It was bad end to the week with US stock market suffering its worst weekly fall in the calendar year, European financial market  once again faltered, China’s economic growth was very disappointing, though Australian job condition improved reducing the odds for next month’s rate cut. But the size of its economy is not good enough to boost global sentiment.  

Gold moved both ways trading in a $ 50 band and currencies traded in a narrow band. Oil prices eased after talk between couple of world leaders to us oil reserves to cool down prices, China’s economic slowdown further pushed oil prices down. 

From financial market perspective, it was a busy week with events all over the global. Europe is once again showing signs of nervousness as Spanish and Italian bond yield gave jitter to the market reminding that the European sovereign debt remained a big unresolved issue.

Bank of Spain Governor added more fuel to the fire by adding that Spain’s banks needed more capital. Spain’s banking problem got the endorsement when its Central Bank confirmed that its country’s bank borrowing from European Central Bank almost doubled in March to Euro 316.3 billion from 169.8 billion in February.

The behavior of Italian bond too is very dubious, which is not an encouraging sign. Signs are becoming quite obvious that the two major European economies may struggle to take strong fiscal measure. Their banking industry is already in hot water so the two-economies will gradually slip towards recession

These are some of the crucial factors that will act as a weak link and will exert pressure demanding more money that will force ECB to consider further quantitative easing. Hence, European currency may once again come under severe pressure.

During the week in USA, Fed’s 12-voting member spoke on different occasions and all of them spoke freely. Fed vice Chairman Janet Yellen’s approach was Dovish like Fed’s Chairman Bernanke, but the remaining members were hawkish is their approach.   

My observation is that they all were talking on the same wave length support lose monetary policy. Fed’s top priority is to bring down the unemployment number and 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 consider reversing 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.   

Finally, much awaited China’s Q1 GDP data of 8.1 versus last quarter growth of 8.9 pct is very disappointing confirming slow export growth and low domestic demand. But easing case looks difficult because last week Bank of China in its report stated that in the month of March, Chinese bank lending jumped to Yuan 1.01 trillion (USD 160 billion) and was up by Yuan 332 billion, which could mean no more easing and no rate in near term. There are reports of China’s Central Bank allowing one percentage cut to some of the rural financial institutions that became effective from April 01. 

Meanwhile, right from the 1st day of the week all eye will be on the US economic data, as retail sales is considered a key data that cover good part of consumer spending i.e., durable and non-durable of consumer spending, which covers almost two-third of the GDP. Retail sales also account for one-third of the aggregate economic activity. It is good for currencies and stick market but bad or bearish for US treasuries.

On Tuesday, German ZEW economic sentiment is important German data that has so far risen for the 4th consecutive time and another rise will be considered positive as it will lend minor support to the ailing European economy. Bad number could further clobber EURO. This will be followed by US building permits, housing starts and industrial production data that may provide more clues about the American economy.

Wednesday activity will be based on European and UK data.

Thursday should be a quieter day with no major global data.

On Friday, IFO is considered a leading German indicator which reflect better picture of the economy and its future trend.

 

 

GOLD @ $ 1657 : Three major factors are the driving force behind the gold boom scenario in most recent times, they are Central Bank buying, quantitative easing and excessive demand from China and India. All three seemingly have been pushed to the wall. Major CB buyers are Indian, South Korean, Russian, Thailand, Turkey and Middle Eastern countries. Minus M/E economies others are choosy with their funds, as they were aggressive buyers at lower levels.

China will never come in open market for its gold shopping and is mostly acquiring the metal from its own mines. Reports are suggesting that China’s gold production has almost doubled.

Indian protest has ended, which was more for the sake of face saving as prolonged strike embarrassed Indian government and bullion traders and jewelers were not only losing business they had to pay the incurring cost. 

Quantitative easing is the last hope, which is gradually fading. US economic data in the coming days is likely to provide more clues. In a nutshell, I do not see any solid reason to buy gold which is a non-interest bearing asset.

So with prospect of free money in shape of quantitative easing diminishing and with new duty on gold imposed by the Indian government remained an unsettled matter, gold will struggle to make new gains, as selling interest will be often seen.

