Thursday October 22, 2009 - 03:43:15 GMT
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FX Thoughts for the Day - www.fxthoughts.com
Morning Briefing : 22-Oct-2009 - 0340 GMT
The Dow (9949.36) and the Nasdaq (2150.73) fell in the late trading hours after trading higher most part of the day on downgrade of Wells Fargo & Co by an analyst. This sent fears of overheated markets down the street which saw Dow correcting nearly 1% yesterday.
The Asian indices, too, are reacting to the news overnight from the US. The Nikkei (10210.78) is down 1.19%, Hang Seng (22016.69) is down 1.35% and Shanghai (3046.36) is down 0.79%. The Sensex had seen a correction yesterday. It fell 1.24% yesterday and has fallen nearly 1.8% this week already. The bullish wedge on the weekly candles seems to be nearing resolution and we shall have to see on which side does it break out. More likely on the upside. To see the chart of Sensex, click on: http://www.kshitij.com/graphgallery/sensexcandle.shtml#candle
Crude (81.31) has once again risen above the $80 mark and scaled a high of 82. Expect it to break the immediate Resistance at 82.50. Once there, expect it to surge towards 89 over the next few weeks.
Gold (1060.50) continues to face Resistance near 1070. We expect a break of this Resistance targetting 1150-1200 over the next few weeks. But till then, it may be ranged between 1045-1070.
The Euro (1.50) and Aussie (0.9250) continue to strengthen. The Euro saw a high near 1.5045 yesterday, breasting the 1.50 tape. Dollar-Swiss (1.0075) came close to printing 1.0000 on the screens when it touched a low of 1.0035 yesterday. The market seems to be lusting for the "Parity" level on Dollar-Swiss, it seems and will not be satisfied till it is seen.
The Pound (1.66) has posted a significant recovery over the last couple of weeks, rising from a low of 1.5710 last week. Its rise past 1.6480 this week is very significant and we could be looking at higher levels soon. Dollar-Yen (90.99) rose to almost 91.30 yesterday and may be good for higher levels. The Euro-Yen Cross (136.45) rose to 137.00 yesterday and may see 137.35-45 today.
In Asia, the stalwarts like the Sing Dollar (1.3955) and the Korean Won (1184.30) have been weakening over the last few days, tracking the Yen rather than the Euro. Dollar-Rupee, which had closed at 46.49 yesterday, is likely to test 46.60-80 today.
3M USD LIBOR was unchanged at 0.28%. The yields on US Treasuries continue to range. The 2Y and 10Y yields are quoting higher by 4 bps at 0.96% and 3.39% respectively.
12:00 GMT EU EA (16) Curr Acct Bal Q1 '09 (2nd)
...Previous EUR -21.5 bln
12:00 GMT EU EA (16) Bal of Trade in services (2nd)
12:00 GMT EU EA (16) Curr Acct Bal as % of GDP (2nd)
UK BOE Minutes
...Expected 0-0-9 hold ...Actual 0-0-9 hold
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