Thursday August 5, 2010 - 03:49:05 GMT
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FX Thoughts for the Day - www.fxthoughts.com
Morning Briefing : 05-Aug-2010 - 0344 GMT
The US Equities gained yesterday on account of rise in the service sector index coupled with hints of better jobs data by the ADP. The Dow (10680.43) was up 0.41% and the S&P 500 (1127.24) was up 0.61%. The Dow may move up towards 10850-900 while above 10500 in the coming days.
The Asians are mixed today. The Nikkei (9609.30) is up 1.26% on good numbers and bullish outlook by Toyota and weaker yen. The Shanghai (2626.86, down 0.44%) may see some upmove towards 2700 in the coming days. In India, the markets opened flat but gained later in the day, with IT companies leading the rally on account of strong numbers by Cognizant the day before. The Sensex (18217.44) was up 0.57% and the Nifty (5467.85) was up about 0.52%. 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 (82.39) fell from the high of 82.97 yesterday as the dollar strengthened. However, it bounced back from its low of 81.62 following the EIA's data release that showed a drop of 2.8 million barrels in US Crude inventories. The overall outlook is bullish with strong Support at 80, a break below which has to be seen to see a sharp downmove. As of now the chances of seeing a break below 80 is less. To see the Crude graph click on the following link:
Gold (1196.50) is risen from yesterday's low of 1187.30 and witnessed a break above 1200 in the intraday trading. A strong break above 1200 might trigger further upmove towards 1220 in the coming days which will also bring back the broader bullish sentiment.
Strength in the Dollar slightly inching back into the market. Important to note is that the Dollar index (80.97) witnessed a break below the 200-DMA (currently at 80.75) yesterday and has bounced back. Will this bounce back continue? This has to be watched carefully in the coming days.
The Euro (1.3152) has come off from its high of 1.3262. However, it has a good Support in 1.3125-00 region which if holds might see a bounce back once again towards 1.3200-50. Dollar-Yen (86.10) has risen above 86 and might test the Resistance in 86.50-70 today. Euro-Yen Cross (113.23), though bounced back from yesterday's low of 112.70, failed to see strong upmove above the Resistance at 113.50 which might retain its overall downside pressure. Support is seen in 113.00-112.85 region , a break below which might see 112.00-111.50 on the downside today.
Dollar-Swiss (1.0533) shot up in the US session yesterday and may move up further towards 1.0600-25 today. Aussie (0.9146) may come down towards 0.9000-8950 in the coming sessions today. Cable (1.5882) may see some buying at these levels and on further dips to 1.5850 for an eventual rise toward 1.5900-50 over today and tomorrow.
In Asia, the Korean-Won is continuing to trade strong near 1167. USD-SGD (1.3538) though has bounced back from its low of 1.3477, is still bearish with the chances of "Falling Three" pattern on the daily candles. Dollar-Rupee has closed at 46.16/17 yesterday and is continuing to retain its current downside pressure.
The 3M USD LIBOR was down 1 bps to be set at 0.42%. The 2Y and 10Y yields were up 3 bps and 4 bps each to quote at 0.55% and 2.94% respectively.
The BOE and ECB meet on interest rate decision is due today and they are expected to leave their interest rates unchanged at 0.50% and 1.00% respectively.
11:00 GMT BOE Mtg
...Expected 0.50%...Previous 0.50%
11:45 GMT E-15 ECB Announcement
...Expected 1.00%...Previous 1.00%
July Australia Trade Balance
...Actual A$ 3.54 Bln...Previous A$ 1.83 Bln
EU Retail Sales
...Actual 0.0%...Previous 0.4%
US ADP Emp
...Actual 42K...Previous 19K
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