Thursday February 25, 2010 - 03:52:08 GMT
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FX Thoughts for the Day - www.fxthoughts.com
Morning Briefing : 25-Feb-2010 - 0349 GMT
The American Markets closed higher yesterday. The Dow (10374.16) closed up by 0.89% and the Nasdaq (2235.90) closed up by 1.01%. The Markets closed in the green after a statement from the Federal Reserve Chairman, Ben Bernanke, that the interest rates would remain low, promising more cheap money in the economy. The Dow has a resistance near 10700-50 levels.
The Asian Markets are mixed today. The Shanghai (3050.37) is trading higher by 0.93% and the HangSeng (20555.10) is trading higher by 0.43% while the Nikkei (10179.79) is trading lower by 0.19%. The Shanghai has a resistance near 3150-75 levels and may see a rise towards 3400 if the immediate resistance is broken. The Nikkei has a resistance near 10600-50, which if tested can drag it down to 9800-50. The Sensex (16255.97) closed lower by 0.19% after trading flat yesterday. We continue to hold our view of a rise in towards 17500 if the Sensex continues to honor the support near 16000 levels.
To see Shanghai charts click on the following link:
To see Nikkei charts click on the following link:
To see Sensex charts click on the following link:
Crude (80.07) is back once again above 80. Though the EIA's data release showed an unexpected increase in the US Crude inventories, the Fed's commitment to retain lower interest rates for an extended period supported the price rise Curde price higher. 81 is a significant Resistance level to watch for a break above which might trigger fresh rally towards 83-85 in the coming days. Support is seen at 78.20.
Gold (1098.10) broke and closed below 1100 yesterday. The stronger dollar is retaining the downside pressure on the metal. The next significant Support level to watch for is 1080. As mentioned earlier, We may expect a sideways move between 1080-1150 now, since 1100 is broken.
Further decline in the Euro (1.3493) against the Dollar and the Yen on continued Greece concerns. S&P is talking about a downgrade for Greece. The worse than expected New Home Sales in the USA have not helped "risk appetite" either. USD-JPY is trading lower near 89.65 and EUR-JPY is trading lower near 120.95. The Pound (1.5365) continues to weaken within a steady and sharp downtrend. The Aussie (0.8918) has been ranged near current levels since yesterday but has a bit of a negative bias towards 0.8730. Dollar-Swiss trades near 1.0855 and is expected to rise a little more towards 1.0940.
With people in Spain protesting against cuts in government spending, the feeling the rest of the world gets is that the Europeans just do not seem to be getting it. Concerns about the PIGS are outweighing the tepid outlook for the US economy. The Euro had, in fact, rallied initially in the US session yesterday on Bernanke's grim readings about the US recovery not being sustainable as yet, but fell back thereafter as European bad news took over.
In Asia, the Korean Won has weakened to 1163.80 and is testing a major resistance for the USD-KRW pair at the current level. The greater chances seem to be that the Resistance will eventually break, leading to further weakness for the Won. The USD-SGD (1.4114) is in a bit of an uptrend, with Support at 1.4057 and potential to rise towards 1.4150-70 in the next few days. Dollar-Rupee had closed at 46.3250 yesterday. The NDFs are flat, trading near 46.30-35. The market faces an important Resistance at 46.40 today. Whether it breaks or not will decide the fate for the Rupee in March.
3M USD LIBOR was unchanged at 0.25%. The yields on US Treasuries dipped slightly yesterday. The 2Y and 10Y yields were quoting 3 and 1 bps lower at 0.85% and 3.68% respectively.
Bernanke has reassured the markets that it is going to continue to keep the interest rates low. In Greece, S&P has commented that its debt rating may be downgraded again by the end of March which saw investors move towards safer option - US Treasuries and German bonds. Greece's deficit concerns are helping the Euro yields to fall. To see the chart of Euro yields, click on: http://www.kshitij.com/graphgallery/eursin00.shtml#sin00
10:00 GMT EU Biz Climate
13:30 GMT Jan US Durable Goods Orders
...Expected 1.6%...Previous 1.0%
Jan US New Home Sales
...Actual 309K...Previous 348K
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