Gold has strong resistance around $ 1675, which could only be tested on break of $ 1668. However, key on the down side will be break of $ 1648 that will encourage for slide towards $ 1638. Only break would risk for crucial of test support around $ 1628-30. There high probabilities of yellow metals further fall towards $ 1600-10 in the month of April unless it is able to penetrate beyond $ 1690. Range for the week $ 1625 - $ 1675

 

EURO @ 1.3075 = Euro is likely to remain under pressure and any up move should be used as opportunity to sell Euro unless it clears 1.3250. A break of 1.3150 would risk for test of 1.3190, but Euro should be sold up moves. The level to watch will be 1.2940 a break here will encourage for sharp slide towards 1.2820. Range for the week 1.2820- 1.3250

GBP @ 1.5844 = Cable will have mildly bullish tone against Euro and may not dip at same pace against US Dollar. On the up break of 1.5898 will encourage for test of 1.5940, where it will find strong resistance, though not a preferred scenario. However, on the down side break of 1.5775 risks for a test of 1.5710. But Cable is preferred currency to buy in dips around support area. Ranges for the week 1.5710- 1.5950

YEN @ 80.88 =  I do not expect Yen to remain too volatility as seen during last 4-6 weeks. However, as long as the Japanese currency is able to hold support area of 81.90, the currency will be bought on dips. A break of 80.20 will see the currency making further gains towards 79.70. Range for the week 79.40 – 82.50

 

CHF @ 0.9191 = Swiss Franc has strong support around 0.9120, which should hold for 0.9260, break risk for 0.9350, or else 0.9090. Range for the week 0.9075 – 0.9350

 

 UsD uP, GoLD uP BuT LateR DowN - ApR 09-13

http://www.forexstreet.net/profiles/blogs/usd-up-gold-up-but-later-...

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Comment by asad rizvi on April 14, 2012 at 3:23pm

Jason, agreed. But, Euro has started losing its gloss. Strategy is unchanged, as of now pick the top and Sell Euro without any fear. AUD, later, as it took 8-hours to prepare this note. I will update my post on Monday was and when required……Nice weekend  

Comment by Ziad on April 14, 2012 at 4:00pm

Good evening Mr. Risvi - thank you re the bias for the wekk on Gold. I  remarked your preference not to buy the yellow metal. Are we @ 1657 in a position to sell or wait for higher highs before considering to sell or even wait for Monday until things unfold and have a clear direction?

 

Thank you.

Comment by Priyank Nevatia on April 14, 2012 at 5:27pm

Mr Rizvi, Its been a little over two weeks since I have been following your blog. I am amazed as to how accurate you are with your price levels. Though I dont take trades at every level, I watch what happens on the demo account. I am still learning the ropes of trading the FX market and following your blog has definitely given me more confidence. You are a kind human being and excellent at what you do. Your advise and services are much appreciated and I look forward to interacting with you in the future. Thanks, Priyank

Comment by Ziad on April 14, 2012 at 5:40pm

I humbly think that whoever is following this blog, should stick to Mr. Risvi's views, many times I was caught in doubt before relying on technicals which fail amazingly, latest incident last Friday 13. The upmove on Gold technically was confirmed to continue by most prominent and reliable websites and traders. It's better not to get confused as this is akin to missing out on trades and/or losing. Much better to rely on a person that can really feel the market without getting confused with charts and diagrams. Accuracy is around 95% cannot be achieved consitently using other strategies.

Comment by Priyank Nevatia on April 14, 2012 at 5:44pm

A piece of advise for all of Mr Rizvi's followers. Just dont go looking for the most recent update of price levels. Read his blog to understand whats happening in the markets. Also keep in mind what he has been saying for the past 2 weeks or so. For example, he replied to one of my post 2 weeks ago telling me that EURO rises for about 100-120 pips and then sells off. This pattern is holding through even today. So review his posts over and over again and you will not only understand the movements of the markets but also be more confident in taking a position. 
He also mentioned that the NYC session would be a killer and a whole different story. Last 2 days we have seen exactly that .. So instead of asking Mr Rizvi every 5 mins for new price levels, follow his blog, review his original posts and updates and you will be on the winning side. I have seen him being right 90% of the time. Thats deadly accurate. 

Comment by dev on April 14, 2012 at 7:16pm

Mr Rizvi is always great for his market survey and quick response to the traders...

Comment by Mohamad on April 14, 2012 at 8:54pm

@ Ziad .. the same happened with me on Friday the 13th .. I regret this a lot .. 

@ peter .. share with us your skills mate ;)  posting clear signals takes a lot of confidence, while throwing a chart out there that can be interpreted in different ways is very easy

@ Mr. Rizvi .. You're the man .. Fundamentals keep the world turning .. round and round and round ;)

Comment by Mohamad on April 14, 2012 at 10:21pm

That's quality Peter .. keep it up

Comment by talisman on April 15, 2012 at 1:41am

what defines fully trained? your account balance?

Comment by talisman on April 15, 2012 at 2:25am

@ jason-good response.  i like pings comment.  being self taught at everything i always get my back up when i m told i need a specific education to succeed.  i am basically uneducated but have somehow managed to create a world where i get to live  on my own terms. your response was neutral, logical. and unopinionated. i could learn something from you.  

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