Tuesday December 29, 2009 - 03:59:05 GMT
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FX Thoughts for the Day - www.fxthoughts.com
Morning Briefing : 29-Dec-2009 - 0357 GMT
The Dow (10547.08) broke above the 10500 Resistance yesterday led by rise in commodities and better holiday sales. For the US economy to recover, personal spending will have to take off since consumption forms 70% of US economy. With not much data ahead, the bullishness might continue and the stocks may continue to edge higher for the rest of the year.
The Asian indices are trading flat. The Sensex (17360.61) had broken above the 17300 Resistance last week. More gains are likely over the course of this week and the next. This is a short week with three trading days. 1st of Jan has been declared a holiday by Indian stock exchanges.
Crude (78.65) is trading strong as the signs of the economic recovery and the cold weather is keeping up the demand higher. The EIA's Crude inventory data which is to be released tomorrow is expected to show further drop in the inventories. With immediate Support at 78.00, if it continues to trade strong we might see a rise towards 80.50-81.00 over the next few days. To see the Crude graph click on the following link:
Gold (1103.30), though continuing to trade above 1100, is not showing much momentum on its upmove. Significant Resistance is seen in the broad 1100-40 region. Though the big picture still remains bullish, as of now the outlook is mixed and we might expect it to oscillate in the Resistance region (1100-40) mentioned above for some time.
Good recovery in the "risky/ carry" currencies over the last few days, at the expense of the Dollar and the Yen, but its too early to say whether the December uptrend in the Dollar is over or not. Quite likely we are simply seeing short-covering and squaring up in the last trading week of the year.
The Euro (1.4356) has risen up from last week's low near 1.4217 and may now be ranged between 1.42-45 for this week and the next. The Aussie (0.8865) has come up from last week's low near 0.8733 and is now trading right at the 21-week Moving Average. Dollar-Yen (91.75) is looking quite bullish with decent chances of moving up towards 92. The Pound (1.5998) has not recovered as much as the Euro or the Aussie, but could surprise on the upside this week. Dollar-Swiss (1.0365) has come down quite sharply from last week's highs near 1.05, but has good Support at 1.03 this week.
USD-SGD (1.4073) has come off from 1.4128 and, like the Aussie, is trading right on the 21-week Moving Average. The Korean Won (1171) has recoverd quite a bit from last week's highs near 1190 and might strengthen a little more towards 1160. Dollar-Rupee (46.6850) has opened flat near Thursday's close near 46.6450. Expect range trading between 46.50-90 this week.
3M USD LIBOR was unchanged at 0.25%. The yields on US Treasuries have surged. The 2Y and 10Y yields are quoting at 1.09% and 3.84% respectively. The 5Y, 10Y and 30Y yields have broken above their Resistances as the investors are concerned over "deficit driven market". Having broken above the Resistances, expect yields to move further up towards June '09 highs.
No major data release today.
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