Tuesday October 26, 2010 - 05:37:02 GMT
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FX Thoughts for the Day - www.fxthoughts.com
Morning Briefing : 26-Oct-2010 -0523 GMT
Overnight, US stock markets closed in the green with Dow getting tantalisingly close to the April high of 11,258, strong existing home sales numbers and robust corporate earnings boosted the stocks. Dow shut shop at 11,164 (up 0.28%) and S&P 500 (up 0.46%). Our inter-market indicators suggest a strong possibility of a decline in Dow towards 10950-900 in the coming sessions.
Asia after opening in the green is now slipping in the red with Hangseng,Australia ASX and Nikkei down between 0.1% to 0.2%. Nikkei 225 (9380) is ranged between 9300-9700. Shanghai is up 0.18% at 3203. After a yo-yo session Nifty closed the day at 6105.80, SGX futures suggest a flat opening and we are seeing resistance in Nifty between 6130-50 and as long as the index trades below that level it is vulnerable to a set-back towards 6000.
Crude (82.43) has risen yesterday following the weaker dollar and comments from the Greece's central bank governor that the worst for its country's banks was over. Crude has been ranged between 79.50-84.50 all through this month and while above 80, the outlook remains bullish. A strong break above 85 might take it up towards 88-90. A downside break of this range (79.50-84.50) is not looking likely as of now.
Gold (1342.60) has bounced back yesterday. The broader outlook is bullish with significant Support at 1320 which has held very well during last week's sharp fall. Some Resistance is seen at 1350 and break above it might take it further up towards 1380 in the coming days.
Dollar clawed back some gains last night. After a better than expected Housing Starts number on the 19th, Existing Home Sales rose 10%, more than had been expected. This might suggest a possible bottoming in the crucial housing market in the US. As suggested yesterday, the market might trade sideways this week, squaring up positions ahead of the crucial FOMC meet next Wednesday, 3rd Nov.
The Euro (1.3954) is trading lower from the high near 1.4080 seen yesterday. Dollar-Yen is up at 80.77, after having dropped to 80.56, the lowest this year and just a hair's breadth above the 1995 low of 79.80. Dollar-Swiss (0.9715) is trading lower than yesterday's 0.9805, but may find intra-day Support at 0.9690-40. The Pound (1.5730) seems to be consolidating a bit before falling towards 1.5550. The Aussie (0.9907) is seeing a weakening of its uptrend. It is trading lower than yesterday's high near 0.9974.
The Asian currencies are closer to the Aussie. Witness the Sing Dollar (1.2934) whose chart simply seems to be the inverse of the Aussie. It has weakened a bit compared to yesterday's 1.2903. The Korean Won trades slightly weaker near 1118.20. Dollar-Rupee had closed at 44.35 yesterday. It could rise a little towards 44.45-50 on the back of all-round Dollar gains overnight, before dipping back.
The 3M USD LIBOR was unchanged at 0.29%. The 2Y and 10Y yields were up 1 bps each to quote at 0.36% and 2.56% respectively.
08:30 GMT RBI Repo Rate
08:30 GMT RBI Reverse Repo Rate
08:30 GMT RBI CRR
08:30 GMT UK GDP Q3 '10 (Pre)
...Expected 0.4%...Previous 1.2%
13:00 GMT US Case Schiller
...Expected 2.6%...Previous 3.2%
14:00 GMT US Cons Conf
...Expected 49.6...Previous 48.5
...Actual 1.3%...Previous 0.3%
Sep US Existing Home Sales
...Actual 4.53 Mln...Previous 4.12 Mln
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