Tuesday April 16, 2013 - 03:36:57 GMT
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FX Thoughts for the Day - www.fxthoughts.com
Morning Briefing : 16-Apr-2013 -0335 GMT
The Dow (14599.20, -265.86, -1.79%) fell sharply yesterday, a correction that was becoming due in any case, possibly pushed down by the fall in commodities. It has crucial Support on the Daily Candles near current levels. This needs to hold in order to prevent a further decline towards 14200.
Most of Asia-Pac is trading in the red, except for Indonesia and Singapore which are marginally higher. The Nikkei ( 13135) is down another 1% and could fall to 12800 by next week. The Shanghai (2176, -0.26%) trades lower and could see 2140-30.
The Nifty (5568.40) had managed to bounce yesterday. It is to be seen whether it can escape the fall in global equities today. It will become very bullish if it is able to avoid a fall.
Gold (Spot 1347.40) and Silver (Spot 22.63) continue to be in a liquidation move. And newspapers exhort the public to buy. This suggests there is more room on the downside for both. Somebody has surely been badly hurt in Gold. Whether that will have an impact on other markets is the worry.
Copper (3.25) has also fallen well, but could have some Support above 3.15. Brent (98.70) too has fallen further yesterday. It may have some Support just above 93.00. That needs to hold in order to prevent a deeper decline towards 91.00. This needs to be watched carefully.
The Euro (1.3040) has corrected down from 1.3138 over the last few days, with 1.31-32 being a crucial long-term Resistance region. Very important Support at 1.3000-2980 now. This needs to hold if the Euro is to gain longer term strength. Break below 1.2980 could be very bearish.
Dollar-Yen (97.07) fell sharply to 95.80 yesterday but has bounced a bit from there. Crucial Support at 96.00 needs to hold to prevent further Yen strength. The Euro-Yen Cross (126.55) saw a low near 124.87. The 124.50 region could provide good Support for a rebound. But in case that breaks, we could see a fall towards 122.
The Pound (1.5283) has corrected down from 1.5412, in line with expectation. A further dip towards 1.5170 could also be possible. Interim Support seen at 1.5225, though. The Aussie (1.0339) fell sharply yesterday, pulled down by the fall in commodities as well as the weaker than expected Chinese GDP data. There can be danger of further decline towards 1.0240.
Dollar-Rupee (54.6250) found Resistance at 54.79 yesterday. It has a crucial Support at 54.40. This needs to break to allow Rupee strength. For now, it is ranged between 54.40-85.
The German-US 10-Yr (-0.44%) has moved higher. This reduces the chances of a fall towards -0.65% and could be supportive of the Euro in the medium term. The Spain 10-Yr (4.73%) and the Italy 10-Yr (4.34%) have softened over the last couple of weeks, suggesting the Cyprus issue has not been allowed to spread. Let us see whetheer the Euro is able to hold above 1.3000.
The US 10-Yr (1.70%) and 30-Yr (2.87%) are trading lower however, and this is not so encouraging for the growth picture. It suggests lower yields going forward.
The market is hoping afresh for a rate cut by the RBI after the 5.96% WPI number yesterday. The 10-Yr GOI (7.83%) needs to break below 7.80% to fall further. The 10-Yr India-USA Spread is in an uptrend though. This casts a bit of doubt on further decline in GOI yields.
9:30 GMT or 15:00 IST UK CPI Y/Y
...Expected 2.80 % ...Previous 2.80 %
10:00 GMT or 15:30 IST EU CPI (YoY)
...Expected 1.70 % ...Previous 1.79 %
12:30 GMT or 18:00 IST US Core CPI (MoM)
...Expected 0.20 % ...Previous 0.20 %
12:30 GMT or 18:00 IST US Housing Starts
...Expected 930 K ...Previous 917 K
13:15 GMT or 18:45 IST US Industrial Production
...Expected 0.30 % ...Previous 0.71%
13:15 GMT or 18:45 IST US Capacity Utilization
...Expected 78.40 % ...Previous 78.30 %
...Actual 5.96% ...Previous 6.84 %
EU Trade Bal
...Actual 10.40 EUR Bln ...Previous 4.70 EUR Bln
US TICS (Net foreign purch of long-term Sec)
...Actual 17.8 $ Bln ...Previous 25.7 $ Bln
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