Tuesday July 6, 2010 - 03:48:15 GMT
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FX Thoughts for the Day - www.fxthoughts.com
Morning Briefing : 06-Jul-2010 - 0346 GMT
The US Equities were closed yesterday. The Dow (9686.48.53) has some important Supports in the region of 9550-500.
The Asian Equities are mixed today. The Nikkei (9181.78, down 0.92%) fell on account of stronger Yen and may dip further towards 9000 in the next few days. The Shanghai (2386.90, up 0.97%) may fall towards 2300 in the coming days. In India, the Sensex (17441.44) was down 0.11% and the Nifty (5235.90) was flat yesterday. While above 17450-400 the Sensex may bounce back towards 17700 in the coming days, however, a break below 17400 may pull it towards 17200-100.
Crude (71.49) is retaining its downside pressure. Trading was muted yesterday due to holiday in US. The global economic recovery concerns and the demand worries are keeping the price lower. We might expect a test of 70 in the coming days. It is to be noted that Crude has been broadly ranged between 65-87 and is now heading towards the lower end of this range. To see the Crude graph click on the following link:
Gold (1206.50) is not showing much strength on its upmove above 1200. As mentioned earlier Support-turned-Resistance is seen in 1220-30 region and while it holds there are good chances seeing a break below 1200 and a downmove towards 1280-70. However, the broader picture continues to remain bullish.
Currencies were generally quiet yesterday, with the US being closed for Independence Day. The Euro (1.2507) has seen an early morning dip to 1.2480, which is a crucial intra-day Support to watch today. Dollar-Yen (87.55) remains in a strong downtrend, but might enter into stabilisation mode unless it falls below 87.20 today. The Euro-Yen Cross (109.55) might find Support near 108.50-00 for a few days and rally towards 111.50.
Dollar-Swiss (1.0625) is testing its 200-day MA (1.0621) again at the moment and might trade between 1.0550-0700 for a couple of days. The pair trades at a very crucial juncture and needs to be watched carefully for further bearishness going forward. The Pound (1.5127) has found Resistance at 1.5200-30 over the last couple of days and might see a decent profit-taking dip towards 1.5000-4950 over the next couple of days. The Aussie (0.8365) might see a short-covering rally towards 0.8410-30 over today-tomorrow. The RBA meets today to decide on interest rates today. Market expects a "no change" decision on the rates which are currently running at 4.5%.
In Asia, Dollar-Won has risen to 1226.70 today, from a dip towards 1200 yesterday. With Support at 1215, can rally further towards 1233. The USD-SGD (1.3935) is more modestly biddish. The Indian Rupee had closed at 46.77 yesterday, in a thin market and looks relatively weak.
The 3M USD LIBOR was unchanged at 0.53%. The 2Y and 10Y yields were down 2 bps and 5 bps each to quote at 0.60% and 2.93%.
The RBA meet is scheduled for today and it is expected to leave the interest rates unchanged at 4.50%.
The 10Y Bund-10Y TBond differential is currently at its very significant Resistance level (-0.40). If this Resistance holds, the differential might fall to -1.0. As seen from the graph this fall could reflect a sharp fall in the EUR/USD from current level of 1.2515. To see the EURUSD Vs 10Y Bund-10Y TBond differential graph click on the following link:
04:30 GMT AUD RBA Interest Rate
...Expected 4.50%...Previous 4.50%
EU Retail Sales
...Actual 0.2%...Previous -0.9%
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