Wednesday January 6, 2010 - 03:40:23 GMT
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FX Thoughts for the Day - www.fxthoughts.com
Morning Briefing : 06-Jan-2010 - 0336 GMT
The US equity indices closed flat yesterday after starting off the new year with a bang the day before. The economic data yesterday was mixed. Whereas the factory orders surged, the data from the housing side was a disappointment. The Pending Home Sales had fallen sharply in November. The markets are awaiting clear indications to determine the direction of the economy in 2010.
The Asian indices are trading higher today as well. The Nikkei (10726.13) and the Hang Seng (22368.07) are trading higher 0.40% each. The Sensex (17686.24) rose another 0.7% yesterday and may test Resistance at 18000 this week.
Crude (81.61) is continuing to trade strong. The increase in heating oil demand due to cold weather in the US and Europe is keeping the prices higher. Immediate Support is seen at 80.90 and if it holds, we might see a rise towards 85-87 over the next few days. The US Crude inventory data is due today. To see the Crude graph click on the following link:
Gold (1122.00) has broken above 1100 and is continuing to trade higher. The speculation that dollar weakness will continue, is supporting the Commodity's price rise. However, 1128.25 is a significant Resistance seen on the weekly's chart. A strong weekly close above this Resistance might increase the chances revisiting 1200 in the coming days. To see the Resistance on the weekly Gold graph click on the following link:
Decent recovery in the Dollar overnight against the "high yielders" which should give way to a couple of days of sideways range trading.
The Yen (91.87) has gained the most overnight with USD-JPY coming down substantially from Monday's high near 93.22. Further dip towards 91.00 Support likely. The Euro (1.4357) has come down after a failed spike to 1.4483. Look for a range of 1.4250-4425 the rest of this week. The Aussie (0.9135) is relatively stable but can dip towards 0.9030 given the strength in the Yen. Dollar-Swiss (1.0330) has risen from yesterday's low near 1.0250 and should be ranged between 1.0250-0425 over today-tomorrow. A period of extended range trade between 1.02-05 is possible for a few weeks. The Pound (1.5985) has fallen quite a bit from Monday's high near 1.6245 on slipping UK Consumer Confidence but may now enter a range of 1.59-61.
Asian currencies had gained substantially yesterday and are strong today as well. USD-SGD is trading lower near 1.3960 while USD-KRW is trading at a new 12-month low of 1135.50. Bank of Indonesia is reported to have intervened to buy the Rupiah yesterday and Dollar-Rupee had also moved up to close near 46.24 on suspected RBI action. The NDFs are quoting lower near 46.14-19 reflecting the strength in the Asian currencies. As such we might see an initial dip to 46.10 in Dollar-Rupee. It needs to be seen whether there will be a bounce from there or not.
3M USD LIBOR was set at 0.25%. The yields on US Treasuries declined nearly 2-5 bps for maturites over 1Y. The 2Y and 10Y benchmark yields are trading 2 and 4 bps lower to quote at 1.04% and 3.78% respectively.
The BOE is scheduled for tomorrow. In India, the markets are expecting some drying out of the liquidity from the system by means of rate increase or CRR increase or a combination of both in the RBI monetary policy review later this month.
UK Cons Conf
...Actual 69...Previous 74
01:15 GMT US ADP Emp
...Expected -74K...Previous -169K
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