Friday January 22, 2010 - 03:36:26 GMT
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FX Thoughts for the Day - www.fxthoughts.com
Morning Briefing : 22-Jan-2010 - 0334 GMT
It has been mayhem for global equity markets yesterday overnight and today morning. The Dow (10389.88) fell over 2% yesterday. Earlier yesterday, the Indian equities dropped sharply on "lower-than-expected" earnings report from the Capital Goods major, L&T and BHEL. In US, President Obama called for stricter rules for banks to regulate the risky proprietary trades undertaken by them to escalate earnings. Over the past two days, the Dow has fallen 336 points or 3.1%.
The Asian indices are trading sharply lower as well. The Nikkei (10573.01) has fallen nearly 3% on Obama's regulatory proposal for banks. The Shanghai (3102.20) and the Hang Seng (20404.11) has fallen nearly 2% today. The Sensex (17051.14) took a beating yesterday as it fell nearly 2.5%. It may continue to fall today on global cues.
Crude (75.83) fell sharply yesterday and is now trading lower below 76. Though the EIA's data release showed an unexpected drop in US Crude inventories, the proposal made by President Obama to cut proprietary trading at large banks and sharp drop in the US refining activity pulled down the price sharply. 75.50-00 is the significant immediate Support region a break below which might see further dip towards 73.50.
Gold (1093.70) has broken below 1100. Stronger dollar, unexpected increase in the initail jobless claims that is still keeping up the concerns of the economic recovery kept the metal's price pressured on the downside. 1100-1080 is the significant Support region which we might expect to hold.
Euro (1.4132) has bounced slightly after days of fall. Still, it may run into selling near 1.42. The Aussie (0.9035) had fallen below the 21-day MA (0.9119) yesterday and is stabilising a bit just now, after having tested a crucial Support at 0.8991. A break below that might be fatal. Dollar-Yen (89.95) has crashed through the US and Asian sessions, coming down from a high near 91.85 yesterday. Look for a further decline towards 88.20, as further positions are unwound, maybe in response to Obama's proposal to restrict proprietary trading at banks.
The Pound (1.6205) is mixed, trading more or less in the middle of a 1.60-65 range, relatively unaffected by moves elsewhere in the currency markets. Dollar-Swiss (1.0415) has dipped from a high near 1.0495 yesterday. Medium-term Resistance seen at 1.0555, the 200-day MA.
USD-SGD rose to high near 1.4069 today. Crucial, make/ break Resistance seen at 1.4100. Dollar-Won (1148) has risen further today and might move up towards 1155-65 in the coming days. Dollar-Rupee had closed at 46.03 yesterday and might well see 46.20 today.
3M USD LIBOR was unchanged at 0.25%. The yields fell sharply yesterday as investors moved towards safer haven on Obama's regulatory proposals for bank's proprietary trading. The 2Y and 10Y yields fell 5-6 bps to quote at 0.82% and 3.58% respectively.
12:00 GMT EU EA (16) Curr Acct Bal Q3 '09 (Fnl)
...Previous EUR 1.6 bln
12:00 GMT EU EA (16) Bal of Trade in services
...Previous EUR 10.7 bln
12:00 GMT EU EA (16) Curr Acct Bal as % of GDP
15:00 GMT Dec US Philifed Index
...Actual 15.2...Previous 22.5
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