PiCk tOp To seLL EuRo & GoLD – maY 14-18

Global economic data and uncertain political condition in Europe dominated the market. Poor economic data from all over the world is a big cause of worry, as recessionary condition is spilling all over globe.

Europe faces a new situation as voters are opting for anti-austerity leaders, which is a very disturbing trend for the 17- nation European policy makers fearing anti-austerity sentiment could lead to huge unrest in the financial market.

Greece making last-ditch effort to share power could be heading for another election in June that could prove to be a very costly affair for the Euro-zone region, failure to form government certainly means big blow to the European financial market.

German government that lost last week’s state election is paying the price of Greece bailout and Sunday’s rejection by the German voters in a key state election will give big blow to the ruling party as North-Rhine (NRW) is a populous state with huge size of economy and this will provide Germany’s future election trend.

In another major development derivative loses by a London base credit trader of USD 2 billion by J. P. Morgan Chase that can surge by another Billion Dollar has once again raised the question about the real health of the banking sector, as the credibility factor of all monitoring agencies has also come in to question.

Some of the questions that require attention are that do the banks have proper and adequate risk management? Are the banks once again violating accounting rules?  In March 2012, regulators gave clean bill of health to JPM-Chase based on Capital requirement, which is FED’s preference to prove banks health. So the big question that should be raised is that is the current pattern or formula of determining the stress test result good enough to counter banks riskiest business?

It is worth noting that FED Chairman Ben Bernanke in his recent speeches given in last 20-days spoke mostly about risk and urgency for banking sector reforms, which is now understandable that why he was so concern about the risk to banking sector.

Therefore, this week market will surely remain nervous and banking stocks of top global banks may come under pressure unless there is more clarity. Smaller banks may not be faced with similar situation.

But overall traders/investor’s focus will once again shift towards political and financial developments that are taking place in Europe. Global economic data will be keenly watched after last week’s disappointing economic number from all over the globe.  

Another area of focus will be unrest in the Spanish banking system, though Spanish government has announced Euro 15 billion reform package to raise provision on loan portfolio, to increase the provision through huge injection of funds. Spain’s bank that sucked in huge LTRO money may require another injection of Euro 25 billion plus to buy more time.


China’s economy that until last quarter of 2011 was growing at a healthy rate has joined the global bandwagon, as the pace of growth slowed down. China’s economic slowdown is caused by weaker European economic condition, which offers no respite to the global economy.

Therefore, effective May 18, Peoples Bank of China has decided to lower its bank reserve rate by 0.50 basis point, for 3rd time since December 2011, to 20 pct for mostly large banks. Estimates are that 50 basis point cut will provide roughly USD 60 billion cash money

However, another worrying factor brewing up is the statement by the Head of Chinese Investment Corporation (CIC). He said that Chinese Sovereign Wealth fund that has portfolio of over USD 400 billion has decided not to buy European government debt, which is negative news for European currency and bond.

Some of the important economic data due to be announced next week are on Monday, there are few European data announcement, as market will focus on Industrial Production to gauge the inflation pressure in the Euro-zone and is expected 0.4 pct. On Tuesday announcement of German ZEW, a key indicator will provide clearer picture about the German economy, which is considered engine of European economy. Expected ZEW growth figure is 19. This reading is compiled from survey by over 300 analysts. A higher number will give boost to the confidence.  On the same day US will be announcing some of the major economic number such as CPI, Retail sales and New York Empire State Manufacturing Index, which will be keenly watched to note if the US economy is picking up. On Wednesday, European data’s will dominate the market. On Thursday, there is no major data announcement and on Friday, Germany will release its key Producer Price Index data.   



GOLD @ $ 1579 = It turned out to be great week as Gold comfortable broke $ 1600 to hit my target $ 1585. This week Chinese Central Bank has announced lowering of its bank reserve rate by 50 basis point that would provide around $ 60 billion of liquidity to its financial market. Chinese injection will not help gold buying, but Gold Bulls may show some optimism, which will help gold to make small correction and provide opportunity to the Bears to short the Yellow metal, as worsening European political and financial condition will encourage US Dollar buying.

We could initially see small correction and break of $ 1584 may see penetration of $ 1590 for $ 1598, which gold could take a breather. But break of $ 1608 should not happen, which could see attack at $ 1620 levels.

However, I will wait to pick the top to sell gold, which has strong support around $ 1570-73 zones. Break here could see dip and fall below $ 562 confirms a move towards $ 1546-50 area.  

