Tuesday February 5, 2013 - 03:35:24 GMT
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FX Thoughts for the Day - www.fxthoughts.com
Morning Briefing : 05-Feb-2013 -0333 GMT
Dow Jones (13880.08, -0.93%) ended in the red on news of worries over renewed Euro crises (political uncertainty). There is always some news that comes up as an explanation/justification for the rise/fall. Technically 14000-200 resistance on the monthly has held well as of now. Currently it looks weak and can see a dip to 13750-00 and may be even lower.
A-Pac is in the red after a disappointing session by the Dow. Australia (4904.60, -0.50%), Hang Seng (23286, -1.68%) and Taiwan (7886.85, -0.46%).
Shanghai (2411.71, -0.68%) has also been pulled lower by the negativity that is seen today morning. Support is seen near 2400 and we are not sure if this will hold or not. We will have to wait and watch.
Nikkei (11137.34, -1.09%) is also lower, we need to watch 11000 support which if broken can push it lower towards 10300. Profit booking was over-due in the index.
Nifty (5987.25, -0.19%) is set to move lower towards 5900 support which has to be watched.
Oil looks weak and likely to dip towards its immediate supports. Gold and Silver are mixed while Copper is bullish but can dip before a rise.
Nymex Crude (96.03, -0.15%) has also seen a fall breaking below its uptrend line of the immediate rise. The current uptrend seems to have revered and a dip to 93-92 levels in the near term.
Brent (115.37, -0.20%) has also come off a bit and an immediate dip towards 114-13 is likely to be seen.
Gold (1674.80) remains mixed and is retaining its 1625-1700 sideways range.
Silver (31.75) is flat within its current 31.00-32.30 range. 50-50 chances of either moving up to test 33.00-50 or coming down to test 31.00-30.50 from current levels.
Copper (3.77) has come off yesterday. But with good Resistance-turned-Support near 3.70, the overall outlook remains bullish for a rise to 3.90-95.
Profit taking in the Euro and Dollar-Yen has taken the Dollar-Index (79.64) higher yesterday. It can move up further to test its 79.75-80.00 Resistance region. We can expect the index to be ranged between 79 and 80 for some time.
The Euro (1.3498) has come off sharply below 1.3600 and can move down further towards 1.3400 ahead of the ECB Meeting this week (07-Feb-13). But a bounce back to 1.3550-3600 is possible before seeing 1.3400. Dollar-Yen (92.32) failed to rise past 93 strongly yesterday and could dip to 91.50-00 before a rise to 94-95. The Euro-Yen Cross (124.64) has come off sharply and can correct further to 123 after which it can rise back again.
Dollar-Swiss (0.9100) remains flat in a narrow range of 0.9075-0.9120. It can remain ranged between 0.9070 and 0.9170 for some time with an overall bearish bias for a fall to 0.8900-8850. The Pound (1.5753) is holding higher above 1.5700 and can move up to 1.5800-50 in the coming sessions while above 1.5700. Aussie (1.0437) is retaining its 1.0350-600 sideways range and is waiting for the outcome of the RBA Meeting which is due in some time. If the RBA surprises the market with a rate cut, then Aussie can break below 1.0350 and fall to 1.0200.
In Asia, the USD-SGD is not breaking above 1.2400 strongly and could remain ranged between 1.2300-2400 for some time. Dollar-Rupee (53.29) has bounced back from its low of 52.93 yesterday and can rise further to 53.60-80 on a strong break above 53.40.
The Germany-US 2-Yr Spread (-0.05%) has fallen below 0% again as rising yields in Italy and Spain may have pushed money into German Bunds. The Spanish and Italian 10-Yrs have risen to 5.44% and 4.48% respectively. Resistance should be seen near 5.55% on the Spain 10-Yr. The Spain-Germany 10-Yr Spread (3.83%) can rise to test Resistance near 4.0-4.2%, but may come off from there.
This could further hurt the Euro (1.3498) in the near term, with chances of 1.3400-3350.
The RBA Meeting is due today. Rates are expected to remain unchanged at 3% after they were lowered from 3.25% at the last meeting on 04-Dec-12. Later in the week (Thursday, 7th), we have the ECB and BOE meetings. There could be some room for a rate cut by the ECB since the policy rate is 0.75%, compared to 0.15% on the 3-mth EUR LIBOR and 0.5% on the UK policy rate and <0.25% on the US Fed rates.
1:30 GMT or 8:00 IST Australia Trade Balance
...Expected A$ -0.80 Bln ...Previous A$ -2.64 Bln
4:30 GMT or 11:00 IST RBA Meeting
...Expected 3.0% ...Previous 3.0%
9:00 GMT or 15:30 IST EU Retail Sales
...Expected -0.3% ...Previous 0.1%
No data release yesterday.
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