Thursday February 7, 2013 - 03:37:52 GMT
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FX Thoughts for the Day - www.fxthoughts.com
Morning Briefing : 07-Feb-2013 -0335 GMT
Dow Jones (13986.52, +0.05%) had a flat session yesterday and as mentioned earlier it can trade in the tight 13850-14050 range for some time.
A-Pac is trading mixed with Australia (4957.20, +0.34%), Hang Seng (23174.30, -0.36%) and Taiwan (7906.65, +0.25%).
Shanghai (2423.49, -0.45%) has come off a bit, but holds above its trend line support of 2420 on the daily charts. It looks likely to achieve its 2490 target before any meaningful corrective fall.
Nikkei (11374.79, -0.78%) is also in the red today but looks strong to scale 12000 while it holds above its 11000.
Nifty (5959.20, +0.04%) gapped up yesterday but could not hold on to its gains as it slipped to close the day flat. A dip to 5900 looks a possibility where Nifty is likely to get bought.
Oil is trading flat with the medium term uptrend intact. Gold and Silver remains mixed and ranged. Copper can dip before further rise.
Nymex Crude (96.69, +0.07%) has dipped from 98.00 just a few days back. It can trade in the tight 98-95 range now and a break on either side will tell us if it goes to 93.00 or 101-103.
Brent (116.80, +0.06%) is close to its 118.00 target that we had been mentioning; a break above this will push it further up towards 123.00. Support is seen near 114-13 levels.
Gold (1678.50) is retaining its 1625-1700 range and can test the upper end of this range in the coming sessions/days.
Silver (31.87) is flat below 32 and will need a strong break/close above 32 for a rise to 33.00-50.
Copper (3.75) has come off yesterday but has Support near 3.70 which can hold and keep the outlook bullish for a rise to 3.90-95.
Currencies remain calm and is waiting for the ECB Meeting today. There could be a sharp fall in the risky assets if Draghi surprises the market with a rate cut. We will have to wait and see. The Dollar-Index (79.75) is holding above 79.50 and is keeping alive the chances of testing 80.00-10 on the upside.
The Euro (1.3512) failed to rise past 1.3600 and is waiting for the ECB Meeting today. While below 1.3600 and if ECB cuts rate today, a fall to 1.3400-3370 is more likely to be seen. Dollar-Yen (93.46) has come off from just below the Fibonacci Resistance at 94.13 and can see a corrective pull back to 92.50-30 while below 94 now. The Euro-Yen Cross (127.70) has come off below 127 and can fall back to 125-124.50 before we see a rise to 128-80.
Dollar-Swiss (0.9104) is trading mixed and flat. The outlook is mixed. The Pound (1.5645) remains lower and is holding above the crucial Support at 1.5600 which if broken can drag it down to 1.5500 and even 1.5300. The BOE Meeting is due today. Aussie (1.0307) has broken its 1.0350-600 sideways range on the downside and now has the threat to fall further towards 1.0200-150 if it breaks below 1.0300 strongly.
In Asia, the USD-SGD (1.2392) is getting good Support near 1.2300 and has good chances of seeing a rise to 1.2500 in the coming days. Dollar-Rupee (53.16) is mixed and ranged between 53.00 and 53.40.
The GOI 10-Yr yield (7.91%, -0.02%) is up from the 7.80% level on 14-Jan. It was 7.85% on the day of the RBI policy when rates were cut by 25bp. The larger trend is downwards, though, and we could see yields dipping again.
The Spain 10-Yr (5.45%, +7bp) has moved up again and should target 5.55% in the near term. Hopefully, it will fall back again from there. In the bigger picture, the best we can hope for is a sideways consolidation between 5.55% and 5.20%. Therefore, the Euro might not get the benefit it earlier got from falling peripheral yields.
The German 10-Yr (1.64%) should also rise a little more, but find Resistance at 1.75% in the near term.
The ECB and BOE meetings are due today. The BOE is expected to maintain its QE targets.
0:30 GMT or 7:00 IST Australia Labour Force
...Expected 5.00 K ...Previous-5.53 K
9:30 GMT or 16:00 IST UK Trade Balance
...Expected -9.00 £ Bln ...Previous -9.16 £ Bln
11:00 GMT or 17:30 IST BOE Mtg
...Expected 0.50 % ...Previous 0.50 %
11:45 GMT or 18:15 IST ECB Meeting
...Expected 0.75% ...Previous 0.75%
No major data release yesterday.
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