Thursday March 21, 2013 - 03:37:08 GMT
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FX Thoughts for the Day - www.fxthoughts.com
Morning Briefing : 21-Mar-2013 -0335 GMT
Bernanke stays the course, as expected. Hallelujah! The Dow (14511.73, +55.91, +0.39%) and S&P 500 (1558.71, +10.37, +0.67%) are up again. The price action suggests the upmove is strong, dips will be eagerly bought back.
Asia-Pac is mixed, ranging from -0.25% (New Zealand) to +0.59% (Hong Kong). The Nikkei (12627.77) is up a good 1.27% opening after yesterday's Japan holiday. The uptrend continues but is making us dizzy, as it is so hugely overbought. Still, a test of 13000 seems possible now.
The DAX (8001.97) was up yesterday despite the problems in Europe. The index is in a good uptrend with 8200 being on the radar.
All in all, the Equity markets suggest "all is right with the world" or at the very least, nothing is terribly wrong. The Nifty (5694.40) had closed just above its crucial Support of 5690 yesterday. It will be seen to be terribly weak if it is unable to bounce today. Further, it is to be seen whether the Nifty will be able to rise past 5750-5800 or not.
Gold (1607) rose to 1615 yesterday, but it might remain below 1615-20, especially if the Cyprus issue cools off.
Brent Crude (108.72) bounced a bit yesterday, coming up from Tuesday's low just above 107, but has trend Resistance near current levels now. A failure to rise past 109 will keep Brent pressured on the downside, targeting 105-103.
The Euro (1.2949) is managing to remain above 1.2875, but is not able to rise past 1.30. Cyprus has got some time due to the ECB saying it will provide liquidity. Cyprus is also trying to woo Russia for some cash. The market might wait over today-tomorrow to see what emerges. Depending on that, the Euro will either rise past 1.30 or break below 1.2850.
The EURCHF (1.2230) bounced yesterday. That might indicate an easing of the European problem in the short term.
Dollar-Yen (95.97) surprised by rising strongly yesterday. Friday's fall to 94.00 seems to have been enough consolidation. Decent Support is seen at 95.00 now. Test of 96.50-70 may be possible. The Euro-Yen (124.96) also surprised by moving up strongly yesterday, finding good Support near 122.20. May rise towards 126 before getting into a sideways range of 122-126.
The Pound (1.5150) whipsawed between 1.5025-5185 yesterday. It has consolidated well over the last few days and could be looking to rise towards 1.5300-50 by next week. The Aussie (1.0380) has also consolidated well and looks set to rise towards 1.0450-0480 in the next few days.
The USD-SGD (1.2500) remains in a broad uptrend, with some chances of seeing 1.2550. Movement in Dollar-Rupee (54.3650) will depend on how the Nifty behaves today. We hope for a bounce in the Nifty. If so, Dollar-Rupee could dip a bit.
The US FOMC is through. The Fed continues to maintain course. No immediate signs of an "exit", no raising of rates or reduction of QE. The US 10-Yr (1.96%) has bounced back from 1.91% the day before. Good Support is seen near 1.75% and the overall trend remains positive for an eventual rise towards 2.25%.
The Germany-USA 2-Yr Spread (-0.23%) continues to move lower, targeting -0.3%. The 10-Yr Spread (-0.57%) is at its lowest leven since Jan-11. Some more downside towards -0.65% looks possible. But there is a very long-term Support coming up near those levels, which needs to be borne in mind.
The Spanish (4.98%), Italian (4.64%) and Greek (11.79%) have dipped a it yesterday due to the small relief in the Cyprus issue. The Italian 10-Yr yield chart actually looks encouraging for a dip towards 4.50% it it manages to remain below 4.75%. So that's some good news there. Let's see what happens with Cyprus this weekend.
14:00 or 19:30 US Philifed Index
...Expected -3.10 ...Previous -12.50
14:00 or 19:30 US Existing Home Sales
...Expected 5030 K ...Previous 4920.00 K
UK BOE Minutes
...Actual 0-0-9 ...Previous 0-0-9
...Actual 7.80 % ...Previous 7.80 %
US FOMC Meeting
...Actual < 0.25 % ...Previous < 0.25 %
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