d0wN, d0wN & d0wN !! juLY 23-27
The risk is that despite reaching an agreement to fund Euro 100 billion from temporary rescue fund to recapitalize its bank that will later be shifted to the European Stability Mechanism (ESM) book, which still requires German law maker’s (Bundestag) approval.
The uncomfortable global market condition surely indicates that there is some sort of uncertainty looming, pushing European currency sharply down to 25-month low, keeping global stock market under pressure and pushing 10-years Spanish bond yield to above physiological level of 7 pct. Demand for US treasuries is on constant rise. Yen, GBP, AUD and Nordic currency is in good demand, all indicating nervous market condition.
Meanwhile, last week FED Chairman Bernanke faced with difficult questions in his congress appearance and was asked to explain about the benefit of continuation of FED’s low interest rate and easing policy that has deprived savers of interest earnings and why his policies is unable to produce more jobs, which was a tough ask. He accepted that the economy has not picked up to the desired level and more effort is required, but his focus was on fiscal support. This will surely refrain FED from easing next week as it has its political consequences.
This week, market will continue to keep a track on news flashes from Europe and the release of economic data’s for direction. On Monday, strong Australian PPI data will help RBA on maintaining its view on interest rate. Later in European session UK Nationwide Housing Prices number will indicate housing growth.
On Tuesday, Germany and Euro-zone’s Purchasing Managers Index will paint clearer picture of economy, but Torika’s (IMF, EU and ECB) visit to Greece should not be ignored. Finally US economic data in the last session will be keenly watched.
Wednesday is going to be a busy days, as RBA will announce CPI, European IFO will indicate the business climate in the region and UK will release its Q2 GDP and at the US opening out of 4-data’s New Home Sales is key is expected to rise that will provide hint about growth in economy, as sale also creates demand for goods and increases spending.
On Thursday, German Consumer Confidence Survey data will indicate economic activity, as higher number is considered positive, but market will wait for release of barrage of data from USA that includes Durable goods order and initial jobless claims that will help FED to determine the pace of economy.
All eyes will be on the economic data’s to be released on Friday, as Europe will release its main inflation indicator CPI and lastly until US GDP Annualized (Q2) announcement market will remain nervous, which could be further revised downward from expected 1.5 pct, that was revised down from earlier 1.9 pct. Unchanged or surprise upward revision would help in closing Q3 or further easing debate for the time being.
Late week optimism is due to fall in Chinese GDP number to 7.6 pct vest last quarter’s 8.1 pct strengthening believe that despite 2-cuts in a month, China will further ease its policy to halt the slide.
Ongoing global easing is also helping the yellow metal as Korea, Brazil and UK eased to stimulate its economy. There many those still believe in US easing in its August policy announcement, but keep in mind that FED minutes clearly stated that it does not favor easing. ECB easing is one big factor that also helps gold for carry trade opportunity versus EURO because of currency’s liquidity factor. Initially bias could be on the upside until Bernanke’s Wednesday testimony. But gold will find regular sellers above $ 1600 because the yellow metal itself is not too appealing due to high price and is a dead asset that does not offer return. It has strong barrier around $ 1604, break is required for a q move toward $ 1620-25 zones. However, I am expecting that market will pick the top and break $ 1578 will encourage for test of $ 1528.
GBP @ 1.5574 = Cable made a late recovery and bias this week remain on the upside and this upside momentum should continue. Cable has strong support around 1.55 zones could penetrate beyond 1.5670 for 1.5770-90 before exhausting. Only break below 1.5450 could risk for more losses. Ranges for the week 1.5570 – 1.5795
JPY @ 79.17 = Yen trade in a narrow band and is gradually likely to weaken to test 79.80 and only clear break could extend the fall towards 80.15-20 zones. However, Japanese currency has the tendency and could bounce back to test 78.80 to challenge 78.40-50 resistance levels Ranges for the week 78.40 – 80.50
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Comment by asad rizvi on July 23, 2012 at 6:46am
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GMT 6:28 - EURO @ 1.2088 = Book you profit around 1.2082-88 and wait for nrxt signal......Cheers
GMT 6:24 - AUD @ 1.0305 = If you went short AUD bookk your profit around 1.0292-98 and wait for next signal.
GMT 6:17 - GBP @ 1.5565 = If you went short GBP on late weekend recomendation book your profit around 1.5560-65 and wait for next signal.
GMT 6:06 = GOLD @ $ 1577.50 = Book profit if you went short on weekend recomendation and wait for another $ 2 dip before going long for quick profit taking
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GMT 6:25 - GOLD $ 1575 = Buy around $ 1571-73 STOPS $ 1568.............
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GMT 9:27 - GBP @ 1.5534 = Strggling at the moment could test 1.5500-10 zones, but selling is not recomended
GMT 9:03 - AUD @ 1.0291 = If hold around 1.0310, i am expecting a test of 1.0260-65 levels
GMT - 8:55 - EURO @ 1.2115 = Could exhaust around 1.2125 for re-test of 1.2085 or else 1.2145
GMT 8:42 - GOLD @ $ 1571.50 = If fails to move beyond $ 1574-75, we could see another dip to taet $ 1564-66 zones, possibly test of $ 1560 today
GMT 7:20 - GOLD @ $ 1574 = Hold on, Gold buying not rcomended now as it could test $ 1568-70 zones if fails to move beyond $ 1577
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GMT 14:01 - GOLD # $ 1582 .50 = needs to break $ 1576 for $ 1572
GMT 13:30 - GOLD @ $ 1584 = SELL around $ 1584-86 STOPS $ 1590
GMT 13:03 - GOLD @ $ 1581= could briefly test $ 1582-84 levels
GMT 12:53 - My view is unchanged still looking for test of $ 1580-82
GMT 11:45 - GBP @ 1.5522 = Suggest sqauring with small profit around 1.5515-20. Do not go short GBP
GMT 11:44 - AUD 1.0277 = Suggest profit taking and sqaring of position around 1.0272-77
GMT 11:42 - EURO @ 1.2088 = Suggest take your profit around 1.2085-90
GMT 7:48 - Book your profit around $ 1570-72..Cheers
GMT 01:42 - AUD @ 1.0278 = Needs to clear 1.3010 for a possible test of 1.0330-40 zones. However, risk is that a fall below 1.0240 would encourage for 1.0210 and break here risk for 1.0170.
GMT 01:32 - GBP @ 1.5524 = Cable may continue to struggle and find tough to move beyond 1.5560. Risk for more losses would increase on break of 1.5480 for test of 1.5455. However, clear break of 1.5595 would encourge buyers of Pound Sterling
GMT 01:23 - EURO @ 1.2127 = Euro is unlikly to make big recovery and fall looks imminent, as the currency may not move beyond 1.2150 levels for test of 1.2075, only break above 1.2180 would give the European currency some breathing space
GMT 00:35 - GOLD @ $ 1576.60 = Gold is still a sell around $ 1579-81 for $ 1570-72, onl;y break above $ 1585 risk for small gain
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