Thursday August 19, 2010 - 03:39:55 GMT
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FX Thoughts for the Day - www.fxthoughts.com
Morning Briefing : 19-Aug-2010 - 0338 GMT
The US markets closed flat yesterday. The Dow (10415.54) was up 0.09% while the Nasdaq (2215.70) was up 0.28%. The weekly jobless claims data release today might play a significant role in determining the further direction of move of the US markets.
The Asian markets are trading higher today. The Nikkei (9335.54) is retaining its strength and is up today by 1.03%. Shanghai (2672.64) is up 0.24%. The Sensex and Nifty has closed higher yesterday at 18257.12 (up 1.15%) and 5479.15 (up 1.20%) respectively and are very close to their respective important Resistance at 18500 and 5600.
Crude (75.42) fell sharply in the intraday trades yesterday following the EIA's report showing much less than expected drop in the US Crude inventories. However, the Commodity price took some Support from the equity markets and has bounced back from the low of 73.83. As mentioned earlier 74.20-00 is a very important/strong Support region to watch for and it is to be seen whether it holds or not. To see the Crude graph click on the following link:
Gold (1229.80) is continuing with its upmove and is keeping up its bullish sentiment intact for a rise once again towards 1250-60 in the coming days. Support is seen at 1220. To see the Gold graph click on the following link:
Concerns about growth in the Eurozone caused the Euro (1.2800) to give up most of the gains seen yesterday, when it touched an intra-day high near 1.2922. Technically, the 200-MA on the 4-hour provides a strong Resistance at 1.2911. Important Support to watch is 1.2770 (100-day MA), a break below which could be bearish.
The Pound (1.5560) has been unpredictably volatile yesterday, first falling to 1.5498, then rising to as much as 1.5688 after the BOE Minutes, only to give up most of its gains in the US and Asian sessions. The price action is disappointing for the Pound. Watch the 200-day MA at 1.5489 today, that is a crucial Support.
Dollar-Yen (85.75) is trading in a sideways range of 85-86 this week, debating whether to push further lower. Downside might be limited in the near term as the market is a little fearful of intervention. In the longer run however, global growth concerns is causing a steady appreciation in the Yen, as Japanese reduce overseas investments.
Dollar-Swiss (1.0440) continues to trade in a 1.0350-0550 range and might move up further within that range today. The Aussie (0.8960) came off sharply yesterday from Tuesday's hgh near 0.9079, unable to sustain above 0.90. On the charts, upside seems limited, with Resistances at 0.91 and 93. There seems to be more room on the downside. In the near term, the markets may want to square, ahead of the Australian parliamentary election this Saturday (21st Aug).
Among Asian currencies, the Ringgitt (3.13) is trading at nearly a 13-year high. It has appreciated steadily from 3.7525 in March-09, a gain of 16.6%. Today's surge is on news that international transactions can now be settled mutually between the Yuan and the Ringgitt. Remember that China is moving steadily forward in making the Yuan a currency for settlement of trades in East Asia. This is in contrast with India which does not want the Rupee to be traded internationally.
The Korean Won (1172.80) and Sing Dollar (1.3525) continue to trade relatively strong. The Rupee market is closed today on account of Parsi New Year.
The 3M USD LIBOR was unchanged at 0.35%. The 2Y yield was up 1 bps to quote at 0.50% while the 10Y yield was down 1 bps to quote at 2.62%.
14:00 GMT July US Philifed Index
...Expected 7.2...Previous 5.1
UK BOE Minutes
...Actual 1-0-8...Previous 1-0-7
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