Wednesday January 27, 2010 - 03:50:50 GMT
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FX Thoughts for the Day - www.fxthoughts.com
Morning Briefing : 27-Jan-2010 - 0340 GMT
The US markets erased the early gains and ended flat yesterday. The Dow (10194.29) ended 0.03% lower while the Nasdaq (2203.73) ended 0.32% lower. The chances of Bernankeâ€™s re-election coupled with an increase in consumer confidence may drive the markets for the day.
The Asian Indices have been mixed today. The Nikkei (10355.62) is up 0.29% while the Shanghai (2997.52) is down by 0.72%. The Japanese markets are up on account of increase in exports for the first time since the collapse of Lehman Brothers in 2008. Chinese Markets are cautious on account of tightening of banking measures in China. The Shanghai is at a crucial level near 3000 and a move from here will be significant in determining the way ahead. No significant change is expected in the direction of the markets for the day. The Sensex (16,780.46) closed 0.47% lower following the markets globally. The Sensex performed better on account of great results from Reliance Industries limited. The markets are expected to open higher today on account of increased global confidence.
Crude (74.65) is continuing to trade below 75. The concerns about the economic recovery, China's step to crub lending and stronger dollar are keeping the price pressured on the downside. If it continues to trade below 75 we might see further downmove towards 72.50 in the coming days. The US Crude inventory data is due today.
Gold (1101.70) is trading silent after last week's sharp fall. The stronger dollar is keeping the pirce lower. A close above 1100 was not seen since the break below 1100 last week although an intraday break above 1100 was seen in last couple of days. The Fed's interest rate decision would be watched closely today.
Mixed bag in currencies today. The Euro (1.4080) fell from 1.4180 yesterday, but has bounced off 1.4040. See a wild, unpredictable range of 1.3950-4250 for the next couple of weeks. Dollar-Yen (89.45) saw a sharp decline yesterday from a high near 90.56 as investors continued to sell the "high yielders". This is despite the BOJ keeping rates steady, as expected. Further Yen strength likely, targeting 88.50-00. Surprisingly, the Aussie (0.9035) is managing to trade above the crucial Support at 0.9015, despite the Yen's strength and despite a dip to as low as 0.8938 yesterday. A rise past 0.9095 would be bullish for the Aussie, if seen.
The Pound (1.6138) is trading relatively weak, like the Euro, after last week's gains, but has Support at 1.6080 and at 1.6035. Dollar-Swiss (1.0460) had risen to 1.0495 yesterday, but has dipped back a bit today. See a range of 1.04-05 while Resistance at 1.05 holds. Expect Sellers to come in at 1.05.
Dollar-Won (1156) has met Resistance near 1168 since yesterday and could see some profit-taking after several days of rise. USD-SGD (1.4027) has Resistance at 1.41, which is holding and might make an attempt to towards 1.3970 while the Resistance at 1.41 continues to hold. Dollar-Rupee had closed at 46.13 on Monday. It may be quiet between 46.00-30 today.
Most markets may, in fact, be quiet today ahead of the FOMC meeting today.
The BoJ has kept the rates unchanged at 0.10%.
The 3M USD LOBOR was unchanged at 0.25% and the 2Y and 10Y yields were at 0.85% and 3.61% respectively.
The US Fed's interest rate decision is due today and it is expected to keep the rates unchanged (<0.25%).
...Actual 0.5%...Previous 1.0%
15:00 GMT Dec US New Home Sales
...Expected 372K...Previous 355K
19:15 GMT US FOMC Interest Rate
...Expected <0.25%...Previous <0.25%
...Actual 0.10%...Previous 0.10%
UK GDP Q4 '09 (Adv)
...Actual 0.1%...Previous -0.2%
Dec GER IFO Business Climate
...Actual 95.8 ...Previous 94.6
US Case Schiller
...Actual -5.3%...Previous -7.3%
US Cons Conf
...Actual 55.9...Previous 53.6
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