Monday May 10, 2010 - 03:57:44 GMT
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FX Thoughts for the Day - www.fxthoughts.com
Morning Briefing : 10-May-2010 - 0355 GMT
Asia-Pac stocks are all up today, the gains ranging from +0.12% (Malaysia) to +1.98% (Australia). The Nikkei is up 1.3% near 10,499. This is a to-be-expected reaction after the sharp slide last week and the news of the EU standing behind Greece and the Euro. Many of the Indices had closed near significant Support levels last week and bargain hunters are in the market looking for cheap stocks. However, we might see quiet market conditions this week, given that everybody would be sitting on huge losses and would be wanting to figure out what has happened and is likely to happen.
The Sensex-Nifty had closed at 16769.11 and 5018.05 respectively on Monday, just above crucial Support levels and might bounce well this week.
Crude (76.59) continued its fall on Friday also. However, the significant Trendline Support at 74.50 mentioned ealier has held and it has bounced back today. If 74.50 continues to hold we might see a bounce back once again towards 80-82 in the coming days. However, a strong break below 74.50 might see 72-70 on the downside. To see the Trendline Support on the Crude graph click on the following link:
Gold (1202.40) is continuing to trade higher and is keeping up its overall bullish sentiment intact for a rise towards 1250 in the coming days/weeks. Immediate Support is seen at 1190-1180 region. To see the Gold graph click on the following link:
Sharp corrective bounce in the Euro (1.2920) today. The EU has decided to allocate EUR 750 bln ($964 bln) to stand behind the bond markets and the Euro. The market will draw comfort from this for a while and will want to buy the oversold Euro (and other currencies) in the near. The big question before the market is regarding the longer term trend. 1.30 and 1.33 are significant Resistances on the Weekly Candles to watch this week, especially on a Closing basis.
Dollar-Yen (92.62) has bounced sharply from last week's exaggerated fall to 88.00. Expect either very quiet conditions or very choppy trades in an indecisive range of 90.50 and 94.50 this week. The Pound (1.4865) too has recovered a bit from last week's low near 1.4475, but may struggle (especially vis-a-vis the Euro) given that the UK is without a leader as yet.
The Aussie (0.9030) may have lost the chance to break into higher ground last week. It has Resistance at 0.9150 this week and might find Sellers come in on a further rally from here. It had seen a low near 0.8705 last week.
Although the Asian currencies are "stronger" today on the European aid news, they had, in all likelihood, broken their long-term strengthening trend last week. The USD-KRW (1130.60) and USD-SGD (1.3789) might get bought on further dips. Dollar-Rupee had closed near 45.4750 last week. Expect Support on dips to 45.20-10 this week.
The 3M USD LIBOR was up 6 bps to be set at 0.43. The 2Y and 10Y yields rose 12 bps and 11 bps each to quote at 0.92% and 3.54% respectively.
The BOE meeting is scheduled for today and is expected to leave the interest rates unchanged at 0.50%.
11:00 GMT BOE Mtg
...Expected 0.50%...Previous 0.50%
...Actual 290K...Previous 230K
CA Lab Force
...Actual 108.7K...Previous 17.9K
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