Thursday December 31, 2009 - 03:34:38 GMT
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FX Thoughts for the Day - www.fxthoughts.com
Morning Briefing : 31-Dec-2009 - 0332 GMT
The US equities ended flat. The Dow still stayed above 10500. Ideally a break above 10500 should have been very bullish. But the fact that the break was accompanied with very thin volumes owing to holiday season has not made the Dow very bullish until now. Going forward into the new year, we shall have to see whether this rise above 10500 turns out to be a false or a potent break.
The Asian indices are trading mixed. The Nikkei (10546.44) is closed today and shall reopen only on Monday. The Shanghai (3262.08) and Straits (2884.16) is trading flat while the Hang Seng (21669.42) and All Ordinaries (4879.90) is trading 0.82% and 0.66% higher respectively. The Sensex (17343.82) ended 0.33% lower yesterday and is likely to be ranged today as well.
Today is the last trading day for 2009. Most markets have risen between 60%-120% since March '09 lows this year. Let's see how 2010 unfolds and if this year brings accelerated economic recovery to the developed economies in particular and the World in general. We hope that Sensex regains 20000 in 2010.
Crude (79.70) is continuing to trade strong. The cold weather and EIA's inventory data release yesterday which showed a drop of 1.5 million barrels in the US Crude inventories supported the price rise yesterday. Technically speaking Crude is now trading well above significant Resistance levels as seen from the weekly and daily charts. The 100-Week MA at 80.55 is the only major Resistance seen on the upside. A higher weekly close this week and a strong break above the 100-Week MA in the coming days would see Crude rising further to higher levels going forwards in the new year. To see the Crude graph click on the following link:
Gold (1096.40) is continuing to trade lower below 1100. The stronger dollar is the keeping the Commodity's price lower. As mentioned earlier. significant Support is seen in 1075-50 region which might be tested in the coming days if it continues to trade below 1100.
Last day of the year and the decade. Diwali, Id and X'mas have been much more enjoyable this year than they were in terrible 2008. Disaster has been averted, so to say, and in fact 2009 has been a stellar year for a few smart risk-takers. At the same time, there is a realisation that the next year and decade will bring a different world.
Rules will change, those who write the rules might also change and maybe those who rule will also change. What will endure will be the values that have endured across time. In this time of merry-making we have to remember that thrift, hard work and humility never hurt anyone.
The currency markets are quiet today and most countries will be on holiday tomorrow. The first week of January may continue to be quiet, maybe erratic. Perhaps the Dollar will strengthen initially towards 1.42-41 against the Euro. Thereafter it might start weakening again on fresh "risk-taking" going up to Feb-March. The second half of the year might, however, see a proper revival in the Dollar. This, mind you, is not a sure-shot prediction we are making, but a broad hypothesis that needs to be examined.
3M USD LIBOR was unchanged at 0.25%. The Treasury yields were flat. The 2Y and 10Y yields were quoted at 1.08% and 3.79% respectively.
No major data release today.
We will be closed tomorrow. Best wishes for a Happy New Year!
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