Tuesday February 9, 2010 - 04:02:02 GMT
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FX Thoughts for the Day - www.fxthoughts.com
Morning Briefing : 09-Feb-2010 - 0355 GMT
The Dow (9908.39) closed below 10000 for the first time in 3 months as the debt concerns of Europe took centrestage. The concerns over Chinese mometary tightening and US bank regulations, compounded with the recent Europe budget deficit concerns has been pressuring the stocks down since the beginning of 2010. There's crucial Support near 9600 on the Dow which may be tested and honoured this week.
The Asian equities are trading mixed today. While the Nikkei (9907.65) is down 0.44%, the Shanghai (2942.06) and the Hang Seng (19494.15) are up over half a perecent each. The Sensex (15935.61) closed flat yesterday after oscillating over 400 points intra day. The Support on Sensex near 15700-15600 looks strong enough for this week which could lead to some consolidation near this region over the next few days.
Crude (71.51) has risen yesterday taking Support from weaker dollar and cold weather. Resistance is seen at 72.50. While it holds, a break below the Support at 71 might pull it down towards 67.50.
Gold (1063.70) has risen from Friday's low of 1044.50. However, much upside momemtum is not seen and with Resistance in 1080-1100 region, we might expect it to remain pressured on the downside.
Consolidative trading in the currency markets since yesterday, understandable after many days of large moves. Dollar gains remains the overall theme in the market. The Euro (1.3673) is trading a range of 1.3610-3720 since yesterday within an overall downtrend, as the bad news from Europe starts getting into the price. Dollar-Yen (89.35) continues to trade sideways. Expect a range of 90.50-88.50 over the course of the week. The Euro-Yen Cross (122.18) is vulnerable to the downside alongwith Euro-Dollar.
The Aussie (0.8648) is consolidating/ hesitating above its 200-day Moving Average near 0.8580, and is in danger of a large fall if this Support breaks. The Australian Labour Force data on Thursday could be a catalyst to watch out for. The Pound (1.5585) is in a strong downtrend with intra-day Resistance at 1.5620-60. Dollar-Swiss (1.0735) has also been consolidating for the last couple of days but remains in an overall uptrend that can target 1.08+.
A strong uptrend exists in USD-SGD as well, which can target 1.43+ as compared to the current level near 1.4215. Dollar-Won (1170.80) has come off slightly since yesterday but remains in good uptrend with Support at 1160. Dollar-Rupee had closed near 46.80 yesterday. The NDFs are trading near 46.85/90 today, suggesting chances of a rise in the onshore Spot.
3M USD LIBOR was unchanged at 0.25%. The US Treasury yields traded marginally higher yesterday. The 2Y and 10Y yields were quoted at 0.77% and 3.58% respectively.
The yields on Greek bonds have been surging even as the ECB is confident that the measures announced by Greece will work. The markets have also now started taking about Belgium and Italy's not-so-pleasant economic siuation, besides Greece, Spain and Portugal. Interestingly, the yields on Euro bunds have, however, not risen, instead they has been declining. Take a look at the chart of Euro yields on the following page: http://www.kshitij.com/graphgallery/eursin00.shtml#sin00
09:30 GMT UK Jan Trade Balance
...Expected $ -6.6 Bln...Previous $ -6.8 Bln
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