Wednesday January 13, 2010 - 03:34:49 GMT
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FX Thoughts for the Day - www.fxthoughts.com
Morning Briefing : 13-Jan-2010 - 0332 GMT
The US stocks fell after disappointing profit report from Alcoa. Besides China's tightening monetary policy weighed on pessimism that the 10 month surge in stocks may not be sustained. The Dow fell 0.34% and the Nasdaq fell 1.30% yesterday. The Resistance at 10700 on the Dow continues to hold.
The Asian indices are trading lower on China's move towards containing liquidity. The Shanghai is trading 2.11% lower at 3204.98, the Hang Seng (21806.86) is trading lower by 2.34% and the Nikkei (10781.92) 0.89% lower. The Sensex (17422.51) had seen some correction yesterday and may see some more correction today on global cues.
Crude (79.87) fell sharply yesterday and is now trading below 80. China's (the second largest oil consumer) move to increase their banks' reserve holdings by 0.5% inorder to keep the economy from growing too fast, which would slow down their fuel demand growth pulled down the Crude prices. Support is seen at 78.40, a break below which might see 78-77.50 on the downside.
Gold (1129.00) has fallen sharply failing to see a break above the Resistance at 1160. Support is seen at 1120 a break below which might pull it down towards 1100-1090. To see the Support on the Gold graph click on the following link:
Yesterday had seen the Dollar recover slightly against the Euro and the Aussie, but fall against the Yen. Dollar-Yen (91.00) may have caused a bit of a heartburn to several people by falling back from Friday's high near 93.79. It is not trading below its 20-day Moving Average and has good chances of falling towards 90.00. The Euro (1.4475) has Support at 1.4450 and looks bullish while the Support holds. The Euro-Yen Cross (131.75) has fallen alongwith the USDJPY and could be in danger of losing another 100 points.
The strength in the Yen has not really impacted the Aussie (0.9220) very badly. Whether the Support at 0.9170 will hold today or not should decide the trend for the day. The Kiwi (0.7397) is looking strong enough, so that should Support the Aussie. The Pound (1.6151) has dipped a bit from yesterday's high near 1.6195. Important intra-day Support at 1.6140 is the divider between Bull and Bear regions. Overall, the currency may be ranged between 1.5970-6210 for a couple of days. Dollar-Swiss (1.0197) is consolidating below 1.0210 since yesterday and has potential to resume its fall towards 1.0100.
Dollar-Won is trading slightly higher at 1125.60 but remains in an overall downtrend with Resistance at 1141. The USD-SGD (1.3903) has also bounced slightly. Although it remains bearish in the near term, there might be chances of it bottoming out above 1.37 in the longer term. Dollar-Rupee had closed at 45.71 yesterday and might rally a bit more towards 45.87 before falling back again.
3M USD LIBOR was set at 0.25%. The yields on US Treasuries fell sharply for longer term maturities. The 2Y and 10Y benchmark yields 2 and 10 bps to quote at 0.92% and 3.72% respectively; thus making the yield curve flatter.
Tightening monetary policy by China yesterday where in the People's Bank of China announced a rise in proportions of deposits that the banks set aside as reserves by 50 bps. This is being seen as a move to fight rising inflation and aviod asset price bubbles.
UK Trade Balance
...Actual $ -7.0 Bln...Previous $ -7.0 Bln
US Nov Trade Balance
...Actual $ -36.4 Bln...Previous $ -33.2 Bln
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