Tuesday October 12, 2010 - 03:36:12 GMT
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FX Thoughts for the Day - www.fxthoughts.com
Morning Briefing : 12-Oct-2010 - 0332 GMT
The US Equity markets were open (although banks were closed) and the Dow has closed 3.86 points higher at 11010.34, its second close above 11000 since April. Further rise is possible if the gains of the last few weeks are sustained. However, the Asia-Pacific indices are mixed to bearish, ranging from +0.37% (Indonesia) to -1.25% (Australia). There is talk that China might want to rein in its economy a bit, as it raised reserve requirments at some large banks yesterday. Shanghai is flat (2805.70, - 0.04%) while Korea is down a decent 1%.
The Sensex had closed at 20339.89 yesterday and might be vulnerable to a profit-taking dip towards 19500 over this week and the next.
Crude (81.63) fell yesterday following the stronger dollar and is now trading below 82. As mentioned Support is seen at 80 and while above 80 there are good chances of further rise towards 88-90 in the coming days. However, a break below 80 might see 77-75 on the downside.
Gold (1348.50) is continuing to trade strong and is keeping up the overall bullish sentiment intact for a rise towards 1380-1400 in the coming days.
Initial round of profit-taking coming in for the non-Dollar currencies/ bit of short-covering on the Dollar Index, which is trading higher near 77.56. The Euro (1.3876) has come off from yesterday's high near 1.3999. Last week's high was 1.4029. Some more serious short-covering is likely for the Dollar, either this week itself, or sometime next week. Dollar-Yen (82.06) rose to 82.36 in early Asian trade today, after Japan was closed yesterday. Further upside possible as the Japanese Fin Min has promised "decisive" action in FX, as needed.
The Pound (1.5909) has also seen some profit-taking, but has Support in the 1.5875-45 region today. Dollar-Swiss (0.9642) has also moved up a bit and has an important intra-day Resistance at 0.9664. The Aussie (0.9806) has also seen profit-taking, but remains above important intra-week Support at 0.9770. It is to be seen if this breaks or not.
The Asians have also weakened a bit, with the Korean Won trading near 1124.30, as compared to 1115.50 yesterday. USD-SGD (1.3062) has bounced a bit to a high of 1.3099 today, as compared to yesterday's low of 1.3030. Dollar-Rupee had closed near 44.40 yesterday and might rise towards 44.55-60 today.
The Brazilian Real, however, has gained further, trading near 1.6613 just now.
The 3M USD LIBOR was unchanged at 0.29%. The 2Y yield was flat at 0.34% while the 10Y yield was down 2bps to quote at 2.37%.
China has increased the reserve ratio by 50 bps for six banks which include the nation's four largest banks as a measure to control the housing bubble.
08:30 GMT UK Sep Trade Balance
...Expected $ -8.0 Bln...Previous $ -8.7 Bln
08:30 GMT Sep UK CPI Y/Y
...Expected 3.1%..Previous 3.1%
No major data release yesterday
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