Wednesday October 13, 2010 - 03:54:05 GMT
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FX Thoughts for the Day - www.fxthoughts.com
Morning Briefing : 13-Oct-2010 - 0348 GMT
Congratulations to the Women 4X400 m relay team for Gold.
The US Equities closed marginally higher after trading down for most of the session yesterday. The markets recovered after release of the Fed minutes which hinted at further action to stimulate the US Economy. The Dow (11020.40) is up 0.09% and the S&P 500 (1169.77) is up 0.38%. The Dow has been closing in its Resistance region of 11000-50 and we need to see whether this is honoured or broken in the coming days.
The Asians are mixed today. The Nikkei (9469.47) is up 0.86% following hopes of a fresh economic stimulus in the US and the Shanghai (2832.81) is down 0.30%. In India, the Sensex and the Nifty closed down by about 0.7% each yesterday. The Sensex may see some Support at 20000 in the coming days.
Crude (82.02) fell initially yesterday as the OPEC signaled that it would keep its output unchanged. However, the weaker dollar following the Fed's minutes release supported the bounce back. While above 80, our view remains bullish for a rise towards 88-90 in the coming days/weeks. A break below 80 might see 77-75 on the downside.
Gold (1354.10) is continuing to trade higher, but with less upside momentum over the last few days. However, with significant Resistance-turned-Support at 1320, the broader outlook remains bullish for a rise towards 1380-1400 in the coming days.
Dollar bashing seems to be back for the while (on the release of the FOMC Minutes), and might continue for some more days, before some serious pullback. The Dollar Index (77.34) has potential to fall towards 76 before there is short-covering. The Euro (1.3970) has recovered superbly after dipping to as low as 1.3775 yesterday, and may bid for 1.40+ again. The Aussie (0.9884) has also seen a good upmove from yesterday's low of 0.9767.
Dollar-Yen (81.85) has fallen back below 82.00 failing to capitalise on the rally to 82.25 yesterday. It seems the BOJ has a tough job on hand weakening the Yen in the overall anti-Dollar environment. The Pound (1.5818) is the only major non-Dollar currency that has fallen overnight, suffering from bad house prices data yesterday. A low of 1.5753 has been seen in early Asia today. But a good bounce is likely today. Dollar-Swiss (0.9560) has fallen strongly from yesterday's rise to 0.9728.
Among the Emerging currencies, the Yuan is quoted near 6.6645, a little weaker than yesterday's 6.6550, perhaps on the back of a narrower trade surplus in September. The Korean Won (1117.40) , however, has recovered most of its losses from yesterday. The Sing Dollar (1.3036) continues to steadily strengthen, as does the Brazilian Real, which trades near 1.67. Dollar-Rupee, which closed near 44.66 yesterday, may dip towards 44.55-50 today.
The 3M USD LIBOR was unchaged at 0.29%. The 2Y and 10Y yields were up 2bps each to quote at 0.36% and 2.42% respectively.
UK Cons Conf
...Actual 53...Previous 62
08:30 GMT UK Unemp
...Expected 7.8%...Previous 7.8%
09:00 GMT EU Sep IND Prodn (MoM)
...Expected 0.7%...Previous 0.1%
UK Sep Trade Balance
...Actual $ -8.2 Bln...Previous $ -8.7 Bln
Sep UK CPI Y/Y
...Actual 3.1%..Previous 3.1%
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