So far it’s been an exciting week as all 12-FED voting members spoke on different occasions and spoke their heart out about monetary policy. Though Fed Vice Chairman Janet Yellen had a dovish approach like Fed Chairman Ban Bernanke, but the remaining members were Hawkish in their approach.
Interestingly, my observation is that they all were talking on the same wave length supporting lose monetary policy. They are of view that reducing unemployment is their top priority, if job condition deteriorates and inflation is manageable then accommodation will be recommended or added and if US economy continues to prosper and inflation becomes a monster they may have to go reverse their action. The message is clear that they will not act in haste. Fed voters will be keenly watching future data’s before deciding their next line of action.
China’s Q1 GDP data is out and 8.1 pct growth is quite disappointing versus 8.9 pct last quarter growth that confirms slow export growth and low domestic demand making case for easing. But in another development, a report was released yesterday by PBoC, which stated that Chinese bank lending in March jumped to Yuan 1.01 trillion ($ 160 billion) up by Yuan 332 billion, which could mean no easing and no rate cut at least in near term.
US Dollar that fell yesterday on no negative news emerging from Europe was pushed further down on mixed US economic data, as US jobless claim rose to 380.000, but narrowing of trade deficit was surprising.
Today, market should start discussing China’s slow growth, which is considered a major driving force for the global economy. If we combine the two and discuss/compare US economic growth and China’s fall, China’s slowdown is bad for Australian and European economy. This is surely positive news for US Dollar.
Gold @ $ 1674.80 = Gold may have topped for the moment and suggest selling around $ 1677-78 with STOP LOSS $ 1682. A drop below $ 1770 will encourage for $ 1667 and break of this level would confirm fall towards $ 1660. However, on the upside break $ 1688 will delay the down move.
Euro @= 1.3170= Although we may have seen Euro’s top, but I will allow another run up towards 1.3215 only on break of 1.3190-95 zone, which may not be easy to crack. I am looking for dip to 1.3140 and break below 1.3135 would encourage for 1.3105. However, break of 1.3240 will delay the down move.
GBP @ = 1.5940 = Cable should struggle to move beyond 1.5965-70, any up move should fizzle out around 1.5985’s. A break of 1.5930 would encourage for a test of 1.5910 or probably 1.5880.
US DollaR tO EaSe – GoLD to GaiN – ApR 12