Monday April 15, 2013 - 03:37:54 GMT
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FX Thoughts for the Day - www.fxthoughts.com
Morning Briefing : 15-Apr-2013 -0334 GMT
The Dow (14865.06) closed flat on Friday. US Retail Sales were not good. While the longer term trend remains bullish, we could see some profit-taking between current levels and 15000. This is in line with what we have been suggesting for some time now.
Most of Asia-Pac is down a goodish bit, ranging from -0.37% (Taiwan) to -1.36% (Hong Kong). The Shanghai (2194, -0.58%) and Nikkei (13325, -1.19%) are both trading lower. We have been warning of profit-taking in the Nikkei for some time now. The Shanghai could be vulnerable to further decline if it closes in the 2180-70 region today. The Nikkei could be vulneranle to deeper correction towards 13200, maybe even 12800, given that the market is still hugely Overbought.
In the medium term, we have to see what impact the fall in commodities over the last couple of days will have on Equities.
The Nifty (5528.55) might break below 5500 today given the downturn in global equities. If so, it could target 5400 on the downside.
Gold, Siver and Crude crashed last week, breaking long-term sideways range supports. This is big news. It can mean two things (a) in the near term, some people would have been badly hurt and the losses could lead to selling in other markets also (b) in the longer term, lower commodity prices could mean lower inflation.
Gold (Spot, 1443.60) broke below the 1525 range support on Friday on news that Cyprus could sell its Gold holdings. It has declined further on stop loss selling today and can now target 1350, maybe even lower.
Silver (24.62) has also broken range support at 26 and may now be headed down towards 22 and 20.
Brent (101.90) has also broke below range support at 103 last week and is headed down to 98-97 now.
Copper (3.3105), however, has not lost much. There is Support near 3.20-15, which could hold. The relative resilience of Copper needs to be watched. It could mean well for industry.
The Euro (1.3078) has come off a bit. It is finding it difficult to rise past 1.3125. Crucial long-term Resistance is seen in the 1.31-32 region. Dollar-Yen (98.16) has fallen sharply, unable to rise past the Resistance at 100 that we'd been pointing out last week. A test of 97.70 is possible today. The Euro-Yen Cross (128.31) has fallen from 131.12 over the lasgt two days and threatens to fall towards 126 this week.
The Pound (1.5315) has run into some profit-taking near 1.54 and has some chances of seeing a bit of a dip towards 1.5250-40. The Aussie (1.0435) has fallen sharply from last week's high of 1.0582, possibly driven down by the plunge in Gold. The failure to rise past 1.06 makes the Aussie vulnerable to a fall towards 1.03.
The Singapore Dollar (1.2367) has been strengthening for some days now. The USD-SGD has good Resistance at 1.24 now and the Sing Dollar can appreciate more while that holds. The Brazilan Real (1.9662) is trading slightly weaker today, but with Resistance at 2.00 holding on the USDBRL for now, the pair can move sideways for a while.
Dollar-Rupee had closed at 54.5250 on Friday. It is expected to remain ranged between 54.25-85 for now.
The US 30-Yr (2.93%) is being unable to rise back past 3.0%, while the 10-Yr (1.73%) has also come off a bit. The softness in yields is a litte worrying.
The German-US 10-Yr Spread (-0.47%) has moved up further in favour of the Euro. If it manages to rise past -0.45%, it might be able to avoid a fall towards -0.65%. That would be good for the Euro.
The JGB 30-Yr (1.55%) has bounced back sharply from levels near 1.25% over the last few days. This is something new to be watched.
5:30 GMT or 11:00 IST IN WPI
...Previous - 6.84 %
9:00 GMT or 14:30 IST EU Trade Bal
...Expected 3.00 EUR Bln ...Previous 3.90 EUR Bln
13:00 GMT or 18:30 IST US TICS (Net foreign purch of long-term Sec)
...Expected 41.30 $ Bln ...Previous 25.69 $ Bln
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