EURO @ 1.2917 =  Euro saw a perfect drop to hit target 1.2905, but failed to dip beyond. This week Euro to remain under pressure, but small correction cannot be ruled out. A break of 1.2865 is required for test of 1.2802 or else Euro could surge to test 1.2990 and break here would encourage for 1.3080. However, on dip failure hold support level of 1.2802 could see sharp selloff of Euro. Ranges for the week 1.2665 – 1.3080

GBP @ 1.6069 = Saw a prefect hit of my last week’s target of 1.6065. Cable has next big support around 1.5990-10 zones. If surrenders, GBP could drop another 100, pips. However, upside break of 1.6130 would encourage for a test of 1.6190’s. Ranges for the week 1.5910 - 1.6220 

YEN @ 79.92 = Yes did test 79.40’s but could not penetrate beyond that level. Since much of the concentration will be focused in Europe, Yen may not be dealer’s choice of currency and is likely to remain in a tight band. Should hold 79.20 and requires clearing 80.20 for test of 80.90 zones. However, only break of  79.20 could risk for 78.70. Range 78.50- 81.20 

CHF @ 0.9295 = Swiss continues to hover in tiny band around 1.20 floor rate against Euro. Weaker Euro could see demand for SFR that could temporarily breach the floor level. SFR has strong support around 0.9320-30, which should hold, but break here risk for test of 0.9380. However Swiss currency could make more gains if 0.9260 surrenders. Range for the week 9180 - 9380


uSD tO GaiN buT GoLD GaiN tO FizzLE ouT - maY 07-11





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Comment by nader on May 13, 2012 at 9:57am
Thank you Mater, i was waiting your blog from early morning. have a nice Sunday and keep your ecxellent work as usual :)
Comment by Eward on May 13, 2012 at 9:47pm

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Comment by ceasar on May 13, 2012 at 10:46pm

Mr.Rizvi, kindly add me to the blow: ceasar.australia@gmail.com

Comment by Roger Pazdera on May 14, 2012 at 1:47am

Hello mr. Asad ,

Eur / USD today nicely broke the 1.2990 hovering above for about a 45 min , taking a breather now a few pips lower. Do you see the planned rebound to 1.30 + happening today ?

Thank you for your opinion .

Also I think the rate cut in China effective May 18th  should support the aussie. Doyou recommend a BUY ?

Comment by asad rizvi on May 14, 2012 at 1:55am

1.2965 is my level to watch & at the moment 1.30 looks at quite a distant.

AUD could be a good pick around 0.9970, if Euro holds 1.2950

Comment by abdul waheed on May 14, 2012 at 4:57am

sir asad,

 request to in your blog novfab1@hotmail.com

Comment by asad rizvi on May 14, 2012 at 5:16am

Roger, I noted that I have made a blunder. I did not mean 1.2965 Versus AUD. My level to watch is 1.2865. Sorry to cause confusion....Cheers

Comment by Roger Pazdera on May 14, 2012 at 8:38am

understood sir

Now eur/usd broke the 1.2865 , so the 1.2815 is the next support . Wish I didn't cash out that 1.2930 short, lol

Well , London,being a major selling session, usually pushes prices down, 1.2815 should be the end of the pit sir ?

Comment by asad rizvi on May 14, 2012 at 2:11pm

GMT 13:45 - AUD @ 0.9965 = Could test 0.9950, watch out
GMT  13:40 - GOLD @ $ 1560.50 = Risk for Gold lovers is that if it stays below $ 1566, break of $ 1555 will encourage for a test of $ 1550-52GMT 13 : 34 - EURO @ 1.2833 -  I am waiting for possible breach of 1.28 levels.
GMT 13:24 - AUD@0.9975, I will take chance around 0.9965 S/L 0.9940 for 0.9985-90
GMT 08:30 - GOLD @ 1563 = Shold hold around $ 1564-66 for $ 1555-58. S/L $ 1569
GMT 08:20 - View unchanged on GBP, if long take profit around 1.6085-90
GMT 07:55 - Euro @ 1.2868 = If hold below 1.2882, should test 1.2835-40 zones
GMT 07:33 -  GBP 1.6053 = Do not buy GBP allow it to fall around 1.6025
GMT 07:19 - GOLD @ $ 1569 = No change in view. Since gold has broken $ 1570-72 should test $ 1562-65 zones. Unikely to break $ 1576 before NYK
GMT 07:18 - Euro may hold 1.2882 for 1.2835-30
GMT 07:16 - GBP @ 1.6077 = Should hold 1.6050-55, as Cable is likley to test 1.6095, probably 1.6120 before exhausting, but should stay below 1.6150

Comment by George on May 14, 2012 at 2:29pm

Hello Mr asad rizvi,

soon I could start again taking some trades ... for half  year I'm learning and reading all posts at this forum especially yours and Mr. Haitham653. I' ve read that you open your blog but everyone of us need an invitation ... and the question is (probably everyone would like to know it):

What could I/we do to receive an invitation? 


thanks for answer






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