Wednesday August 8, 2012 - 04:10:42 GMT
FX Thoughts for the Day - www.fxthoughts.com
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Morning Briefing : 08-Aug-2012 -0407 GMT
GOOD MORNING!
EQUITIES
The Dow Jones (13168.60, +51) was up for third consecutive day on expectation of the European banks doing something to protect the Euro zone. It can target 13300 in the near term.
The Nikkei (8947.59, +1.64%) is moving towards its resistance of 8970-9000 which is expected to hold the index at least in the short term.
Shanghai (2165.15, +0.35%) is up again for the third consecutive day and is targeting 2200. Whether this will be a trend reversal or the down trend will continue has to be seen, though the major trend is still bearish. China seems to be much cheaper than India as it currently trades at P/E multiple of 11.57 as compared to 17.43 in India. So if Nifty faces resistance at 5400-50 and coming lower with Shanghai out performing it is a possibility in the near future, time to look for a trend reversal soon in Shanghai? Charts will tell us soon
Nifty (5336.70, +54) extends it smart gains and the next resistance is seen at 5400-50, though an odd profit booking day can be expected after smart three day rally
Dax (6968, +49) continues its dream run and the next target seems to be 7000-50. Support is seen much lower at 6550.
COMMODITIES
Nymex Crude (93.42, -0.27%) remains higher. While above its support of 91-92, it can move towards 95.50 soon. Supply worries from the North Sea and instability in Syria are expected to keep the Crude prices strong.
Brent (111.64, -0.32%) as expected took resistance at 112 and can retreat to 110-109 levels. However, it may continue to out perform the Nymex.
Gold (1610.20, +0.03%) trades in copy book flat fashion and is going nowhere, it is in a broader range of 1525-1640.
Silver (28, -0.31%) retains its range of 26-29 and any small up move will face resistance at 28.50-29.00.
Copper (3.42, -0.46%) can target 3.50 in the immediate term with good support at 3.30, it continues to trade in the range of 3.25-50.
CURRENCIES
The market remains mixed. Dollar is trading weak but is not gainig momentum to weaken further strongly. The Dollar Index (82.31) remains below its 82.50-60 Resistance region and is keeping up the chances of a fall to 81.50-00.
The Euro (1.2398) is ranged between 1.2375 and 1.2445. With Support near 1.2330 the chances of seeing 1.2480-530 on the upside is still alive. Dollar-Yen (78.53) is coming off from its high of 78.74 and could be ranged between 78.00 and 78.75. The Euro-Yen Cross (97.34) can target 99.00-30 on the upside on a strong rise past 97.50. we see good Support in 96.30-00 region.
Dollar-Swiss (0.9689) is ranged between 0.9660 and 0.9740 and within this range our bias would be bearish for a break dip below 0.9660 towards 0.9600 or may be even lower. The Pound (1.5614) is retaining its 1.5400-5770 sideways range. Aussie (1.0543) is coming off from near 1.0600 and can fall further to 1.0450-00.
In Asia, the USD-SGD (1.2427) is getting Support near 1.2400 and is trying to bounce back. While above 1.2400 a rise to 1.2450-70 is possible after which the overall downtrend could resume. Dollar Rupee had closed lower yesterday at 55.06/07 and can fall further to test 54.90-70 now.
INTEREST RATES
The Spanish 10yr yield has risen back and is now at 6.83%. While above 6.80% there are good chances that the yield can rise further to 7.15% in the coming days.
The German 10Yr Bund Yield has been rising well over the last couple of weeks and it now stands at 1.48% as compared to last week's level of 1.42%. Good chances that the yeild can rise further to 1.60% and there is a good possiblity of a Double Bottom on the charts as well. Take look at the chart on the following link: http://www.kshitij.com/graphgallery/eursin00.shtml#sin00
The US Treasury yield has risen yesterday. The 2yr yield was up 2bps to quote at 0.26% while the 5yr and 10yr yields were up 5bps each to quote at 0.70% and 1.62% respectively.
The 3-Month Mibor has dipped further to 9.15% and is heading down towards our target of 9%.
DATA TODAY
No major data release today.
DATA YESTERDAY
RBA Meeting
...Actual 3.5% ...Previous 3.50%
PMI CA
...Actual 62.8 ...Previous 49
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