Wednesday October 7, 2009 - 03:36:42 GMT
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FX Thoughts for the Day - www.fxthoughts.com
Morning Briefing : 07-Oct-2009 - 0333 GMT
Tide seems to have changed in favour of equities and commodities once again. The American indices surged more than a percent overnight. The Dow (9731.25) and the Nasdaq (2103.57) rose 1.37% and 1.71% respectively. The interest rate increase by Australia has raised hopes that the G20 central banks would soon follow suit.
The Asian indices too are rising on surge in commodities and general buoyancy prevailing in the markets. The Nikkei (9778.25) is up 0.89% while Shanghai is still closed. The Hang Seng has risen 1.61%. The Sensex (16958.54) closed higher after trading lower for most part yesterday. The telecom stocks led the fall owing to "price war" concerns. The Sensex is likely to rise today given general buoyancy prevailing in the international markets.
Gold (1039) rose to a high near 1045 yesterday. Near term Resistance may be available in the 1045-50 region, and might cause a short-lived dip towards 1020. That said, the longer term outlook remains bullish for our target of 1100-1200. Look at the strength of the Weekly line chart on the page below:
Crude (71.32) has been underperforming Gold for some weeks now, but could be gearing up for a decent rise in the weeks ahead. The fact that it has bounced from the fall to 65 (25-Sep) is bullish. Some Resistance is seen at 75 though. Watch out for the Crude inventory data tonight.
The Aussie (0.8885) was King yesterday after the trailblazing rate hike (25bp) and has seen a high near 0.8920 today. We may target 0.9130 over the next couple of weeks. The Euro (1.4685) is also bullish, although a little less so than the Aussie. We see decent chances of rise towards 1.4850 over the next couple of weeks. Dollar-Yen (88.90) remains bearish with Resistance at 89.50 and may dip towards 88.30-00. Should the AUD-JPY (79.05) rise past 80.00, the downward pressure on USD-JPY decrease quite a bit.
The Pound (1.5898) remains a pariah currency with Resistance at 1.60 and 1.5775 as a near term target. Dollar-Swiss (1.0290) has fallen yesterday, tracking the rise in the Euro. A slow fall towards 1.0160 is likely.
Asian currencies too remain strong. The Sing Dollar trades near 1.4033. The USD-SGD had seen a low near 1.4010 yesterday. The Korean Won is strong near 1171. Dollar-Rupee had closed near 46.8850 yesteday. The 1-mth NDF remains bearish, quoting near 46.65-70.
3M USD LIBOR was set at 0.28%. The US T-yields have risen a little. The 2Y and 10Y yields are quoting 3 bps higher at 0.90% and 3.25% respectively.
Australia has raised its key interest rates (3.25%) by 25 bps yesterday and has indicated more such hikes. It has become first among the G20 nations to have raised interest rates since recession set in. Reserve Bank of India, too, has indicated that it might as well increase interest rates sooner than most of the advanced economies. The ECB and BoE are scheduled to announce their interest rate decision tomorrow. Market expectation is that these may be left unchanged.
09:00 GMT EU GDP Q2 '09 (Fnl)
...Expected -0.1%...Previous -0.1%
00:30 GMT Sep Australia Trade Balance
...Expected A$ -0.89 Bln...Actual A$ -1.52 Bln
03:30 GMT AUD RBA Interest Rate
...Expected 3.00%...Actual 3.25%
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