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Fx & Gold – Feb 7

February 7, 2014
Draghi has a habit of making 360 degree policy shift at a very fast pace and once again he opted for same strategy sensing that market is buffoon, which again proved to be correct . He took the lead by comforting the market at his press conference that there is no threat of deflation in Europe that helped Euro to surge sharply.
This is certainly a very strange statement, as European unemployment rate is hovering around 12 pct, as Euro region is struggling for growth and cannot survive without injection on cheap money. Though economic slide may have halted, but it is still faced with numerous problems. Current stability is at a very heavy cost and poses huge risk if artificially injected liquidity is drained out of the system. Anyhow, this is how market behaves when it wants to ignore the reality.
Meanwhile, market is waiting for today’s jobs data, which could again be dicey due to sever cold condition in USA. In my view, if Non-Payroll drop to 150.000-160.000, it may initially give shiver to the market, but Unemployment Rate anything better than 6.7 pct should balance it out next week. Similarly, better jobs  data could give a jolt to the Doves, which I am not ruling out, as jobless claims fell by 20.000 and growth in private sector was clearly on the up. Do keep a close watch on the release of data, as I am expecting significant upward revision of December numbers.
Therefore, the conclusion is that mixed data could see choppy and volatile trading conditions and market may take time to settle. However, possibly strong number will lead to discussion of FED winding of its asset purchases at a faster pace and more misery for emerging markets.
GMT 3:29 – GOLD @ $ 1260 = Expecting gold to hold around $ 1254 and $ 1268 band prior to data and should be picked up on dip. However, on broader note on the downside a fall below $ 1235 will open gates for more losses. While on the up, break of $ 1275-80 zones is required for move to extend towards $ 1288-90 levels before exhausting.

GMT 3:36 – EURO @ 1.3591 = Prior Euro may hold around 1.3560-70 zones for a test of 1.3620-30 levels. Break of support levels is required for a test of 1.3520, but may find buyers on the up move above 1.3650 encourage for a test of 1.3690-00 zones.
GMT 3:39 – GBP @ 1.6323 = Cable is locked in range an may hold until it get a clear direction. break of 1.6260-70 support level is required for a test o 1.6205 levels and in the up move beyond 1.6350 will open doors for a test of 1.6375-90 zones.
GMT 3:43 – JPY @ 101.96 = Breakout of 101.50 and 102.50 is required for next direction.
GMT 3:46 – AUD @ 08942 = We have seen the top, as Aussie has almost hit the target 0.8990 and now looking good for a drop towards 0.8860-70 zones. should stay below 0.8998 or else test of 0.9020-40 cannot be ruled out.

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

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