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Despite Shutdown US Dollar Has The Edge – Oct 02

October 2, 2013

As this is  just  the  beginning of partial  US government’s  shutdown financial market  still believes  that the i ssue will  get  resolved, but  if  the  situation continues  without any positive  result the  conditions may start to deteriorate because 15-days  is  a long  period and  market  may not wait for the last day and could loose its patience earlier.

Hope the issue does not get mixed up with financial politics and is treated on merit, because the US economy that has started to respond well to the FED measure could slip back if market gets the feeler that the negotiation lacks determination and the Republicans are in no mood to compromise.
Meanwhile, activity in the US manufacturing sector in September was healthy as per the ISM data. While, data released in Germany showed worsening employment condition, which is a sign of concern for the Euro-zone that heavily depends on German growth. Recent weak numbers affirms Draghi’s concern that the European economy still needs mending and though no change in rates is expected, but ECB tone will surly be soft.
In UK too, PMI data slipped down by 0.6 to 56.7 unable to maintain its upward momentum. Today’s PMI Construction should be another important economic indicator that would provide clue about the economy, since housing plays important role growth, market may take this data seriously.
Surprisingly, gold that usually is considered as a safe haven instead got clobbered because it did not find buyers or in fear that tapering is unavoidable and healthier US ISM data gave further blow to the metal. Today’s release of ADP employment could be a big event because of uncertainty that if US payroll data will be released or not. But it is important to keep a track that any news of failure, decline or uncertain condition while negotiating could drive gold sharply upward.

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For Currencies & Gold Update

 

GMT 3:17 – GOLD @ $ 1293 = Pick top to sell around $ 1295-98 levels. Risk if $ 1304-5 breaks for $ 1315. Expecting break of $ 1285-88 zones for test of $ 1270-75 zones. Keep in mind market will remain choppy.

GMT 3:24 – EURO @ 1.3522 = Top around 1.3550, as the European currency could struggle to make bigger gains. Strong barrier is around 1.3590-00. I am looking for a test and break of  1.3402 for 1.3485, break wool encourage for 1.3466.
GMT 3:31- GBP @ 1.6174 = Cable may initially find support and hold around 1.6140, but needs to crack 1.6195-00 for 1.6230-50, which could be tough. Or else break of 1.6115-20 risk for a test of 1.6070-80 zones.
GMT  3:33 – JPY @ 97.93 = Japanese Yen looks suspicious if holds 98.50. see risk for further gains needs to test and break 97.30 for test of 96.80-90 zones. Or else 98.95.
GMT 3:36 – AUD @ 0.9373 = If fails to move beyond 0.9390-00 for 0.9420, Aussie could soon exhaust for a dip to test and break 0.9330-35 for 0.9310.
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