Thursday October 28, 2010 - 03:32:37 GMT
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FX Thoughts for the Day - www.fxthoughts.com
Morning Briefing : 28-Oct-2010 -0330 GMT
US stocks recovered from a mid-day sell off yesterday and finished with a modest 0.3-0.4% cut. Dow shut shop at 11,126 (down 0.39%) and S&P500 closed at 1182 (down 0.27%). Corporate earnings keeps rolling out across the world and in US the earnings show has been so far so good. Though the headline US durable goods orders showed strength but the core numbers disappointed. Now econ watchers will shift their focus to US 3Q GDP numbers out tomorrow, call is for a 2% growth. Though 10,950 has not been reached and Dow recovered from an intra-day low of 11,020 but the structure of the bounce as well as Euro and Australian dollar, both holding key support, we could see Dow move towards 11,230-11,250, immediate support is at 11,000.
Asian indices are mostly trading flat with the exception of Australia ASX, which is up 0.74% lead by Banking and resources stocks. Nikkei, is still holding the range of 9300-9700 and is currently trading at 9,381 (down 0.06%) and Hangseng trading at 23,179 (up 0.06%). Shanghai is in the green with a modest 0.04% up tick and trading at 3142.As expected yesterday Nifty sold-off below 6000 and ended the day with a 1.14% cut at 6012.65. SGX suggest a flat opening and we believe Nifty can recover towards 6080-6100, where resistance is expected.
Crude (81.96) is retaining the range 79.50-84.50 and is now trading below. Though the stronger dollar is keeping some downside pressure, the better than expected US inventory data release limited the loss yesterday. While above 80, our view remains bullish for a rise towards 88-90 on a strong break above 85.
Gold (1326.50) fell sharply yesterday. The stronger dollar and the doubts on the quantum of the Fed's QE2 pulled down the price. Though the Support at 1320 is continuing to hold and the broader outlook remains bullish, Gold might continue to trade lower until the FOMC meet scheduled for next week. 1300-1280 is the next strong Support region seen below 1320.
Dollar is retaining its strength all over. The Euro (1.3812) is continuing to trade lower and with Resistance at 1.3870 there are good chances of testing the 1.3730-00 Support region once again today. Dollar-Yen (81.60) is retaining its strength but has very important 21-DMA Resistance at 81.96 a strong break above which might trigger further upmove towards 82.50-83.00. Euro-Yen Cross (112.78) has bounced back from yesterday's low of 112.22 and might test the 21-DMA (113.70) Resistance over today/tomorrow while above the 112.20-00 Support region.
The Pound (1.5803) is continuing to trade sideways between 1.5700-5900 over the last couple of days. Dollar-Swiss is trading strong and might test its important 55-DMA (0.9969) over today/tomorrow. Aussie (0.9755) has bounced back from its crucial Support at 0.9650. Need to be cautious on the pair as a strong break below 0.9650 would confirm a Double-Top pattern.
In Asia, the Korean-Won is trading near 1125 and USD-SGD is trading near 1.2991. Dollar-Rupee has closed flat yesterday at 44.45/46 and is retaining the 44.20-60 range as expected.
The 3M USD LIBOR was unchanged at 0.29%. The 2Y and 10Y yields were up 4 bps and 6 bps each to quote at 0.41% and 2.69% respectively.
09:00 GMT EU Biz Climate
...Actual 0.7%...Previous 0.6%
Sep US Durable Goods Orders
...Actual 3.3%...Previous -1.0%
Sep US New Home Sales
...Actual 307K...Previous 288K
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