Tuesday April 23, 2013 - 03:36:10 GMT
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FX Thoughts for the Day - www.fxthoughts.com
Morning Briefing : 23-Apr-2013 -0333 GMT
Dow Jones (14567.17, +19.66, +0.14% ) seems directionless, but is vulnerable to correction now. The higher probability for the move is a trend on the downside. 14380-14420 is a good support on the short term basis. Upside looks capped around 14820-14880.
Nikkei (13,530.00, -38.36, -0.28%), which seemed unstoppable yesterday, has come off today, down 0.28 %, alongwith the dip in Dollar-Yen. Support for the index comes in at 13300-13350 . Resistance likely to set in around 13620 .
Nifty ((5,834.40, +51.30, +0.89 %) closed with strength above the resistance of 5830 which is a bulllish outcome. However after the amazing run Nifty looks likely to consolidate for a few trading sessions. Resistance for the index is around 5870-5900 on the upside and support stands at 5750-5780 levels .
Metals look weak overall. Crude could be consolidative. Eyes will be on US GDP data out on Friday. A 3% increase is priced in. Disappointment could push prices lower.
Gold (1428.80) rose to 1439 in its week-long relief rally, but might start seeing fresh selling coming in soon. Good Resistance is seen near 1455. Gold looks particularly weak on the MCX excahange in India, with potential to fall towards 23500 compared to 26363 currently. Silver (23.255) has been consolidatin after the fall a week ago, but looks weak overall for a further decline towards 22-20.
Brent (100.04) has held well above 97 last week and looks consolidative between 97-103 for some days now. The Brent-Nymex Spread (11.31) could drift lower towards 10.
Copper (3.1095) looks quite weak and can test the Oct-2011 low near 2.994.
The Euro (1.3040) continues to consolidate sideways and can remain in this mode for some more days. Dollar-Yen (99.12) was unable to rise past crucial Resistance at 99.80-100.00 yesterday, but a thrust past 100 may still be possible while above 98. The Euro-Yen Cross (128.85) has come off strongly yesterday, failing to sustain gains above 130.50, largely due to the fall in USDJPY. With the QE already in the price, the market is in the process of re-thinking where it wants to see the Yen. Hence the consolidation.
The Pound (1.5277) has bounced well from the 1.5200 Support mentioned yesterday. Fresh dips might be bought for a rise towards 1.5400. Dollar-Swiss (0.9350) has been consolidating sideways alongwith the Euro for some weeks now. Long-term Resistance is seen at 0.9605 which can keep the Dollar pressured in the long term.
The Aussie (1.0220) had rallied a bit yesterday, but is likely to test crucial Support in the 1.0200-0160 region. Should that break, we could be looking at a decline towards 0.99 in the coming weeks. Such a fall would suggest further weakness in Commodities and in China.
The Singapore Dollar (1.2410) and Brazilian Real (2.0177) have weakened in the last few days. The weakness in the Real is understandable given the weakness in Commodities and damp data out of China.
Dollar-Rupee (54.1450) is hesitating to break below 53.75 for now and remains ranged between 53.75-54.50 in the near term.
Spanish yields (10-Yr 4.49%) have been on a decline since the beginning of the month, coming down from 5.06%. The Italian 10-Yr (4.06%) have declined sharply over the last few days. Giorgio Napolitano has been re-elected as president. The Greek and Italian election episodes suggest that the European situation might have seen its worse, unless there's some nasty surprise lurking in France.
The US 10-Yr (1.69%) has fallen below 1.70% and the 30-Yr (2.87%) has fallen below 2.90%. The hopes for a sustained rise over the course of the year are severly dented and the focus shifts to the downside now. This is not very nice for global growth.
The German-US 10-Yr Spread (-0.47%) has dipped again. The German 10-Yr (1.22%) does not look like it wants to rise and the 2-Yr (0.01%) is just about managing to remain above Zero. We need to see economic data get better in the Eurozone (as hoped for by Draghi) to see rates rise now.
14:00 GMT or 19:30 IST US New Home Sales
...Expected 419 K ...Previous 411 K
US Existing Home Sales
...Actual 4.92 M ...Previous 4.95M
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