Wednesday February 27, 2013 - 03:37:07 GMT
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FX Thoughts for the Day - www.fxthoughts.com
Morning Briefing : 27-Feb-2013 -0334 GMT
Dow Jones (13900.13, +0.84%) was up after better than expected New Home sales data which stood at 437K against expected of 381K. Also Ben Bernanke’s being supportive of the bond buying program has helped the index rise.
A-Pac is mostly in the green with Australia (5051, +0.58%), Hang Seng (22624, +0.46%) and Taiwan (7887, +0.09%).
Shanghai (2298.50, +0.23%) is slightly higher today after breaking 2300. A further down side towards 2250 and 2200 cannot be ruled out after this short covering rally gets done with.
Nikkei (11310, -0.78%) is trading lower in the 11000-500 range. A break below 11000 if seen will be bearish in the near/medium term which could trigger some corrective rally for the index.
Nifty (5761.35, -1.60%) was sharply lower, we have been mentioning a dip to 5750. Now after a sharp fall yesterday we can see some short covering/pull back towards 5800. A further down side towards 5600 can also be seen on a break below 5750. But first a short covering rally is likely.
Nymex is hanging on to its support while Brent has made up its mind to dip further. Gold, Silver and Copper are experiencing a short covering rally which can take them higher to their immediate resistances.
Nymex Crude (92.85, +0.24%) is facing resistance near 93.00 levels and a further dip towards 90.00 seems likely now. It does have some support near 92 levels but it can break that.
Brent (112.95, +0.21%) is headed towards 111-10 in the near term. And then further lower levels of 104.00 cannot be ruled out on the break of 110.00.
Gold (1611.70, -0.24%) is witnessing a corrective pull back which can take Gold all the way towards 1650. A turn down from 1650 can then weaken it towards 1515-00. Gold still does not look a buy.
Silver (29.24, -0.05%) is also experiencing some short covering which can take it towards 30.00 from where it can dip towards 26.00 again.
Copper (3.57, +0.15%) has bounced from its support of 3.50. While 3.50 hold a short covering rise towards 3.70 is possible. The trend is bearish and for it to be reversed it needs to break 3.70 strongly. Rather we would be looking for Copper to turn down again from 3.70 to break 3.50 for a move towards 3.30.
Despite the better US economic data, the Dollar Index (81.85) continues to trade strong. The Euro (1.3047) has fallen again, weighed down by the Italian election results. It could weaken further on failure to hold above 1.31 in the US session.
Dollar-Yen (91.79) is consolidating near the 8-week MA and could fall further on a break below 91.50. The Euro-Yen Cross (119.88) has a crucial Support in the 118.90-20, which needs to hold to prevent further carnage for the Euro.
The Pound (1.5115) has come off a bit again from the 1.5215 region and could begin a fresh decline in case it breaks below 1.5085. The longterm outlook is bearish. Dollar-Swiss (0.9330) has not risen as much as the Euro has fallen because the EURCHF (1.2175) has fallen sharply from 1.2350 over the last few days. But, the Swiss Franc could weaken further in case of a further decline in the Euro. The Aussie (1.0214) continues to push lower and can target 1.0130 in the coming days.
Dollar-Rupee closed near 54.09 yesterday, but could rise towards 54.20-30 again on the fresh weakness in the Euro. The Singapore Dollar is ranging sideways betwen 1.2350-2425, with a crucial Resistance at 1.2420. The Brazilan Real (1.9822) has started weakening again after gaining to 1.9357 over Jan-Feb. This could have a negative impact on the Rupee.
The Italian elections have turned the European bond markets around again. The Italian 10-Yr (4.9%) has risen sharply and threatens to rise towards 5.25% also. The Spain-Germany 10-Yr Spread (3.92%) has also risen sharply, but can find some Resistance near 4.0%. The market will be watching whether Italy will be forced to go in for a re-election or not.
US yields have come off a decent bit over the last few days, as a setback to the upside potential. The earlier FOMC minutes confusion and now the Italian elections have brought the 10-Yr (1.88%) down the 2.02% region. Some more dip could be seen across the Curve over the coming days.
Japan seems agreed on Haruhiko Kuroda as BOJ governor. A looser monetary policy is now being taken as inevitable. The Yen yields have dropped a goodish bit in the last few weeks and could push lower. German yields too have been falling through February, with the 5-Yr down from 0.8106 to 0.45%. Further dip to 0.30% is possible.
8:30 GMT or 15:00 IST UK GDP
...Expected -0.30 ...Previous -0.30
9:00 GMT or 15:30 IST EU Biz Climate
...Expected 89.70 ...Previous 89.20
12:30 GMT or 19:00 IST US Durable Goods Orders
...Expected -4.10 % ...Previous 4.55 %
US Case Schiller
...Actual 6.88 % ...Previous 5.48 %
US New Home Sales
...Actual 437K ...Previous 378 K
US Cons Conf
...Actual 69.6 ...Previous 58.4
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