Tuesday September 1, 2009 - 03:44:36 GMT
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FX Thoughts for the Day - www.fxthoughts.com
Morning Briefing : 01-Sep-2009 - 0332 GMT
Dow (9496.28) and Nasdaq (2009.06) closed lower 0.50% and 0.97% respectively after a sharp fall in the Asian indices yesterday led by Shanghai (2660.94) which was down close to 7% following a break of an important Support at 2800. The Nikkei (10540.61) which was down 0.4% yesterday has recovered today and is up 0.46%. Reports showed manufacturing grew in China at the fastest pace in 16 months, but the concerns that this has been acheived due to record lending in first half of 2009 could dampen the good news.
Shanghai having broken below 2800 has entered the bear market technically speaking. Though it is trading flattish today, but given the momentum, credit tightneing measures, investors concerns over sustainable growth could continue to pull the market down with techincal Support available at 2500.
In India, the Sensex (15666.64) fell 255 points yesterday. There's strong Resistance on Sensex at 16300 which may be tested over the next few days and Support at 15000.
Crude (70.20) fell sharply and closed below 70 yesterday following the steep fall in China's (world's second largest oil consumer) key stock index (down by 6.74%). However it has managed to rise from yesterday's low of 69.13 and is now trading just above 70. As mentioned earlier we might expect a consolidation between 70.00-72.50 for some time. On the downside Support is seen at 67.50.
Gold (951.90) is continuing to trade within the range 930-960 in which it has been trading for some time. It is still looking mixed and may continue to retain the range. A break out on either side would decide the direction of futher move.
As hoped for/ expected, the Euro (1.4335) and the Aussie (0.8435) have recovered in the US session after the early morning dip in the Asian session. Dollar-Yen (93.10) is also managing to remain above 92.85-55, the crucial Support region established yesterday. The key theme in the currency markets is that investors are continuing to look for alternative investments to the Dollar. Slowly, it seems, currencies are breaking away from the "risky assets" bracket, which is coming to be identified more with Equities.
The Pound (1.6280) continues to look weak and the EUR-GBP continues to soar as a result. Dollar-Swiss (1.0590) maintains its overall stance of sideways range with a bearish bias.
Dollar-Won (1247) continues to trade sideways in the near term and retains a fairly bearish bias in the medium term, with good Resistance at 1260. Dollar-Rupee had closed near 48.82 yesterday, avoiding a close above 49.00. The 1-week and 1-mth NDFs are trading higher near 48.87/92 and 48.98/49.05 though. The 49.00-05 region remains the crucial Resistance to watch.
3M USD LIBOR was set at 0.35% (just 10 bps away from Fed's target rate) which puts a strong case for an increase in key interest rates by Fed in the next FOMC meet scheduled later this month. The yields have dipped between 3-5 bps for maturities over 2Y. The 10Y benchmark Notes were quoting at 3.41%.
In India, the Interest Rate Furtures were re-launched on NSE yesterday after a long gap of 7 years.
04:30 GMT AUD RBA Interest Rate
...Expected 3.00%...Previous 3.00%
05:45 GMT CH GDP
...Expected -0.9%...Previous -0.8%
09:00 GMT EU Unemp
...Expected 9.5%...Previous 9.5%
IN GDP Q1'09-'10
...Actual 6.1%...Previous 5.8%
12:30 GMT CA GDP
...Actual 0.1%...Previous -0.5%
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