Friday September 24, 2010 - 03:53:39 GMT
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FX Thoughts for the Day - www.fxthoughts.com
Morning Briefing : 24-Sep-2010 - 0350 GMT
The US Equities closed down following higher jobless claims, renewed trouble in Europe and shrinking of Ireland's economy by 1.2% yesterday. The Dow (10662.42) was down 0.72% and the S&P 500 (1124.83) was down 0.83%. The Resistance at 10750-800 has been honoured and we see less chances of a rise past 10750 this week. We will now need to see whether the important Resistance at 10775 holds on the monthly charts next week - while it holds, we may see fresh dip towards 10400-300 next month.
The Asian Equities trading down today. The Nikkei (9446.71, down 1.25%) has fallen further on stronger Yen and higher US jobless claims and has a risk of falling further towards 9400-350 in the coming sessions. The Shanghai (2591.55) is closed till Friday. In India, the Sensex (19861.01) was down 0.40% and the Nifty (5956.55) was down 0.52% yesterday. The Sensex and the Nifty have been falling on profit booking and are unable to find strong reasons for another immediate rally beyond 20000 and 6000. While the Dow reamins below 10750 we see less chances of Sensex moving above 20000 in the coming days.
Crude (74.85) closed slightly higher above 75 yesterday. The news that ConocoPhillips' refinery is undergoing a major maintenance supported the price amid strong dollar and weaker equity markets. Technically, the Support in 74-73 region which we have been mentioning for sometime is continuing to hold and a strong break above 76 might see 78-79 on the upside in the coming days. To see the Crude graph click on the following link:
Gold (1292.20) bounced back from yesterday's low of 1286.70 and is keeping up the overall bullish sentiment intact for a rise towards 1320-50 in the coming days/weeks. Good Resistance-turned-Support is seen in 1280-75 region.
Resistance at 10800 was honoured yesterday and the Dow fell to close at 10662.42. Worries about Europe resurfaced with news that Ireland's GDP contracted 1.2% in Q2. The Dollar Index has bounced a bit, and is trading near 80.11, up from yesterday's low of 79.78.
The Euro (1.3340) has come off on account of this. Dollar-Yen (84.57) has risen a bit from yesterday's low of 84.37. However, Dollar-Swiss (0.9851) remained more or less flat through the US session yesterday within its overall weakness. The Pound (1.5689) has come off from yesterday's high near 1.5742, but remains bullish overall, with Supports at 1.5660-20.
The Aussie (0.9510) came off well from the Resistance at 0.9575 yesterday and could be headed down towards 0.9400-9350 next week.
Among the Emerging currencies, the Won trades stronger near 1156.20. The Sing Dollar (1.3272) has weakened slightly from the low of 1.3243 seen day before yesterday. The Petrobras issue closed yesterday, garnering a little more than its vaunted $78 bln. The Brazilian Real trades near 1.7177 and is said to have factored in the inflow on account of the issue.
Dollar-Rupee had closed at 45.64 yesterday. The increase in FII investment limits in Rupee debt market may not have an immediate impact on the FX market. Instead, the fall in Equities and Aussie could drive Dollar-Rupee higher today.
The 3M USD LIBOR was unchanged at 0.29%. The 2Y and 10Y yields were down 1 bps each to quote at 0.42% and 2.55% respectively.
In India, the government raised the investment limit for FIIs in government securities and corporate bonds by $5 billion each to $10 billion and $20 billion respectively.
08:00 GMT July GER IFO Business Expectations
...Expected 104...Previous 105.2
08:00 GMT July GER IFO Business Situations
...Expected 108.7...Previous 108.2
08:00 GMT July GER IFO Business Climate
...Expected 106.3...Previous 106.7
12:30 GMT July US Durable Goods Orders
...Expected -0.9%...Previous 0.4%
14:00 GMT July US New Home Sales
...Expected 293K...Previous 276K
July US Existing Home Sales
...Actual 4.13 Mln...Previous 3.84 Mln
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