Friday January 11, 2013 - 06:50:59 GMT
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FX Thoughts for the Day - www.fxthoughts.com
Morning Briefing : 11-Jan-2013 -0649 GMT
Dow Jones (13471.22, +0.60%) had a positive session yesterday which brings it close to its 13500 and 13650-700 resistances. It can rise till 13700 but we need to see a strong break above all of these resistances to see a meaningful rally. It is looking mixed currently and we will have to wait and watch.
A-Pac is trading mixed with Australia (4730, -0.32%), Hang Seng (23320, -0.15%), Taiwan (7807, -0.05%) and Nikkei (10778.24, +1.18%).
Shanghai (2274.09, -0.42%) is lower today following the inflation data release which had come in at 2.5% for December (YoY) as against the expected 2.3%. As mentioned yesterday it can trade in the 2300-2250 range for some time now.
Nikkei (10778.24, +1.18%) has risen again and is not giving any dip which indicates that it is very strong. Also the weaker yen is giving good support. A strong rise above 10800 can then target 11300-350 in the coming days.
Nifty (5968.65, -0.05%) ended slightly in the red giving up its gains for the day. From the charts it has now started to look a bit vulnerable and a dip might be seen. If this dip comes it will take Nifty lower towards 5850 which seems to be next important support. 5950-00 might not hold. However, this dip could be averted if the index takes que from the strength in other markets
Oil after breaking its resistance has dipped back below but can still break it for a rise. Gold can rise towards 1700 if it closes above 1675-80 for the week, Silver can be ranged for some time and Copper can rise a bit in the near term.
Nymex Crude (93.87, +0.05%) gave up its gains to end below the 94-95 resistances. The line charts have now started looking comfortable/positive which suggests that the upside break can still be seen. Above 94-95 a rise towards 103 can be seen.
Brent (111.63, -0.23%) also could not hold on to its gains as it dropped below 112.00. A weekly closing will be important for oil. A strong close above 112 will make it bullish for a rise to 116-18.
Gold (1673.10, -0.29%) has risen holding the 1650 level. 1675-80 will be important now and a weekly close below or above the same will decide if it falls to 1650 or rises to 1700.
Silver (30.82, -0.32%) has also risen holding its 30.00 support. In the short term it looks to be in the 29.75-31.75 range. A rise towards the upper end of the range can be seen now. In the longer term it can see a rise towards 34.00.
Copper (3.70, -0.16%) has risen above 3.68 and while above this level a further rise towards 3.73 can be seen and 3.80 also cannot be ruled out
The ECB leaving the rates unchanged and giving no signal on any immediate rate cut in the future has triggered a sharp fall in the Dollar yesterday. The Dollar-Index (79.79) has dropped sharply and is now below 80. A further fall to 79.35 and even 79 looks likely with good Resistance now in 80.10-25 region.
The Euro (1.3256) has shot up and is heading to test its important Resistance at 1.3300 a break above which will open doors for further rise to 1.3500-3600. Dollar-Yen (88.97) has risen further on the new Prime Minister's comments that BOJ should consider increasing the employment as well. Dollar-Yen can target 90-92 on the upside. The Euro-Yen Cross (117.91) has risen sharply breaking its 113.30-115.50 sideways range on the upside and can rise further to 119-120 if the immediate Resistance at 118 (55-MOnth-MA) is taken out decisively.
Dollar-Swiss (0.9153) tanked after the ECB Meeting and has a threat of seeing further fall if the important 0.9100 Resistance is also broken. The Pound (1.6151) has averted the fall below 1.6000 and can now rise back to 1.6250-300 region. It is important to see whether it manages to see a weekly close above 1.6200 today or not. Aussie (1.0578) remains strong and has very important Resistance coming up in 1.0600-20 region which needs to be broken for it to rise further.
In Asia, the USD-SGD (1.2240) has come off from its 1.2330 range Resistance and can move down to test 1.2200 now. The broader 1.2150-2350 sideways range remains intact. Dollar-Rupee (54.56/57) had closed lower yesterday and can fall to 54.30 and even to 54.15 given the overall weakness in the Dollar.
The ECB and the BOE left the rates unchanged at 0.75% and 0.50% respectively. The BOE left its asset purchase also unchaged at 375 billion Pound. The ECB has not hinted any rate cut in the near future and has said that the economy could gradually recover in the later part of 2013.
Good Spanish aution yesterday has triggered a sharp fall in the yields. The Spanish 10Yr yield fell sharply by 23bps to 4.90%. Our downside target of 4.90%-4.80% that we have been looking for some time is just being met and now we will have to look in for the chances of seeing a bounce back from this 4.80% level.
The Spain-German yield spread has also come down sharply by 31bps and is just above an important Support at 3.25%. If this Support is broken then the spread can come down further to 3.00% and 2.80%. Overall things are looking good from the Euro zone.
13:30 GMT or 20:00 IST US Trade Balance
...Expected $ -41.1 Bln ...Previous $ -42.24 Bln
...Actual 0.50% ...Previous 0.50%
...Actual 0.75% ...Previous 0.75%
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