Wednesday November 4, 2009 - 03:43:18 GMT
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FX Thoughts for the Day - www.fxthoughts.com
Morning Briefing : 04-Nov-2009 - 0341 GMT
The Dow (9771.91) ended marginally lower yesterday after falling nearly 1% earlier during the day. The intra-day recovery was led by higher auto sales, rise in commodities and general euphoria over Buffett's $34 mio purchase of Burlington in what he termed as an "all-in wager on the future of US economy".
The Asian equities are trading marginally higher. The Nikkei (9796.28) which was closed yesterday is trading flat at 9796.28. The Shanghai (3122.14) continues to trade higher despite weakness in most of the other Asian indices over the last few days. It has remained insulated from the weakness in global stocks being seen over the last few days. The Sensex (15404.94) shed another 3% yesterday. The Support at 15200 mentioned yesterday should hold going forward.
Crude (79.30) has risen sharply and closed above 79 yesterday as the US factory orders data came in better than expected signalling an increase in the energy demand. We expect Crude to continue its upmove and a strong break above 80 might see a rise towards 82.50-83.00 over the next few days and target 88-90 in the coming weeks. The US Crude inventory data and Fed's interest rate decision are due today.
Gold (1083.10) has risen sharply yesterday after the IMF announced its sale of 200 metric tons of gold to India. If the current strength on the upmove continues we might see further rise towards 1150-1200 over the next few days. The Fed's interest rate decision is due today.
Some recovery in the Euro, Aussie and Swissy today, after lows seen in the US session yesterday. Further strength or consolidation may be possible
The Euro trades near 1.4725, up 100 pips from a low near 1.4625. The Aussie (0.9017) has been seen buyin in the 0.8905-15 region over the last two days. Dollar-Swiss (1.0260) has moved back down below 1.03 after spiking to 1.0340 yesterday. Dollar-Yen (90.25) has remained stable since yesterday, between 89.85-90.60. The Pound (1.6415) has bounced, like the Euro, from a US-session dive to a low near 1.6260.
In Asia, the Sing Dollar and the Korean Won are relatively strong/ stronger today. The USD-SGD (1.3998) has been consolidating between 1.3950-4050 for the past few days within an overall bear trend. USD-KRW (1180.50) has dipped over the last few days from an earlier high near 1210 on 26-Oct. In contrast, the Indian Rupee (close near 47.40 yesterday) has been relatively weak over the last few days, impacted by the fall in the Sensex. Resistance is seen at 47.65 today for USD-INR.
3M USD LIBOR was unchanged at 0.28%. The yields on US Treasuries have risen yesterday. The danger of double top on 10Y T-notes has now been allayed and the yields have started moving in a sideways range. Expect the range to hold for some more time.
The FOMC Meeting is scheduled for today. The markets expects the key rates to be left unchanged. Yesterday the RBA had increased interest rates by 0.25% for the second consecutive month to 3.50%. ECB and BOE meetings are due tomorrow.
19:15 GMT US FOMC Interest Rate
...Expected <0.25%...Previous <0.25%
AUD RBA Interest Rate
....Actual 3.50%...Previous 3.25%
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