Monday December 31, 2012 - 03:59:16 GMT
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FX Thoughts for the Day - www.fxthoughts.com
Morning Briefing : 31-Dec-2012 -0355 GMT
Dow Jones (12938.11, -1.21%) fell as expected towards its 12900 support. A further dip to its significant support at 12750 looks possible. Failure to reach a deal on the “Cliff” will be very bad for the US and the global markets. We will have to wait and see.
A-Pac is trading mixed with Australia (4674.10, -0.24%), Hang Seng (22638, -0.13%) and Taiwan (7699.50, +0.67%).
Shanghai (2245.24, +0.54%) continues to remain positive, it has resistance ahead at 2260 which is its 61.80% Fibonacci of the fall from 2450-1950. It has seen a strong rise and a corrective fall from this resistance cannot be ruled out.
Nikkei (10395, +0.70%) is closed today on account of the “New Year Eve” holiday. Overall it remains strong with Support in 10300-200 region.
Nifty (5908.35, +0.65%) continues to trade in its 5950-850 range within its overall bullish trend.
Oil has come off from its resistances, Gold continues to trade above important supports, Silver is also up while Copper is looking mixed.
Nymex Crude (90.60, -0.22%) is taking resistance near its upper channel on the daily charts but this is expected to break for a further rise to 94.00 in the near term. Support is seen near 87-86 levels.
Brent (110.32, -0.27%) has also dipped from its resistance on the daily at 111-12, a further rise to 123 can be seen on the break of this resistance. Nymex seems to be a bit stronger than the brent
Gold (1661.40, +0.33%) continues to trade above its crucial supports (1650-25) but needs to rise strongly from here to avoid any further fall. Longer term remains positive.
Silver (30.24, +0.90%) has bounced but has resistance ahead near current levels. Dip to 29.00 can still be seen.
Copper (3.61, +0.58%) is also up but the outlook is a bit mixed with equal chances of seeing either a rise to 3.70 or a fall to 3.50 from current levels.
Market remains ranged and cautious ahead of the US fiscal cliff deadline and the year end. The Dollar Index (79.58) is looking mixed and ranged between 79 and 80 with a bearish bias to see a break and fall below 79 towards 78.50.
The Euro (1.3207) is retaining its 1.3150-3300 sideways range. Within this range our bias would be bearish to for a break below 1.3150 which can take it down to 1.3050-3000 after which a fresh leg of upmove can begin towards 1.3500-3600. Dollar-Yen (85.99) remains strong but can run into a corrective fall to 84-83 after testing 87 on the upside. The Euro-Yen Cross (113.59) has seen a strong rise over the last several weeks and is coming near an important Resistance at 115 which is expected to hold and trigger a pull back to 111-110 in the coming days.
Dollar-Swiss (0.9136) is ranged between 0.9080 and 0.9200 with a bullish bias for a rise to 0.9250-9300. The Pound (1.6152) is not rising back above 1.6200 can see a fall to 1.6050-6000. But the bigger picture is bullish and it can rise to 1.6500-6600 after testing 1.6000 on the downside. Aussie (1.0396) is getting good Support near 1.0340 but will need to rise above 1.0400 strongly to reduce the threat of a fall to 1.0200.
In Asia, the USD-SGD (1.2221) remains above 1.2200 and can rise to 1.2300 before a fresh fall to 1.2100-2000 is seein. Dollar-Rupee (54.77) remains below 55 and can test 54.50 while below 55. We can expect it to be ranged between 54.50 and 55.25 for some time.
The Spanish 10Yr yield has come down by 2bps to 5.26%. We expect the yield to come down to 5% as it has good Resistance in 5.40%-5.50% which can restrict the upside. Similarly, the Spain-German 10Yr yield spread (currently at 3.95%) has very good Resistance near current levels at 4% and then strong Resistance at 4.25% and it can come down to 3.50% to 3.25% in the coming days. A fall in the yield spread will be very good for the market and as of now there is no immediate serious threat to the market. The danger will be only if the Spain-German yield spread rises above 4.25%.
The US 10Yr yield has come down sharply by 7bps to quote at 1.70%. As we have been mentioning for some time, the US treasury yield can be ranged between 1.60% and 1.90%. Within this range, the yield can come down to test the lower end of this range now in the coming days.
5:30 GMT or 12:00 IST BOP IN
...Previous $ -42.5 Bln
No data release on Friday.
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