Tuesday November 9, 2010 - 03:45:37 GMT
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FX Thoughts for the Day - www.fxthoughts.com
Morning Briefing : 09-Nov-2010 -0344 GMT
A marginally lower closing for the US market with Dow around 11,407 (down 0.37%) and S&P500 at 1223 (down 0.21%). Dow has support around 11,350 and immediate resistance around 11,450. If either 11,350 breaks or 11450 goes, we can see a move of 100-150 points on either direction.
Asian markets are trading lower with Hangseng at 24,722 (down 1%), Nikkei at 9692 (down 0.4% ) and China down a percent at 3128. Buzz of QE2 from Fed has left similar vibrations on the charts of Hangseng, Shanghai and Nifty. All three have seen consecutive gap openings and strong follow through closing. This could be the developing signs of a market whose uptrend is maturing. Nifty closed in the red at 6273 (down 0.62%), dragged by IT and banking counters. SGX is quoting a postive opening around 6300. We expect Nifty to find strong support around 6250-60 and resistance is expected around 6305, break above that can see Nifty re-test last week's high of 6350.
Gold moved up in the past 2 sessions and is currently trading at the Resistance of 1410. In the coming days, Gold has some good Resistance in the region of 1410-20. A break above 1420 may take it towards 1450, which should hold followed by another dip towards 1300 in the coming weeks.
Crude has been ranged between 86 and 87.50 since it opened this week and may have some upside towards 90.50 in a couple of weeks. In case of a break above 90.50, it may see some more upmove towards 93 by the month end.
Continued gain in the Dollar Index (77.02) on further decline in the Euro (1.3882). Talk is of fresh worries about sovereign debt issues in the PIG nations in Europe, but it might be just a good way to explain profit-taking. A rebound is possible in the Euro now as it has good Support in the 1.3850-30 region.
In the meanwhile, Dollar-Yen (80.78) has fallen a goodish bit today in the last hour on better than expected trade balance. However Support should be coming up in the 80.70-50 region. The Euro-Yen Cross (112.25) has been falling for the last 2-3 days but may have good Support between current levels and 111.50.
Dollar-Swiss (0.9659) has moved up yesterday after having fallen dramatically in the run up to the FOMC last week. With intra-week Support at 0.9550, there are chances of a further upmove towards 0.9820. The Pound (1.6143) had fallen to a low of 1.6065 in early Asian trade, but has bounced back a bit from there. The Support at 1.6050 looks good and an upmove towards 1.6200-50 can develop. The market will be out for the UK October Trade Balance today, which is expected to be narrower (7.9 bln) as compared to 8.2 bln earlier.
The Aussie (1.0126) has been more consolidative, moving sideways, over the last couple of days than the Euro or the Pound. Even so, it saw a short-lived dip to 1.0075 today morning, but has bounced from there. Might have room on the upside.
The Emerging currencies had weakened a bit yesterday on the all-round Dollar rally. Dollar-Won (1118.20) might range between 1110 and 1130 over the next couple of days. USD-SGD (1.2850) remains in a downtrend and might fall towards 1.2800. The USD-BRL (1.6960-7000) is looking like it is tracing out a medium-long term bottom, with good Support at 1.6700 now. Dollar-Rupee had closed near 44.3850 yesterday. It has Resistance at 44.45-55 and could run into selling today.
The 3M USD LIBOR was unchanged at 0.29%. The 2Y yields were up 6 bps to quote at 0.39 and the 10Y yields were down 1 bps to quote at 2.54%.
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