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Fx & Gold – Feb 4

February 4, 2014
Market is jittery and nervous because of weak US ISM numbers signalling weak manufacturing sector. Interestingly, FED may not be as worried as the market that has a different benchmark. This is a funny thinking but a reality, as traders do follow such trend. The question is that should one really care that 51,3 pct is a worrisome number, since above 50 is considered a good  ISM data or it is reflating true picture of US economy.
It is once gain a false alarm and far from reality. Bond market that has reacted by sharp surge in bond yields is a temporary phenomena, as market has a short memory that FED is in tapering process. This is ideal opportunity for holders of US bond to take profit and to try short because current strength will be short lived, but it will give more comfort to FED to unwind at a faster pace.
The weakness in stock market is all over the globe because of many unfavorable economic factors. Chinese manufacturing sector is once again disappointing that fell to 50.5 versus 51 in December further confirming slowdown. Euro-zone minus Germany too is not doing enough to support global economy due to weak economic condition. So it is all inter-connected and the fear is having contagion effect.
 
GMT 3:20 – GOLD @ $ 1256.50 = In my weekly outlook I have clearly stated that that any upside should potentially exhaust around $ 1265-70 zones and it did. Basically it was opportunity to sell due to was US stock market that gave gold push.
In Asia gold may hold  around $ 1250-52 levels, but unless move beyond $ 1262-65 zones today risk is for a drop and could test $ 1245-48 zones later in the day.

GMT 3:26 – EURO @ 1.3510 = I do not see too much room for upside move should hold around 1.3535-40 zones or else 1.3575. However, unless 1.3460-70 surrenders for downside, Euro will trade within the band.
GMT 3:30 – GBP @ 1.6301 = Though Cable has a weaker tone, but should find support around 1.6250-60 or else deeper fall is possible. However, real challenge will be to surpass 1.6375-90 zones, which could be tough and may exhaust around 1.6350.
GMT 3:33: – JPY @ 101.30 = JPY made perfect gain getting close to target 100.80-90, which may hold or else 100.50 and needs to move beyond 101.90 for more correction.
GMT 3:36 AUD @ 0,8830 = Needs to move beyond 0.8880-90 zones for a test of 08920-40 levels. However, selling interest should be see on up move and soon could re-enter 0.8770-80 zones.

Dec 11 -Gold 2014 Target  Break of $ 1000 for $ 800.

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More Later…………………..

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