Thursday January 14, 2010 - 03:40:28 GMT
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FX Thoughts for the Day - www.fxthoughts.com
Morning Briefing : 14-Jan-2010 - 0338 GMT
The US equities rose yesterday. The Dow (10680.77) rose 0.50% as the Resistance at 10700 held. The Nasdaq (2307.90) rose 1.12%. The Fed had observed yesterday that the economy is recovering despite high unemployment. However, the US job market is known to recover vary fast. If so, the recovery would then be accelerated.
The Asian indices are trading higher today after falling yesterday on China's liquidity tightening. The Nikkei (10844.02) is up 1% and the Shanghai (3184.52) is up 0.36%. The Sensex (17509.80) had risen half a percent yesterday and may rise further today on global cues.
Following China's move to increase their bank's reserve holdings on Tuesday, the EIA's data release which showed an increase of 3.7 million barrels (against 1.2 million expected) in US Crude inventories added further downside pressure and pulled Crude (79.88) sharply down yesterday. However, the Support at 78.40 (on the weekly graph) mentioned yesterday has held and it has risen from yesterday's low of 78.37 once again. As of now the outlook is mixed. To see the Support on the Weekly Crude graph click on the following link:
Gold (1143.40) has risen from yesterday's low of 1118.50. Weaker dollar supported the rise yesterday. The Support at 1120 mentioned yesterday has held. We may expect a sideways move for some time. However, the broader picture continues to remain bullish.
The Dollar is on the mat again, losing against all currencies including the Pound, but not against the Yen (which has weakened to 91.62). The Euro (1.4540) is looking bullish for a rise to 1.4620. The Pound (1.6300) has seen a strong rise over the last two days on better economic data (narrower trade deficit and better outlook for retail sales) and might well rise further towards 1.64. The Aussie (0.9295) continues to look strong and is bolstered by better than expected employment gains today. A test of the previous high of 0.9408 is possible. Dollar-Swiss trades lower near 1.0170 reflecting the Euro's strength.
All eyes will be on the ECB rate decision today, where rates are expected to remain stable at 1.0%. Last week, the BOE had retained rates at 0.50%.
In Asia, the Sing Dollar (1.3861) has strengthened again with USD-SGD seeing a low near 1.3845 today, the strongest level for the Sing Dollar since Nov last year. The Korean Won too is gaining again, trading near 1120.80, after a pause over the last two days. We may well expect Dollar-Rupee to move down towards 45.50-40 today in response to the weak Dollar sentiment and due to the uptick in Stocks.
3M USD LIBOR was unchanged at 0.25%. The yields on US Treasuries have continued to rise. The 2Y and the 10Y yields have risen 6 and 8 bps yesterday to quote at 0.96% and 3.79% respectively. The yields on 30Y Treasuries (4.72% up 10 bps) are near 7 month high ahead of auction of $13 bln debt.
The Euro bunds have stayed at lowest level in 3 weeks ahead of the ECB Meet today. The market expectations are of unchanged interest rate of 1%.
Dec Australia Labour Force
...Actual 35.2K...Previous 31.4K
10:00 GMT EU Nov IND Prodn (MoM)
...Expected 0.6%...Previous -0.6%
12:45 GMT E-15 ECB Announcement
...Expected 1.00%...Previous 1.00%
01:30 GMT US Dec Retail Sales
...Expected 0.4%...Previous 1.3%
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