Monday May 31, 2010 - 03:31:54 GMT
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FX Thoughts for the Day - www.fxthoughts.com
Morning Briefing : 31-May-2010 - 0330 GMT
Most Asian indices are trading in the Green today, between +0.1% (China) to +2.5% (Singapore). The exceptions are the All Ordinaries (Australia), which is modestly lower near 4463 (-0.36%) and the Nikkei, which trade near 9743 (-0.21%).
The UK and US are closed today. On Friday, the Dow had closed at 10136.36, having failed to rise past important Resistance at 10335. That is a worry. The overall outlook is still cautious and could easily give in to pessimism if things do not improve. The US Non-Farm Payroll numbers at the end of this week are likely to be crucial for all markets worldwide. A rise of 300K + will be needed to bring some cheer into the makret. Unemployment will also have to fall below last month's level of 9.9%. Without this, the sentiment cannot improve.
The Sensex had closed at 16863.06 last week. Looks biddish for now, buy will find some Resistance in the 17300-600 region.
Crude (74.12) has broken above the Resistance at 72 and is continuing to trade higher. However, the downgrading of Spain's credit rating restricted further rise on Friday. Important Resistance is seen at 76 both on the 3-day and the weekly candles and a strong break above it might trigger fresh rally to 80-85 once again. However, if 76 holds we might see a pull back to 72 where some Support is seen. To see the Resistance on the Crude 3-day and weekly candles click on the following link:
Gold (1210.40) is continuing to trade above 1200 and is ranged between 1200-20 over the last few days. While above 1200 there are good chances of a rise towards 1250 in the coming days. However, much strength is not seen on its current upmove above 1200 and a strong break below 1200 might pull it down towards 1180-60. The broader picture continues to remain bullish and we might see a bounce back from 1180-60 region.
To see the Gold graph click on the following link:
Last day of the month, first day of the week. UK and US on holiday today. Markets may be quiet as a result. The Euro (1.2325) is not looking overly bullish, having failed to sustain above 1.24 last week. Appears consolidative at best. On the other hand, Dollar-Yen (91.42) has found good Support near 89 over the last two weeks and is looking bullish now, for a rise towards 93.00. Euro-Yen (112.69) too has seen good buying on the dip in the last two weeks and may be poised for a rise towards 114.75.
The Pound (1.4490) is slightly more bullish than the Euro, but not much overall. Seems ranged between 1.4350-4580. Expect little movement today in any case, with the UK being closed. Dollar-Swiss (1.1548) had been looking like it would see a corrective fall towards 1.14 last week, but has managed to hold up well above 1.1480 and has rallied a bit again. The Aussie (0.8488) has recovered well from the low of 0.8070 seen in the last two weeks. The Aussie is seeing extraordinary volatility and might trade in a range of 0.8350-8700 this week, with a bullish bias.
In Asia, the Won trades near 1198.70. It has recovered a good bit from last week's weak level of 1277. The long-term trend seems Dollar-positive, however. USD-SGD (1.4007) has come off from last week's high near 1.4208, but appears bullish in the long term. Dollar-Rupee had closed at 46.35 on Friday, in an very oversold condition. Look for a rally towards 46.60-70 this week.
The 3M USD LIBOR was unchanged at 0.54%. The 2Y yield was down 5 bps to quote at 0.77% while the 10Y yield was up 9 bps to quote at 3.29%.
Spain's credit rating has been downgraded to AA+ from AAA which has added further pressure on the Euro zone debt crisis.
The RBA and BOC meeting are scheduled for tomorrow (01-Jun-10). The RBA is expected to leave the interest rates unchanged at 4.50%. The BOC is expected to increase the interest rates by 25 bps from the current rate of 0.25%.
11:00 GMT IN GDP
09:00 GMT EU Biz Climate
12:30 GMT CA GDP
...Expected 0.5%...Previous 0.3%
...Actual 5.1% ...Previous 5.0%
US Apr Personal Income
...Actual 0.4%...Previous 0.4%
US Apr PCE Price Index M/M
...Actual 0.0%...Previous 0.6%
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