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US Dollar to Remain Under Pressure – Oct 04

October 4, 2013
As the fear of shutdown and on going tussle on debt ceiling goes on, it continues to haunts market wondering that for how long this uncertainty can last. There is a growing concern that the world economies cannot afford US default though there are few signs that the deal will be concluded before the expiry. The worrisome factor is that s the day passes the risk increases. And this why global stock market and US Dollar is on decline.
While, today Bank of Japan is meeting to decide its interest rate policy, which is likely to stay put. Although BOJ has talked of increasing its inflation level but for easing though injection of liquidity does not look a possibility. Possibly after introducing consumption tax BOJ may consider adding liquidity. This means Japanese Yen could make some more gains and adopt stronger toone with occasional correction until US debt ceiling issue is settle. Announcement of reaching an agreement on debt could see sharp Yen move towards easing of Japanese currency.
While, Euro maintained its stronger tone after easing of Political tension in Italy and Draghi’s less Dovish approach. Strong Euro-zone retail data and upward revision of PMI (service) helped European currency to move higher. Further in my yesterday’s post I warned that Cable is ripe for fall and would specially suffer against crosses by naming Euro, as correction is long due.
In the absence of US payroll data announcement there is no other major data due to be release today. Germany & European producer price index due to be released today may not have big impact in the market. Couple of the FED speakers will take the podium. But in current circumstances US Dollar should be the looser due to lingering US debt crisis.

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GMT 2:53 – JPY @ 97.28 = Only break above 97.50 would challenge 97.80-90 for 98.10. However, downside risk persist, as move beyond target 96.70, would increase the probability to tease 96.50 and below briefly.

GMT 3:02 – GOLD @ $ 1315 = The trend will remain unchanged with choppy moves expected. In Asia gold will hold around $ 1310-12 levels and is not suspect unless $ 1304-06 breaks, but needs to surpass $ 1320-22 levels for $ 1327-30. If see I will not be a buyer and would prefer to pick top.
GMT 3:07 –  EURO @ 1.3626 = The gradual up move to continue as 1.3580-90 levels should hold, break of 1.3645 will pave way for a test of 1.3665-70 before minor correction occurs. Or else 1.3560.
GMT 3:13 – GBP @ 1.6170 = Cable would be heavy around 1.62 levels and any rally should not move beyond 1.6225-30 levels. Downside break of 1.6130 would encourage for a test of 1.6100-10 levels. Or else 1.6250-60 before down again.
GMT 3:16 – AUD @ 0.9435 = Aussie is likely to find support around 0.94 levels , but on the up move may exhaust around 0.9470-80 levels for another dip. Or else 0.9370-80.
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