Monday March 22, 2010 - 03:40:45 GMT
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FX Thoughts for the Day - www.fxthoughts.com
Morning Briefing : 22-Mar-2010 - 0339 GMT
The US Markets were up last week. The Dow (10741.98) was up 1.10% and the Nasdaq (2374.41) was up 0.29%. The Dow has been honouring the trendline Support on the daily charts since 05-Feb-10 and if it continues to close above the Support line, it may touch 11000 in a couple of weeks. To see the trendline Support on the Dow, follow the link:
The Asian Indices are mixed today. The Shanghai (3071.526) is up 0.12% while the HangSeng (20938.60) is down 2%. Japan is closed today on account of Vernal Equinox. In India the Sensex (17578.23) was up 2.39% and the Nifty (5262.80) was up 2.45% last week. The Sensex has closed just above the Resistance on the weekly charts and may rise towards 17750-800 in a couple of weeks.
Crude (80.36) fell sharply on Friday below 81 and is now trading just above the Trendline Support at 80. The stronger dollar is keeping the price pressured on the downside and a strong break below 80 might pull it further down to 78-77.50 in the coming days. To see the Trendline Support on the Crude graph click on the following link:
Gold (1106.30) fell sharply on Friday as the dollar strengthend and tested the lower end of the range (1100-50) in which it has been trading for sometime. As mentioned earlier, 1100 is a crucial Support to watch for and a strong break below it would increase the chances of another 50-100 dollar fall.
All-round gains for the Dollar continue today, carrying over from Friday, as "risk aversion" hits the markets. The Euro (1.3515) might fall a fifth straight day today. The Pound (1.5008) has come off sharply from last week's high near 1.5382, failing to capitalise on an earlier bounce from 1.4708. It may test Support at 1.4840 this week. Dollar-Yen (90.45) remains ranged between 89.80-90.70.
Dollar-Swiss (1.06) has rallied from last week's low near 1.0506 and might be on its way up to 1.07-08 this week. The Aussie (0.9145) has met Resistance at 0.9250 last week and can dip further to 0.9085-65 this week.
The Korean Won (1137.50) has weakened a decent bit and USD-SGD has also moved up to 1.3982, from last week's low near 1.3910. This, apart from the dip in Equities worldwide) suggests that Dollar-Rupee may move up today, from last week's close near 45.50, despite the reverse repo rate hike by the RBI.
3M USD LIBOR was raised a little and was quoted at 0.2775% and the 6M USD LIBOR was raised from 0.4077% to 0.4233%. The yields on US Treasuries rose on Friday. Last week, the 2Y and 10Y yields closed 5 and 1 bps higher at 0.99% and 3.69% respectively.
Bloomberg reports that 2Y notes sold by Berkshire Hathway (Warren Buffett) in February yielded 3.5 bps less that US 2Y T-notes indicating growing diffidence among investors to invest in US Treasuries. The IMF too has warned the developed nations of high debt levels. It has projected a rise in government debt in G-7 economies (except German & Canada) from 75% of GDP in 2007 to 110% of GDP by 2014. This is likely to have a bearing on the credit rating of government debt of these nations. The US and the UK are very close to losing their AAA status.
No major data release today
CA Core Inflation Index Y/Y
Actual 2.1%...Previous 2.0%
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