Tuesday October 19, 2010 - 03:37:02 GMT
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FX Thoughts for the Day - www.fxthoughts.com
Morning Briefing : 19-Oct-2010 -0335 GMT
The US Equities closed higher on better than expected numbers from Citigroup yesterday. The Dow (11143.69) was up 0.73% and the S&P 500 (1184.71) was up 0.72%. The Dow may see an upmove towards 11250-70 this earnings season.
The Asians are mixed today. The Nikkei (9548.93, up 0.53%) is trading higher led by financial stocks and the Shanghai (2953.81, down 0.05%) just slipped into red following concerns of further property tightening. In India, the Sensex (20168.89) and the Nifty (6075.95) closed up 0.22% each yesterday. The Sensex may see some sideways movement between 19500-20500 in the coming days followed by an upmove beyond 20500 in the coming weeks.
Crude (82.82) bounced back from the low of 80.35 yesterday and is now trading near 83 once again. The weaker dollar and continuing strike in France's largest oil port supported the price rise. Crude has been ranged between 80.30-84.50 over the last couple of weeks. With strong Support in 80.00-79.50 region, our view remains bullish for a rise towards 88-90 or even higher in the coming days/weeks.
Gold (1368.20) is continuing to trade above 1350. The broader bullish outlook remains intact and a strong break above the Resistance at 1375 might trigger fresh upmove towards 1400-20 in the coming days. However, if 1375 holds, then a break below 1350 might pull it down towards 1330-20.
The Dollar is a little worse off than its strongest level yesterday, but its not panic stations. The DXY had risen to 77.645 yesterday, but is trading slightly lower at 77.23 today. The long-term Support at 76.00 has a 50% chance of being tested again, but is unlikely to break easily. Yesterday's TIC data for Aug-10 shows there is good foreign demand for US securities, as the figure came in at a huge +$128.7 bln, as against an expectation of $47.5 and $61.2 bln last month.
The Euro (1.3930) rose to 1.4003 but has fallen back. Might dip to test important Support at 1.3815. Dollar-Yen (81.32) is managing to stay above 81.00, but has Resistance at 81.45 today. The Euro-Yen Cross (113.36) is trading up from yesterday's low of 112.39, but down overall. This suggests limits to Euro strength overall.
Dollar-Swiss (0.9603) is trading higher as compared to yesterday's US session low of 0.9541 and is a vote in favour of the Dollar. The Pound (1.5882) trades relatively weak. A break below 1.5875 would be bearish. The Aussie (0.9882) has seen good volatility since yesterday, first falling to 0.9801, followed by a rise to 0.9958, from where it down again, testing an important Support at 0.9875.
Among the Emerging currencies, the Won is trading weaker, being quoted at 1119.70-1125.90. The Sing Dollar (1.3027) had weakened to 1.3982 yesterday. It is stronger compared to that level, but relatively weak overall. The Brazilian Real (1.6720) has weakened a decent bit over the last couple of days. Dollar-Rupee had closed at 44.36 yesterday and might range between 44.20-40 today.
The Coal India issue is reported to have garnered 34% subscription yesterday. Interest should build up further over the course of the week.
The 3M USD LIBOR was unchanged at 0.29%. The 2Y and 10Y yields were up 1 bps and 3 bps to quote at 0.36% and 2.51% respectively.
12:30 GMT US Sep Housing Starts
...Expected 0.59 Mln...Previous 0.60 Mln
13:00 GMT BoC Meeting
...Expected 1.00%...Previous 1.00%
US Aug TICS (Net foreign purch of long-term Sec)
...Actual $ 128.7 Bln...Previous $ 61.2 Bln
US Sep Industrial Production
...Actual -0.2%...Previous 0.2%
US Sep Capacity Utilization
...Actual 74.7%...Previous 74.8%
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