Friday February 19, 2010 - 03:40:48 GMT
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FX Thoughts for the Day - www.fxthoughts.com
Morning Briefing : 19-Feb-2010 - 0338 GMT
The US equities rose higher yesterday. The Dow (10392.90) closed 0.81% higher. This was prior to the announcement by the Fed of 25 bps increase in 'discount rate' (rate banks pay for emergency loans) to 75 bps. This is being seen by the market partcipants as the part of a broader move by the Fed to pull back the aid it had provided to fight financial crisis despite Fed repeatedly assuring the consumers and businesses of record low levels for 'extended period'.
The Asian indices are a sea of red today following the 'discount rate' announcement out of US. The Nikkei (10259.43) is trading lower by 0.74% and the Hang Seng (19968.68) is trading 2.22% lower. The Sensex (16327.84) had seen some correction yesterday after two consecutive days of surge. Today, it may dip like all its other Asian counterparts. On the downside, there's medium term strong Support available at 15800.
Crude (77.97) has risen sharply breaking above the Resistance at 77.50 and recorded a high of 79.29 yesterday following the good economic data release. However, the Fed's move to increase the discount rates (the rates charged for emergency loans to banks) to 0.75% from 0.50% has pulled down the prices from yesterday's high and is expected to keep the price pressured below 80.
Gold (1102.70) has fallen from yesterday's high of 1024.80. The stronger dollar is keeping the prices lower. As mentioned earlier, Support is seen at 1100-1090 region a break below which might revisit 1080-60 levels once again. On the upside Resistance is seen in 1120-40 region.
Dollar continuing to trade strong all over following the Fed's move to increase the discount rate (rate charged for the emergency loans to banks). The Euro (1.3489) has broken below 1.35 and see a dip towards 1.3400-1.3380 today. Dollar-Yen (91.77) has risen sharply and might test the 200-DMA (92.25) which is the significant Resistance level to watch for. Euro-Yen Cross (123.79) is continuing to trade weak with strong Resistance at the 21-DMA (124.51).
The Pound (1.5433) has broken the range (1.55-58) on the downside and might see 1.5350-30 on the downside today if it contiues to trade below 1.55. Aussie (0.8918) is trading near the Support at 0.8900 a break below which might see further dip towards 0.8800-0.8780. Swiss (1.0866) has risen sharply breaking above the significant Resistance in 1.0800-20 region and might see further rise towards 1.0925-50 in the coming sessions.
Dollar-Ruppee has closed yesterday at 46.27/28 and might see higher levels today given the overall dollar strength. The 1W NDF is quoting at 46.39/44
3M USD LIBOR was unchanged at 0.25%. The big news on the interest rate side was Fed's surprise increase of 'discount rate' by 25 bps to 0.75%. Discount rate is the rate banks pay in the US for emergency loans. The yields on US Treasuries rose sharply yesterday. The 2Y and 10Y yields rose 8 and 4 bps to quote at 0.92% and 3.77% respectively.
13:30 GMT US Jan Core CPI (MoM)
...Expected 0.2%...Previous 0.1%
...Actual 0.10%...Previous 0.10%
15:00 GMT Jan US Philifed Index
...Actual 17.6...Previous 15.2
US Jan Core PPI (MoM)
...Actual 0.3%...Previous 0.0%
US Jan Core PPI (YoY)
...Actual 1.4%...Previous 0.4%
CA Core Inflation Index Y/Y
...Actual 2.0%...Previous 1.5%
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