Thursday January 21, 2010 - 03:38:35 GMT
Share This Story
FX Thoughts for the Day - www.fxthoughts.com
Morning Briefing : 21-Jan-2010 - 0335 GMT
The US equities fell yesterday on concerns that China's monetary tightening measures may stall economic recovery. World Bank has shown concerns of Asia's risk asset bubble caused by surging growth in Asian economies. The Dow (10603.15) and the Nasdaq (2291.25) closed over 1% lower yesterday after falling nearly 2% intra-day.
The Asian indices are trading lower today. Among major indices, only the Nikkei (10776.99) is in the green. The Shanghai (3128.38) which fell 3% yesterday is down further 1% today. Shanghai seems to be nearing the end of the wedge on the weekly candles. A resolution of the wedge is likely to determine the direction going forward. The Sensex (17474.49) ended flat yesterday after trading higher for most of the day. It may dip today on global cues.
Crude (77.66) fell sharply and closed below 78 yesterday. The Credit policy tightening in China, stronger dollar and expected decline in demand because of the easing cold weather pulled down the price. Support is seen in 76.50-25 region which might be tested if it continues to trade below 78. The US Crude inventory data is due today. To see the Crude graph click on the following link:
Gold (1114.00) fell shaply breaking below 1120 yesterday. The dollar which strenghtend to a five month high against Euro pulled down the Commodity's price. As mentioned earlier 1100-1090 is the significant Support region below 1120 which we might expect to hold as the broader outlook remains bullish.
Further sharp decline in the Euro (1.4087) to a low near 1.4065 so far today. Test of 1.3945 possible. The Aussie (0.9105) has also declined to a low near 0.9071 in the US session, but might find some Support at 0.9050. All this weakening in the "high yielders" is despite the Yen (91.45) weakening further today, as compared to 90.31 seen on Tuesday. Concerns about China restricting bank lending and insipid Housing Starts data from the USA yesterday seem to be weighing on the markets. Whether these are mere "fears" or not is immaterial because they are inflicting damage on trading positions in the near term.
The Pound (1.6255) continues to fall on profit-taking after having hit a high of 1.6460 on Tuesday. It can dip further towards 1.6200-6150. Dollar-Swiss (1.0458) has surged following the Euro's decline and may well test the Dec-09 high of 1.05 before dipping back again.
The Asians had weakened quite a bit yesterday, and are looking mixed. The USD-SGD (1.4006) has resistance at 1.4030 while the Korean Won (1137.50) might weaken further towards 1150. Dollar-Rupee had closed at 45.93 yesterday and has chances of rising further towards 46.00-20.
3M USD LIBOR was unchanged at 0.25%. The yields on US Treasuries fell for maturities over 5Y as the investors have once again started looking for a safe haven on concerns that sharp growth in China has created a lot of asset bubbles on the way. The yields on 2Y and 10Y Treasuries were quoted 1 and 4 bps lower near 0.88% and 3.66% respectively.
15:00 GMT Dec US Philifed Index
...Expected 18.2...Previous 20.4
UK BOE Minutes
...Actual 0-0-9 hold...Previous 0-0-9 hold
...Actual 7.8%...Previous 7.9%
CA Core Inflation Index Y/Y
...Actual 1.6%...Previous 1.5%
US Dec Core PPI (MoM)
...Actual 0.2%...Previous 1.8%
US Dec Housing Starts
...Actual 0.56 Mln...Previous 0.58 Mln
Forex Trading News
Daily Forex Market News
Forex news reports can be found on the forex research
headlines page below. Here you will find real-time forex market news reports
provided by respected contributors of currency trading information. Daily forex
market news, weekly forex research and monthly forex news features can be found
Real-time forex market news reports and features providing
other currency trading information can be accessed by clicking on any of the
headlines below. At the top of the forex blog page you will find the latest
forex trading information. Scroll down the page if you are looking for less
recent currency trading information. Scroll to the bottom of fx blog headlines
and click on the link for past reports on forex. Currency world news reports
from previous years can be found on the left sidebar under "FX Archives."