Monday January 14, 2013 - 03:56:51 GMT
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FX Thoughts for the Day - www.fxthoughts.com
Morning Briefing : 14-Jan-2013 -0352 GMT
Dow Jones (13488.43, +0.13%) was up slightly has closed just below its 13500-650 resistance region which will have to be broken for a further rise. Weekly candle was not very strong and we will have to wait for further cues from the index. US Trade Balance was disappointing with a deficit of $-48.73 bln against expected of $-41.10 Bln.
A-Pac is mixed to positive with Australia (4744.70, +0.23%), Hang Seng (23343, +0.34%) and Taiwan (7763, -0.72%).
Shanghai (2247.30, +0.19%) after a good correction on Friday is slightly up today. It has broken its 2250 level and a correction towards 2165-50 (38.2% Fibonacci level of the current up move since Dec-12) is possible.
Nikkei (10801, +1.40%) was up on Friday and can rise further to 11300. It is closed today on the account of Coming of Age day.
Nifty (5952.80, -0.27%) was in the red again as it could not hold on to its early gains on Friday. It opens with a small gap up every day and gives up its gains through the day. It looks weak and can see some correction towards 5850 in the coming days.
Nymex has risen and looks relatively stronger than Brent, Gold is looking weak, Silver looks ranged in the near term while Copper has risen but looks weak.
Nymex Crude (94.17, +0.65%) is up today but still below its 95.00 resistance which needs to be broken for a rise towards 103.00.
Brent (110.95, +0.28%) has dipped slightly from its resistance near 112-13, a strong break of this Resistance is required for a rise towards 116-18. Brent is looking relatively weaker than Nymex.
Gold (1665.20, +0.28%) lost some ground on Friday as it faced resistance near 1675. Now a dip to 1625-00 is looking more likely than a rise towards 1700. Gold-Crude ratio does suggest that Gold is weaker than Oil and can dip a bit more.
Silver (30.66, +0.83%) is trading in the 29.75-31.75 range, a further rise towards the upper end of the range looks likely now. In the slightly longer term further rise towards 34.00 can well be seen.
Copper (3.67, +0.67%) dipped on Friday and is looking a bit mixed. A sharp fall below 3.65 can push it lower towards 3.60 and even to 3.50-48 levels. We will have to wait and watch.
Dollar is trading weak after last week's ECB Meeting. Yen remains pressured as Japan's Prime Minister has stressed that the BOJ should set a 2% inflation as their medium term target. The Dollar-Index (79.46) has come off well below 80 and can come down further to 79.00-78.90.
The Euro (1.3392) has broken 1.3300 decisively and is now bullish to test 1.3500-600 on the upside. 1.3300 could now be a very good Resistance-turned-Support level. Dollar-Yen (89.53) remains strong and can rise to 92.00-20. Immediate Support is there at 89 and then strong Support is available in 88.30-00 region. The Euro-Yen Cross (119.90) has risen sharply and looks bullish to target 122-123 on the upside.
Dollar-Swiss (0.9132) is trading just above its important 0.9100-9080 which if broken can take it down to 0.9000 and even lower levels. However, if this Support continues to hold, it can remain ranged between 0.9080 and 0.9330. The Pound (1.6145) is ranged between 1.6000 and 1.6300 over the last few weeks. Within this range our bias is bullish to see an upside break and rise above 1.6300 towards 1.6500-6600. Only a strong break below 1.5950-00 will turn the outlook bearish. Aussie (1.0547) has important Support in 1.0400-380 region and while above this Support there is no immediate downside threat. A strong break above 1.0600 will open doors for further rise to 1.0700 immediately and then to 1.1000 there after.
In Asia, the USD-SGD (1.2267) is retaining its 1.2150-2330 sideways range can come down towards the lower end of this range in the coming days. Dollar-Rupee (54.75/76) had closed higher on Friday but can come down again towards 54.40-30 levels given the overall weakness in the Dollar. The upside is expected to be capped to 55.00-25 region.
The Spanish 10Yr yield remains lower and is now at 4.895 (down 1bps). We expect it to dip to 4.80% and there are chances to see a bounce from this 4.80% level. The Spain-German yield spread (3.31%) is just above its important Support of 3.25% which needs to be watched. Whether this Support breaks or hold will determine whether the spread is continuing to fall towards 3.00%-2.80% or is rising back to 3.50%-3.75%. We will have to wait and see.
The US 10Yr yield has dipped slightly by 3bps last week to 1.87% as compared to 1.90% the week earlier. We expect the treasury 10Yr yield to remain higher and target 2.20% on the upside in the coming days/weeks.
4:30 GMT or 11:00 IST IN WPI
9:00 GMT or 15:30 IST EU IND Prodn (YoY)
...Expected -3.2% ...Previous -3.90%
10:00 GMT or 16:30 IST EU IND Prodn (MoM)
...Expected 0.1% ...Previous -1.40%
US Trade Balance
...Actual $ -48.73 Bln ...Previous $ -42.06 Bln
IN Trade bal
...Actual $ -17.67 Bln ...Previous $ -19.29 Bln
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