that negates Dovish BOE Governor Carney’s forward guidance plan, as he is targeting unemployment rate of below 7 pct to hike rates. Pound Sterling has hit 7-month high on strong job numbers. Continuation of positive data could push British Pound to new highs, but the economy still has many challenges ahead. However, Pound is still a good buy on dips and GBP should remain attractive against Euro and Japanese Yen.
Today in Europe, ECB monthly report and Industrial production may give some kind of feeler about the progress in the region because overall recovery is yet not up to the mark. Growth in France, regions second largest economy is still pulling the strings. Any news negative from Italy that goes against  Berlusconi still poses a threat to the Italian government.
In US session weekly jobless claims data cannot be ignored, which needs to be sharply low to to bring some life in the market, as economic data has not been the main driver of the market this week.

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GMT 3:16 – JPY @ 99.53 = It is important for Yen to move beyond 99.80-90 levels or else risk is that break of 99.10-20 levels could see Yen gains extending towards 98.50 or else another test of 100.20.

GMT 3:23 – EURO @ 1.3321 = Top is around 1.3325-35 levels and Euro should not surpass1.3375. Break  of 1.3270-80 will encourage for a move towards 1.3220-40 zones.
GMT 3:331- AUD @ 0.9265 = I think we already seen the top of my weekly given range of around 0.9320. Now any Aussie up move should be opportunity to sell as AUD should cap below 0.9295 for a test and break of 0.9230 for a visit to 0.9205 zones. Beyond or around 0.9320 will again be a good selling levels, which should not be seen.
GMT 3:38 – GBP @ 1.5724 = The tone will remain strong but upside may not be easy to penetrate beyond 1.5875. However, 1.57760-70 should hold. either pick top to sell or pick bottom on dip. With stops 1.5910 and 1.5630 respectively.
GMT 3:44 – GOLD @ $ 1359 = I do not see fall below $ 1349-50 levels until New York and hence, gold should make minor recovery to test $ 1363-65 levels. Only break would see gains extending towards $ 1368-70, which is less likely to happen. However, fall below $ 1345 will encourage for $ 1335.
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