Recent Euro strength sustainable ! Aug 20-24
Last week's euro strength is a bit surprising because recent US economic data suggest that the economy has been performing well. This is surely in continuation after Draghi's affirmation supported by the European policymakers that the ECB will defend its currency at any cost.
The other factors that helped the euro currency was better economic data released by Germany and the ECB and many still believe that the FED could go for quantitative easing.
But the real hope that is pushing down the yields of Spanish and Italian bonds and supporting the European currency is in expectation of policy shift that the European central banks may finally buy sovereign bonds.
It has been noted that the tone of Angela Merkel has surely softened, but she is not the decision-maker. The first hurdle that needs to be overcome will be on September 12 when a nod from the German constitutional courts would pave the way for the German Chancellor.
The real problem is too big with hope being too little that needs to be addressed and the problem is that the European debt is too big, which makes it very difficult to manage to reach better understanding and the hope is too little because there is no real cash available to support new business openings to create new jobs and more importantly increase revenue collection to an extent that can counter debt growth, which means revenue collection should be good enough to settle debt.
Though they meet frequently, the European leaders still split over reforms because they are not the sole decision taker/maker as they require their coalition partners' support. If all (policy-makers) reach consensus, it would mean allowing bond buying by Central Bank, more printing of money and more leniency, but then what about austerity measures, talk about reducing deficit and guarantee to protect tax payers money. These are all unanswered questions that still need to be addressed and properly answered.
My conclusion is that even if there is some sort of understanding reached the marriage will be a short-lived affair and divorce paper could be filed during the honeymoon period, as politicians will never increase tax and therefore the real issue (Debt) would never be resolved without biting the bullet.
-
Comment by Manish Patadia on August 20, 2012 at 9:10am -
hello sir after a long peroid i m happy to see uay n can u sugeest mke about gold for today n comming week many times i send u a message to become urs payable subcribe blog i need urs help in trading would u reply soon
-
Comment by asad rizvi on August 20, 2012 at 9:29am
-
-
GMT 12:10 - AUD @ 1.0439 = View unchanged bias on the upside
GMT 12:09 - GBP 1.5690 = Watch Cable aroudn 1.5660-70 iof fails to hold could dip further to test 1.5630. On the up needs to move beyond 1.5720 for test of 1.5740-50 zones
GMT 11:59 - GOLD @ $ 1615 = Gold should hold $ 1610-12 for re-test of $ 1620-22 zones as $ 1608 remains the key level to watch
GMT 11: 55 - EURO @ 1.2308 = Euro should find support around 1.2280-90 zones and unless 1.2250 surrenders we are again going to see a test of 1.2350 for 1.2380 or else 1.2205 befor up again....
-
Comment by ikwoche on August 20, 2012 at 8:26pm -
you are welcome sir. i always check your blog hoping i will see a comment. you are welcome. you number one follower.
-
-
Monday August 20-24 2012
GOLD @ $ 1615.50 = Gold survived drop despite news of fall in global 2ndquarter demand on hopes of QE and Friday support by Merkel’s statement during here Canada visit that she will support ECB action to solve European crisis that gave confidence to the market.
However, it is extremely important to keep a watch on developments in South Africa because if the violence spread that has already pushed platinum prices higher due to strike at platinum mines. It may have spillover effect though gold miners have no direct connection with the mine strikers.Despite, all the probability I would continue to pick the top to sell the yellow metal, as I see risk for a sharp drop, which is now almost due.Gold needs to make a move beyond $ 1628 to attack $ 1635-40, which should be good levels to sell. A dip below $ 1604 will open gates for $ 1595 and this fall could extend up to $ 1578 on break of $ 1585.EURO @ 1.2330 = Bounce back from 1.2280’s suggest that Euro will initially make gains and could re-visit 1.2390 zones break will encourage for a test of 1.2430-50 zones. Suggest caution around those levels as risk will increase for a drop, so buying is preferred those levels, as long as hold below 1.2520. A fall below 1.2260 will push European currency down to test of 1.2185. Range for the week 1.2180 – 1.2520.GBP @ 1.5690 = As long as Cable holds above 1.5550 it is likely to maintain its stronger tone. It has strong support around 1.5610 levels. A break of 1.5780 is required for a final assault towards 1.5880 zones, as beyond that level buying pound would be risky proposition. Range for the week 1.5550 – 1.5920.JPY @ 79.55 = Yen could suffer more losses if 79.80 surrenders for 80.60. Japanese currency is required to push below 79.10 and only break of 78.80 will the currency making more gains to test 78.10. Ranges for the week 78.50- 80.50.CHF @ 0.9737 = Swiss Franc is firmly hovering around Euro parity of 1.20 parity and the trend may continue. Swiss Franc could make gains on break of 0.9690 for 0.9650 where it may exhaust. Swissy could lose its sheen if falls below 0.9805 for a test 0.9850. Range for the week 0.9650 – 0.9860.AUD @ 1.0413 = The fall seems to have stretched a bit as crucial support lies around 1.0380-00. As long as 1.0340 holds AUD has good chance to recover. Bias for AUD is on the upside and needs to move beyond 1.0480 for a test of 1.0530-50 levels.
Comment
Photos
ChartAccess 20% OFF
© 2013 Created by FXstreet.
You need to be a member of FXstreet.com Forex Social Network to add comments!
Join FXstreet.com Forex Social Network