After two days of uncertainty European market made some recovery, as regions bond yield gained and its stock market made upward adjustment, which was largely supported by banking share recovery.
More importantly market is still looking for direction, as too many statements and officials are involved to defend and counter situation in Europe, which is often confusing. But bottom line is that Europe’s financial market is in big trouble, which will remain unresolved for many years.
It requires austerity measure, it needs to reduce deficit, it needs cheap funding, it needs to generate revenue to meet expense, and it needs to create more job opportunities. Half of the regions bank need funding to raise capital and therefore, its needs more time due to its unending list of things to do and hence Europe will continue to make adjusting entries and print more notes, increase the size of its balance sheet to buy more time. But the biggest worry should be that where and how does it end?
Signs emanating from FED beige book are positive for the US Economy, which overall cover 12-region. Paring oil prices, which is the concerning factor the report suggest that key areas such as manufacturing, professional businesses and freights volumes are showing satisfactory growth if not robust.
But FED’s second in command Janet Yellen has strength the argument of low interest rate with her dovish approach by saying that economy will continue to grow only gradually and that employment rate will remain high for years. But one positive note in hear ending remarks she made was that she is prepared to make policy adjustment in response to incoming information, which means positive data could shift her sentiment.
Meanwhile, surprisingly strong Australian job data reduced the odds for next month rate cut that helping AUD to surge, but as I said in my weekly report that Friday’s Chinese GDP number will play big role in determining the future economic trend.
Market will be watching developments in Europe quieter condition will see USD losing some of its gloss. Currencies and gold is likely to make gains until New York.
Gold @ $ 1658.40 = Today we could see gold making some gains, as it has strong support around $ 1654. Looking for attest and break of $ 1666-68 for a possible test of $ 1673-75 zones
Euro @= 1.3128= Euro is likely to make gains in early hours of Europe. It should hold 1.3105-10 for move towards 1.3170-75. Break would encourage for a test of 1.3195-00 zones.
GBP @ = 1.5922 = Prefer buy on dips around 1.59’s with Stop loss on break of 1.5870. Only break of 1.5955 could push Cable towards 1.5980.
BuY GbP oN dipS – PrefeR SellinG GoLD – ApR 11