Tuesday November 2, 2010 - 03:43:34 GMT
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FX Thoughts for the Day - www.fxthoughts.com
Morning Briefing : 02-Nov-2010 -0340 GMT
All quite on the Western front. Dow and S&P both closed flat at 11124 and 1184. Robust ISM manufacturing surveys was in sharp contrast to the weak personal spending data and moribund disposable income data, indicating that though manufacturring is benefiting from strong overseas market but domestic economy remains in the hole. Traders are looking to go light into the Fed meeting and there is mid-term election too. Dow (1124.62) remains safe as long as it stays above 11000. But resistance is expected around 11200. We expect another quiet day before the showdown tomorrow.
Asian indicies are also trading flat with Hangseng at 23625 (down 0.11%), Nikkei at 9145 (down 0.1%) and Shanghai 3182 (down 0.55%). Nikkei having broken below its month old range of 9700-9300 is expected to test support at 8900. RBA announces monetary policy in 30 minutes, expectation is for a no change in key rates. As expected Nifty after conquering 6100, rallied close to our target of 6140-50, made an intra-day high of 6132. Banking, Pharma and commodity stocks lead the bull charge in the bourses. We expect Nifty to test 6150 today, on a break Nifty can move towards 6200, support is expected around 6100.
Gold (Comex Dec, 1354) dipped in the US session yesterday, after having risen to a high near 1366.40 earlier in the Eurpoean session yesterday. Support at 1340 needs to hold if Gold is to fulfill its promise of climbing towards 1400.
Crude (83.16) has been moving sideways between 80-84 for the last several days and seems to be positioning itself for a rise towards 90 in the weeks ahead.
Sideways consolidation continues in most currencies vis-a-vis the Dollar, with the Dollar Index trading near 77.19. While all the other currencies are relatively strong against the Dollar, epecially the Pound (1.6043), the Swiss Franc (0.9917) has been weakening. The Euro (1.3897) is relatively stable. Dollar-Yen (80.66) quietened down after the early morning rise to 81.43 yesterday.
The Aussie (0.9877) is maintaining the strength it regained last week. In Asia, the Won trades relatively strong near 1115.20 and the Sing Dollar has gained further to 1.2912. Dollar-Rupee closed near 44.47/48 yesterday. It is likely to be capped below 44.55-60 today and might dip towards 44.40-35.
RBA and RBI meetings today. RBI is widely expected to hike rates by 25 bp and then stay put after that.
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