Wednesday March 6, 2013 - 03:50:02 GMT
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FX Thoughts for the Day - www.fxthoughts.com
Morning Briefing : 06-Mar-2013 -0347 GMT
A new lifetime high for the Dow (14253.77, +125.95, +0.89%) last night. If it sustains above 14200 now (it might) we can see 14500-15000 in the coming months. All of Asia-Pac is in the green today, ranging between +1.3% (Nikkei, 11838) and +0.12% (Taiwan). The Nikkei is coming close to a "faultline" Resistance near 12000 and should be ripening for a good corrective fall. Be careful there.
The rise in the Dow has come even in the face of "sequestration" cuts. If we see the charts, this is the first time that a multi-week sideways consolidation has resolved in an upmove rather than a decline. Both these developments are significant.
The Nifty (5784.25, + 85.75, +1.50%) had moved up a good bit yesterday. It is to be seen if the global rise in Equities can enable it to break above Resistance in the 5800-25 region.
Oil is witnessing some short covering; Gold has overhead resistances while Silver and Copper can see further short covering as well.
Nymex Crude (91.08, +0.29%) seems to have held the 90-89 support for now and a rise towards 92-93 seems to be coming. We will have to see if it turns down from there.
Brent (112.01, +0.36%) has also bounced from its support of 110-09 and a rise towards 113-14 can be seen from where it can turn down again.
Gold (1578.10, +0.20%) has risen slightly but remains under pressure with over head resistances in the 1580-90 region. The down side pressure will ease only on a strong rise above 1590. On the other hand a turn down from 1590 can again push it lower towards 1545.
Silver (28.79, +0.67%) has also risen slightly and can see some more short covering towards its resistances of 29.00 and 30.00. While below these resistance Silver is likely to be under pressure and a further dip towards 26.50 cannot be ruled out.
Copper (3.53, +0.46%) has also held its 3.50 support and can see a bounce now. The over head resistance is far off at 3.70. We will have to see how far it goes.
The rise in the Dow has been good for "risk on" trades it seems. Good bounce seen in the Euro (1.3066), which has managed to remain above the 1.3000-2967 Support region for the last three days. Near term Resistance is seen near 1.3093 (200-MA on the 1-hr), but if that is broken, the Euro could be headed much higher. The EU GDP release is today. A decline of 0.6% is already in the price.
The Dollar Index (82.07) hasn't been able to break trendline Resistance on the Monthly near 82.70.
Dollar-Yen (93.10) has been consolidating sideways just above 93 for the last three days but can dip to 92.00 this week. The Euro-Yen (121.67) has also been quiet for the last three days, but could move up if the Euro strengthens further.
Dollar-Swiss (0.9406) trades below significant trend Resistance at 0.9465 on the Weekly chart and can fall alongwith a rise in the Euro. The Pound (1.5147) had risen to 1.5200 yesterday on short-covering but dipped again to near 1.5100 in the US session. It currently trades near the 200-MA ont he 1-hour chart. If it manages to remain above 1.5100 through today, it might be able to rise past 1.5200 also. Else, a break below 1.5100 will be quite bearish.
The Aussie (1.0294) has surged. The Dec-12 GDP has come in at 0.6%, in line with expectation. The chart looks good for a further rise towards 1.0330.
Dollar-Rupee (54.9250) had bounced from near 54.60 yesterday. We have to see if the global "risk on" can push it down again today or not. Our view is that the Rupee is being sold a little unfairly. But, let's see what the market thinks.
The Italian 10-Yr (4.74%) has dipped again a little. There's a small "Double Top" on the charts and if the yield remains below 4.90%, we may hope to see levels below 4.70%. That would be good for the markets. A rise past 4.90%, on the other hand, would spook the markets all over again. The Spain-Germany 10-Yr (3.59%) has also come off a bit. Both of these should help the Euro and "risk on" trades.
The US 10-Yr (1.90%) has moved up a little more yesterday, up another 3bp. The 30-Yr (3.11%) has also risen another 2bp. The trend is positive in the longer term, but some near term dip still cannot be ruled out.
The Bank of Canade meeting is due today. Tomorrow brings meetings at the BOJ, ECB and BOE. The Japan 30-Yr (1.75%) has seen a sharp decline over the last few weeks in anticipation of balance sheet expansion by the BOJ. Take a look at
UK yields have also been coming down on fear of more QE by the BOE to fight a "triple dip" recession. The Pound can continue to decline in the longer term if Gilt yields contine to drop relative to the USA. Take a look at
9:00 or 15:30 EU GDP
...Expected -0.60 % ...Previous -0.60 %
12:15 or 18:45 US ADP Emp
...Expected 168 K ...Previous 192 K
3:00 or 19:30 BOC Meeting
...Expected 1.00 ...Previous 1.00
14:00 or 20:30 CA PMI
...Expected 56.20 ...Previous 58.90
...Actual 3.00 % ...Previous 3.00%
EU Retail Sales
...Actual 1.25% ...Previous -0.82 %
...Actual 0.60 % ...Previous 0.65 %
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