Wednesday April 7, 2010 - 03:51:34 GMT
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FX Thoughts for the Day - www.fxthoughts.com
Morning Briefing : 07-Apr-2010 - 0359 GMT
The US Equities ended mixed yesterday. The Dow (10969.99) was flat after trading lower for most part of the day while the Nasdaq (2436.81) was up 0.30%. The markets recovered later in the day after a news that the Fed may keep rates low for a an extended time period.
The Asian Equities are mixed today. The Nikkei (11321.29) is up 0.35%, the Shanghai (3153.501) is down 0.16% and the Hang Seng (21795.37) is up 1.2%. In India, the Sensex (17941.37) and the Nifty (5366.00) ended flat after a silent session yesterday. Watch the 18100-300 Resistance on the Sensex in the coming days.
Crude (86.78) is continued to trade above 86 although the dollar strengthened and was narrowly ranged between 86-87 yesterday. With Support at 86 there are good chances of a rise to 90 in the coming days. Note 89.99 is the 50% retracement level of the fall from 147.27 (11-Jul-08) to 32.70 (20-Jan-09). The US Crude inventory data is due today. To see the Crude graph click on the following link:
Gold (1135.20) is trading near the upper end of the range (1080-1140) in which it has been trading over the past few weeks. A strong break above 1140-50 might increase the chances of rise once again to 1200. However, the stronger dollar might retain the sideways move (1080-1140) in Gold for sometime before we see a breakout on either side of this range which would determine the direction of move going forward.
The Euro (1.3385) fell to a low near 1.3355 yesterday on continued/ renewed concerns about Greece and remains below 1.34 today, with potential to dip towards 1.3320. Dollar-Yen (94.20) has moved up today after having dipped to 93.56 yesterday, and may rally towards 94.80 over today-tomorrow. Driven by the 25bp rate hike yesterday, the Aussie (0.9280) has been a big mover overnight, and finally seems to be breaking past the 0.9220-50 region that had been holding it down for a long time. A test of the Jan-10 highs near 0.9325 is possible.
Dollar-Swiss (1.0695) clocked a good rise to 1.0720 yesterday and might be worth buying on dips for a further rise towards 1.0790. The Pound (1.5260) has recovered beautifully after dipping to a low of 1.5130 and might become very bullish if the recovery is sustained today.
Contrary to our reading, USD-SGD (1.3947) has been coming down for the last three days. It is trading at a crucial Support now and might become bearish unless there is a good bounce over today-tomorrow. So, please keep an eye on this one. Dollar-Won continues to grind lower, trading near 1121 now. Dollar-Rupee closed at 44.45 yesterday. It has a super-crucial cluster of Supports in the 44.20-00 region.
Bloomberg reports that China is "considering allowing the yuan to trade against the Russian ruble, South Korean won and Malaysian ringgit to promote its use in cross-border trade". Fascinating.
3M USD LIBOR was unchanged at 0.29%. The yields on US Treasuries cooled of a little after having risen sharply over the last several days. The 2Y and 10Y yields were down 4 bps each and was quoted near 1.13% and 3.95% respectively.
In Europe, the Greece debt concerns continue to worry. The markets expect a cold response to Greek Dollar bonds issue. There are also fears that the EU-IMF aid plan may not work for Greeece. All these continue to pressure Greek bonds which has driven the yield premium between Greek and German 10Y bonds to 385 bps.
Yesterday, the Reserve Bank of Australia had increased interest rates by 25 bps to 4.25% in line with market expectations. The Bank of Japan has kept the interest rates unchanged at 0.10% today.
...Actual 0.10%...Previous 0.10%
08:30 GMT UK Cons Conf
...Expected 81...Previous 80
09:00 GMT EU GDP Q4 '09 (Fnl)
...Expected 0.1%...Previous 0.1%
AUD RBA Interest Rate
...Actual 4.25%....Previous 4.00%
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