Thursday February 21, 2013 - 03:37:00 GMT
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FX Thoughts for the Day - www.fxthoughts.com
Morning Briefing : 21-Feb-2013 -0334 GMT
Dow Jones (13927.54, -0.77%) ended in the red over concerns of how log the QE will continue. Fears of it being stopped before the unemployment came down to desired levels have resurfaced. A further dip to the lower end of the 13850-14050 range can be seen. Housing starts also was disappointing at 0.890 Mln against expected of 0.930 Mln.
A-Pac is in the red following the fall in the US markets. Australia (5038, -1.48%), Hang Seng (22954, -1.52%) and Taiwan (7977, -0.64%) are all trading lower.
Shanghai (2352.34, -1.87%) is down and is likely to dip further towards 2300 in the coming sessions.
Nikkei (11376, -0.80%) is lower with other Asian peers, inside its 11000-500 range. Likely to dip towards the lower end of the range now.
Nifty (5943.05, +0.06%) closed flat giving up all of its little gains that it had. We had mentioned that a turn from 5950 will be “Bad” for the markets. A slide towards 5750 seems possible now.
Sharp fall in the commodity space yesterday as the Dollar strengthened following the US Fed's minutes of the meeting showing a divided opinion on its open ended asset purchase program.
Nymex Crude (94.65) has broken its 95-98 range on the downside and can test 93 immediately and further downmove to even 90 cannot be ruled out.
Brent Crude (115.05) has come down to test 115 as expected. 115-114 is a good Support region which can restrict further fall. However, if 114 is broken then further fall is possible. We will have to wait and see.
Gold (1556) has dropped below 1600 and is heading towards 1550-1525 as expected. Important to note is that Gold is in a broad sideways range of 1520-1800 since Sep-11 and there is also important Support near current levels on the long term chart. Having said this a turn around from 1550-25 region should be a good buy signal for Gold.
Silver (28.41) has broken its 29.50 Support as expected and can fall further towards 27 which is a very good Support level.
Copper (3.59) is heading down towards 3.50 as expected. We expect 3.50 to hold and a fresh rise back to 3.70 is possible from there.
The Euro (1.3275) has come off sharply overnight, triggered possibly by weaker than expected Housing Starts and news that the Fed had debated abouted moderating/ reducing QE purchases. A break below 1.3250 can test 1.3200-3190.
The Pound (1.5229) had a terrible day yesterday and is now near the Jan-12 low of 1.5234. It looks very bearish on the Monthly chart. UK Unemployment data was worse than expected yesterday. Dollar-Yen (93.63) is staying above 93.10 and 93.40. Support is seen at 93.00 while Resistance is still available at 94.25-45. The Euro-Yen Cross (124.32) has dipped alongwith Euro but has long-term Support near 123.95-75 that could be worth buying.
The Aussie (1.0239) fell sharply yesterday finding Resistance at the 21-day MA. It looks bearish on the Weekly now, with chances of 1.0110 on the downside. The fall in Gold would also hurt the Aussie. Dollar-Swiss (0.9285) rose strongly yesterday, reflecting the Euro weakness, after finding Support at 0.9185.
Dollar-Rupee (54.07) closed just above crucial Support at 54.05 yesterday. It can bounce today on account of all-round Dollar strength.
There's been a bit of a debate at the Fed on whether to tone down the QE programme. But, they cannot afford to back off just now. They have to hang in there till Unemployment reduces a little further.
We are concerned about the ability of the Housing sector to continue improving and to give a fillip to the US economy. Look at the Housing Starts, which have dipped to 890K, from the revised 973 in Dec. Today's Existing Home Sales becomes more important therefore. The expectation is for a rise of 4.91 Mln compared to 4.94 Mln in Dec. In reality, we need to see a rise past 5.0 Mln in order to feel comfortable about the Housing sector. Note that the New Home Sales (due next week) also needs to rise past 400K to give greater comfort.
Take a look at
The Spain 10-Yr (5.18%) has come down a bit again, thankfully. And the Spain-Germany 10-Yr (3.53%) has also come off from Monday's high of 3.60%. This could help to bring Support for the Euro near 1.3200, if not 1.3250 itself.
12:30 GMT or 19:00 IST US Core CPI (MoM)
...Expected 0.10 % ...Previous 0.10 %
14:00 GMT or 20:30 IST US Philifed Index
...Expected 0.70 ...Previous -5.80
14:00 GMT or 20:30 IST US Existing Home Sales
...Expected 4.91 Mln ...Previous 4.94 Mln
UK BOE Minutes
...Actual 0-0-9 ...Previous 0-0-9
...Actual 7.8 % ...Previous 7.7 %
US PPI ex Food & Energy (MoM)
...Actual 0.22 % ...Previous 0.11 %
US PPI ex Food & Energy (YoY)
...Actual 1.77 % ...Expected 2.11 %
US Housing Starts
...Actual 0.890 Mln ...Previous 0.973 Mln
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