Wednesday October 27, 2010 - 03:39:11 GMT
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FX Thoughts for the Day - www.fxthoughts.com
Morning Briefing : 27-Oct-2010 -0337 GMT
US stock averages settled the day in the green with Dow at 11,169 (up 0.05%) and S&P 500 at 1186 (unchanged). Stocks yo-yoed as market weighed in the soft housing data and still soft consumer confidence data against robust corporate earnings reports. Re-iterating what we said yesterday, our inter-market indicators suggest a correction in Dow to 10950-10900 in the coming sessions.
Asian indicies are a mixed pack, with Australia showing a cut of 0.51% and Shanghai down 0.2%, but Nikkei is up 0.7% at 9442 and Hangseng is flat at 23,600. There is strong correlation between Yen and Nikkei so we will keep a close eye on either markets for clue on the other.However, Nikkei is now in a range of 9300-9700. Yesterday Nifty closed in the red by 0.4% at 6082 and today morning. SGX futures suggest a soft opening. We believe as long as Nifty trades below 6150, it is vulnerable to a set-back towards 6000.
Crude (82.32) is trading silent above 82. Though the US consumer confidence retained the price above 82, the stronger dollar limited the gains yesterday. The sideways move between 79.50-84.50 is expected to continue. However, while above 80 the outlook is bullish for a rise towards 88-90 on a strong break above 85. The US Crude inventory data release is due today.
Gold (1339.20) fell yesterday as the dollar strengthend. It is oscillating between the Resistance at 1350 and Support at 1320 over the last one week. The broader outlook is bullish and we expect the Support at 1320 to hold and might see a bounce back once again in the coming days.
Further rise in the Dollar overnight on better than expected Conference Board consumer confidence index (50.2, agst 50.0 exp) and general squaring of Dollar-Short positions ahead of the FOMC meeting next week.
The Aussie (0.9755) has lost in particular this morning on signs that the proposed SGX takeover of ASX could run into opposition. The Euro (1.3830) has come off quite well also, down from the 1.4075 high on Monday. As may be expected, there is talk of Eurozone debt troubles all over agains, to justify the fall in the Euro. Dollar-Yen (81.64) has skyrocketed from Monday's low of 80.54 suggesting reduced chances of a test of the 1995 low of 79.80.
Dollar-Swiss (0.9857) has been rising over the last several days. It faces a Resistance near the immediate levels. In case this breaks, then further strengthe towards 1.0040 may be available. The Pound (1.5837) has been consolidating sideways since yesterday after having moved up overnight and could see further strength going ahead, especially against the Euro. Currently, EURGBP trades near 0.8725. It has seen a sharp fall yesterday which may be continued today.
Weakness in the Aussie today has led to slight weakness in the Sing Dollar which trades near 1.3000, compared to lows of 1.2922 and 1.2902. Dollar-Won has appreciated to 1126.10. Dollar-Rupee, which had closed near 44.44 yesterday may well rise to 44.55-60 today.
The 3M USD LIBOR was unchanged at 0.29%. The 2Y and 10Y yields were up 1 bps and 7 bps each to quote at 0.37% and 2.63% respectively.
...Actual 0.7%...Previous 0.6%
12:30 GMT Sep US Durable Goods Orders
...Expected 1.5%...Previous -1.5%
14:00 GMT Sep US New Home Sales
...Expected 301K...Previous 288K
UK GDP Q3 '10 (Pre)
...Actual 0.8%...Previous 1.2%
US Case Schiller
...Actual 1.7%...Previous 3.2%
US Cons Conf
...Actual 50.2...Previous 48.6
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