Wednesday August 4, 2010 - 03:36:51 GMT
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FX Thoughts for the Day - www.fxthoughts.com
Morning Briefing : 04-Aug-2010 - 0329 GMT
The US Equities fell on account of disappointing earnings and economic reports yesterday. The Dow (10636.38) was down 0.36% and the S&P 500 (1120.46) was down 0.48%. The Dow may move up towards 10850-900 while above 10500 in the coming days.
The Asian Equities are mostly in the Red today. The Nikkei (9548.59) is down 1.50% on stronger Yen and the Shanghai (2617.12) is down 0.38%. In India, the markets opened on an optimistic note yesterday and ended marginally higher on weak Asian and European sentiments. The Sensex (18114.83) was up 0.19% and the Nifty (5439.55) was up about 0.15%. We continue to hold our view of a Resistance at 18500 on the Sensex and 5500 on the Nifty in the next few days.
Crude (82.27) continuing to trade strong as the dollar is retaining its weakness. With current strength on its upmove, a rise past 83 might take it further up towards 85-87 in the coming days. The US Crude inventory data is due today which is expected to show a drop in the inventories and it will be watched closely by the market. To see the Crude graph click on the following link:
Gold (1189.10) is continuing to trade below 1200 and is not showing much strength on its current bounce back move from the low of 1155.60. Immediate Resistance is seen in 1190-1200 region and a failure to see a strong break above this region might see a test of 1160-50 once again in the coming days. To see the Resistance on the Gold graph click on the following link:
Significant to note in the Gold/Curde ratio (currently at 14.45) graph is that, it is now below its significant Support region 15.00-14.80 and has good chance of moving further down to 14.00-13.80. This Supports our bullish view on Crude for a rise to 85-87 and correspondingly Gold could be ranged between 1170-1220. To see the Gold/Crude ration click on the following link:
Most non-Dollar currencies remain strong, having risen spectacularly well through July. Although no one is selling them yet, they are now close to testing important Resistance levels. Further strength may require some correction/ consolidation.
The Euro (1.3225) is moving up well in a rising wedge on the Daily, but needs to rest for a while. EU Retail Sales today is to be watched, where an insipid 0.1% M-o-M growth is expected. Dollar-Yen (85.50) has fallen below an important support (now Resistance, likely) at 85.75. This can be dampener for "risky" assets/ currencies such as the Aussie. Take a look at
The Euro-Yen Cross (113.10) has been falling for the last two days due to the Yen's strength, coming down from a high near 114.74. Support is seen at 112.65 today.
Dollar-Swiss (1.0397) seems to be nibbling away at the 1.0400-0350 Support, but is also getting bought on the dips. Can be bearish on break below 1.0350. The Pound (1.5940) continues to move up, now the 10th day of consecutive rise. Some Fibonacci resistance may be available near 1.6050. The UK Consumer Confidence today would be data release to be watched. The Aussie (0.9145) also remains strong, but may find Resistance on trendlines visible on the Weekly Candles, as can be seen on the followong page:
In Asia, the USD-KRW (1169.30) has declined further since yesterday, and is testing the 100-day MA at 1169.65 today. USD-SGD (1.3515) has seen a low near 1.3478 so far this week, which is close to its lowest level of 1.3447, seen in Jul-08. Dollar-Rupee, which closed at 46.1650 yesterday, may find Support near 46.00 today, especially if the Asian currencies also weaken a bit. Note that the ADXY is also nearing crucial Resistance at 112.75.
The 3M USD LIBOR was down 1 bps to be set at 0.43%. The 2Y and 10Y yields were down 3 bps and 4 bps each to quote at 0.52% and 2.90% respectively.
Yesterday, the RBA left the interest rates unchanged at 4.50% as expected.
The BOE and ECB meet on interest rate decision is due tomorrow (05-Aug-10)
July Australia Trade Balance
...Actual A$ 3.54 Bln...Previous A$ 1.83 Bln
09:00 GMT EU Retail Sales
...Expected 0.0%...Previous 0.1%
12:15 GMT US ADP Emp
...Expected 36K...Previous 13K
AUD RBA Interest Rate
...Actual 4.50%...Previous 4.50%
US June Personal Income
...Actual 0.%...Previous 0.3%
US June PCE Price Index M/M
...Actual 0.0%...Previous 0.1%
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