Thursday March 18, 2010 - 03:45:00 GMT
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FX Thoughts for the Day - www.fxthoughts.com
Morning Briefing : 18-Mar-2010 - 0340 GMT
The US Markets ended in the Green yesterday led by Financial Institutions and Energy Producers. The Dow (10733.67) closed up 0.45% and the Nasdaq (2389.09) closed up 0.47%. The Dow advanced for the seventh day, its longest streak since August, and climbed to the highest level since 1-Oct-08. We continue to hold our view of an up move towards 11000-250 on the Dow in the next few weeks.
The Asian Equities are trading in the Red today amid worries that the Bank of Japan's move to increase the 3-month bank lending facility may not be effective in stemming deflation as the demand remains too low for companies to increase investment. The Nikkei (10823.94, down 0.21%) looks strong and may see 11000-250 in the coming weeks. The Shanghai (3044.787, down 0.19%) has bounced strongly from its lows near 2975 and may see 3125-50 if it continues to stay above 3000 in the days ahead. The HangSeng (21344.72) is down 0.19%. In India, the Sensex (17490.08) was up 0.58% and the Nifty (5231.90) was up 0.65% yesterday. The Sensex is near crucial Resistance level, and a break above it may take it towards 18000 in the coming sessions.
Crude (82.62) is keeping up its upside momentum and heading towards the previous high of 83.95 (11-Jan-10). Though the EIA's data release showed an increase in US Crude inventories, the fall in gasoline and heating oil stocks, the increase in oil product demand in US and the OPEC's decision to leave the output unchanged as expected, supported the price rise. Whether Crude will break upside of the range (68-84) in which it has been trading over the last few months or will it retain it, we will have to wait and watch.
Gold (1123.40) is continuing to trade within the range 1100-50 that we been mentioning for some time. As mentioned earlier, 1100 is a very significant Trendline Support to be watched for as a break and weekly close below it might turn the metal price a little bearish. To see the Trendline Support on the Gold graph click on the following link:
After weakening yesterday, the Dollar has clawed back a bit today. The Euro (1.3725) has come off from yesterday's high near 1.3818. With this, the overall downtrend in the Euro still remains valid for now. Dollar-Yen (90.17) is trading near the lower end of the 89.95-90.75 range it has been inhabiting for the past few days. A break below 89.95 might be bearish. As a consequence, the Euro-Yen Cross (123.80) has come off well from yesterday's high near 125.06 and looks bearish for a fall towards 122.00.
The Pound (1.5310) has been a star performer over the last couple of days, seeing a high 1.5382 yesterday, but is seeing a bit of a pause at the moment. Note that it has averted disaster (a fall below 1.48) a couple of weeks ago despite strong bearish sentiments. This suggests possibilities of a contrarion Long here. The Aussie (0.9224) has moved up over the last couple of days, but is now close to testing an important Resistance near 0.9250, and might see some profit-taking today. Dollar-Swiss (1.0550) has been falling through this week but might be a good buy another 100 points lower today.
Among the Asians, USD-KRW (1130.40) continues to maintain its 1126-35 range, suggesting activity by the Bank of Korea. The Sing Dollar has strengthened further to 1.3921, but has chances of weakening again, according to the charts. Dollar-Rupee had closed lower at 45.3450 yesterday. It has an important Support at 45.20 that needs to be honoured if a further dip towards 44.80 is to be avoided.
3M USD LIBOR was unchanged at 0.26%. The yields on US Treasuries have been declining for the farther maturities over the last couple of weeks on expectations of lower inflation. US CPI is scheduled to be announced today. The difference between the 2Y and 10Y yields is near the lowest since January at 272 bps. Notice the sharp decline in yield differentials at the following page: http://www.kshitij.com/graphgallery/usddiff.shtml#sindiff
The Bank of Japan had kept the interest rates unchanged yesterday and have expanded the credit program to $220 bln to fight deflationary pressures.
09:00 GMT EU Trade Bal
...Expected 5.1 Bln...Previous 7.0 Bln
12:30 GMT US Feb Core CPI (MoM)
...Expected 0.1%...Previous -0.1%
14:00 GMT Feb US Philifed Index
...Expected 17.2...Previous 17.6
12:30 GMT US Current Account Balance
...Expected $ -120 Bln...Previous $ -108 Bln
...Actual 0.10%...Previous 0.10%
UK BOE Minutes
...Actual 0-0-9 hold...Previous 0-0-9 hold
...Actual 7.8%...Previous 7.8%
US Feb Core PPI (MoM)
...Actual 0.1%...Previous 0.3%
US Feb Core PPI (YoY)
...Actual 1.0%...Previous 1.0%
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