Thursday March 7, 2013 - 03:35:08 GMT
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FX Thoughts for the Day - www.fxthoughts.com
Morning Briefing : 07-Mar-2013 -0333 GMT
Dow Jones (14296.24, +0.30%) rose further up to a new all time high. While above 14200 a further rise towards 14500 can be seen.
A-Pac is trading mixed with Australia (5111, -0.38%), Hang Seng (22798, +0.09%) and Taiwan (7962, +0.14%).
Shanghai (2337, -0.43%) after breaking below 2300 has bounced back above it day before yesterday. But the chances of it correcting/consolidating remain high.
Nikkei (12004, +0.60%) is at an important resistance of 12000. Chances of profit taking at current levels are high which has been long due.
Nifty (5818.60, +0.59%) has risen further yesterday breaking above its 5800 resistance. Even though a good rise in Dow has been seen Nifty needs to break above 5850-5900 to ease the down side pressure. We are slightly in favor of the index finding sellers near 5850.
Oil is near its support. Gold is at its resistance while Silver and Copper are near important supports. All the commodities seem to be at important support and resistances.
Nymex Crude (90.46, +0.03%) has not risen as much as expected. The bigger trend is bearish and a break below 89 will push it further lower towards 84.00 but before that a consolidation/short covering cannot be ruled out.
Brent (110.90, -0.14%) has dipped slightly and a break below 110-09 will push it further lower towards 105.00. We will have to wait and watch to see if the support holds.
Gold (1581.30, +0.41%) is at its 1580-90 resistance. We will have to wait and see how it trades here. If it holds then we can see Gold weakening in the coming sessions.
Silver (28.92, +0.42%) is slightly higher but is at its 29.00 resistance. A turn down from this resistance can weaken Silver further towards 26.50.
Copper (3.50, +0.26%) is also near its 3.50 resistance. We will have to see if this holds or breaks.
The Euro (1.2985) has dropped below 1.3000 on failure to rise past 1.3070 yesterday. The Pound (1.4990) has also declined substantially. It is looking the weakest among all the currencies, including the Yen. The ECB and BOE meetings are due today. Interest rates are expected to remain steady. The Euro can dip towards 1.29 today, while it remains below 1.3020. The Swiss Franc (0.9487) has weakened alongwith the Euro.
Dollar-Yen (94.00) has risen to the upper end of its recent 92-94 range. There is Resistance coming near current levels, but the market could see a sharp after the sideways consolidation through February. The BOJ Meeting ends today and Japan is expected to announce monetary easing. That even the Euro-Yen (122.06) is creeping up slowly, with good Support near 121.70, is suggestive of Yen weakness.
The Aussie (1.0238) has fallen a bit after finding Resistance near 1.03 yesterday. But, we are not very bearish on the Aussie. Weakness in the Yen should benefit the Aussie and prevent it from falling too much. But, looking at the EURAUD (1.2680), it should be the Euro that benefits the most from Yen weakness.
The USDSGD (1.2483) has risen further and could be headed higher towards 1.27 in the coming weeks. The Thai Baht and Phillippine Peso are strengthening against the USD while the Korean Won is consolidating sideways. The USDBRL (1.9688) continues to trade sideways, just above crucial Support in the 1.95-93 region.
All round Dollar strength today could push Dollar-Rupee (54.71) a little higher towards 54.90 today, where the NDF seems to be trading.
The correlation between the Spain-Germany 10-Yr (3.55%) and the Euro seems to have broken down over the last few weeks, as the Euro is falling even though the Spread is coming down. Even the fall in the Italian 10-Yr to 4.66%) is not helping the Euro in the near term.
The Euro is declining alongwith the fall in the Germany-USA 2-Yr Spread (-0.21%) which looks like it can fall further towards -0.25% or even -0.3%. Even the Germany-USA 10-Yr Spread (-0.47%) is in a fresh decline targeting -0.50%. Take a look at
GBP yields have also been falling relative to the US leading to weakness in the Pound, as can be seen on http://www.kshitij.com/graphgallery/gbpusddiff.shtml#gbpusd
Dollar yields have risen further yesterday, the 10Yr up from 1.90% to 1.93% and the 30-Yr up from 3.11% to 3.15%. The Yield Curve continues to steepen. In contrast, the Japanese Yield Curve is seeing tremendous flattening as the long-end (30-Yr) drops sharply to 1.79% from 2.0% a few weeks ago.
23:30 or 6:00 Australia Trade Balance
...Expected -0.51 A$ Bln ...Previous -0.43 A$ Bln
5:07 or 11:37 BOJ Meeting
...Expected <0.10 % ...Previous <0.10 %
11:00 or 17:30 BOE Mtg
...Expected 0.50 % ...Previous 0.50 %
11:45 or 18:15 ECB Meeting
...Expected 0.75% ...Previous 0.75 %
12:30 or 19:00 US Trade Balance
...Expected -42.70 $ Bln ...Previous -38.54 $ Bln
...Actual -0.60 % ...Previous -0.60 %
US ADP Emp
...Actual 198 K ...Previous 215 K
...Actual 1.00 % ...Previous 1.00 %
...Actual 51.10 ...Previous 58.90
...Actual 0.60% ...Previous 0.65%
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