Wednesday March 13, 2013 - 03:35:07 GMT
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FX Thoughts for the Day - www.fxthoughts.com
Morning Briefing : 13-Mar-2013 -0333 GMT
The Dow (14450.06, +2.77, +0.02%) closed flat last night. The S&P 500 (1552.48, -0.24%) dipped a little bit, failing to breach its earlier all time closing high of 1565.15. Profit-taking is coming in now. Asia-Pac indices are all in the red ranging from -0.15% (Singapore) to -0.67% (China). Only Korea and Taiwan are up slightly.
The Nikkei (12271, -0.36%) continues to see profit-taking and may have potential to dip to as much as 11900. That could induce profit-taking in Dollar-Yen (94.85) as well.
Globally, Equities are seeing legitimate profit-taking now and may correct/ consolidate for a few days. The US Retail Sales data today is going to be crucial. We expect a rise of 0.87% M/M. The previous release for Jan was 0.14%. If the data is not good, it may induce longer and deeper profit-taking than otherwise warranted.
The Nifty (5914) has already been seeing profit-taking so far this week and may dip to 5850 over the rest of the week.
Brent (109.63) has been coming down for the last four weeks. It has a crucial Support near current levels. If this Support breaks, Brent could move down towards 105. That would be very signiciant for the Rupee.
Gold (1593) is likely to be ranged between 1960-1600 for some days. In the longer term, the threat of a fall towards 1520 remains alive while Gold trades below 1610.
Currencies are seeing divergent moves. The Euro (1.3035) is managing to remain above 1.30. But, Dollar-Yen (95.88) is seeing profit-taking and could be in danger of a fall towards 95.00 if the Nikkei falls further. The Euro-Yen (124.98) fell from 126 yesterday and might dip further to important Support at 124.00.
Dollar-Swiss (0.9467) has been coming down for the last three days, from Friday's high near 0.9552 and might now trade sideways a bit between 0.9425-9500. The Pound (1.4933) has seen a decent bounce from yesterday's low near 1.4831 and can move up to 1.5000 over today-tomorrow. The EURGBP (0.8729) can see a profit-taking dip towards 0.8675, but is bullish in the longer run.
The Aussie (1.0310) is holding onto yesterday's gains and can test 1.0350-0400 over the rest of the week. The bounce from last week's low near 1.0115 is significant and suggests chances of further gains ahead.
Dollar-Rupee (54.1750) has Support at 54.00 and might bounce if stocks come off more today.
US Yields have dipped a bit yesterday. The 10-Yr (2.02%) is down from 2.07% and the 30-Yr (3.22%) is also 5bp lower from 3.27%. This is an understandable dip/ pullback. The longer term outlook higher levels near 2.15-2.20% on the 10-Yr and 3.35-40% on the 30-Yr.
German Yields have also come off. The 10-Yr (1.48%) is down from 1.52%. The 2-Yr (0.07%) is down 1bp. In the overall picture, German yields have to start moving higher from here or else they may see lower levels in the coming weeks. The Near End of the Curve needs to move up more to bring in greater confidence for Europe. Today's EU Industrial Production will be important. It had shown a slower pace of decline last month (Dec-12). The market expects a -2.2% (Y/Y) figure today. A number in the -2.0% to -1.0% region will be welcomed by the market.
The Swiss National Bank meeting is due tomorrow and the market will wait for some indication of where the SNB wants the EURCHF rate to go. Next week brings the RBI Meeting on 19th March and the market is hoping for an interest rate cut. The 10-Yr GOI (7.84%) might range sideways above 7.80% for some days but is in an overall downtrend that can push yields down to 7.60% in the coming weeks.
10:00 or 15:30 EU IND Prodn (MoM)
...Expected -0.10 % ...Previous 0.73 %
10:00 or 15:30 EU IND Prodn (YoY)
...Expected -2.20 % ...Previous -2.23 %
12:30 or 18:00 US Retail Sales (MoM)
...Expected 0.87 % ...Previous 0.14 %
...Actual 2.40%...Previous -0.50 %
UK Trade Balance
...Actual -8.20 £ (Bln) ...Previous -8.74 £ (Bln)
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