Friday May 3, 2013 - 03:48:24 GMT
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FX Thoughts for the Day - www.fxthoughts.com
Morning Briefing : 03-May-2013 -0346 GMT
The unexpected fall in jobless claims in US and ECB's decision to cut refinance rate to 0.50% (record low) has propelled all the global indices and commodity prices higher. Most of the global indices and commodities are close to the major resistance levels and it will be interesting to watch whether the bullish sentiments propel them above the key supply areas. Today's US NFP data will be keenly watched. Market expectation is a rise of 155,000.
Dow Jones (14831.60, +130.63, +0.89%) ended the day 130 points higher. Has moved back to reistance zone of 14900. Inabilty to surpass this area would see the Dow in a trading band of 14600-14900 in coming days.
Dax (7961.71, +48.00, +0.61%) has continued its amazing run and is in close to 8000 levels. We feel the Dax may find resistance around 8100 levels. Supports to come in at 7750-7800.
Nifty (5999.35, +69.15, +1.17%) was up 69 points yesterday. Nifty can trade volatile on the back of RBI's Credit Policy. Profit taking can creep in around 6030-6070. Support stands at 5930-5950.
Shanghai (2,210.13, +36.22, +1.67%) has found support around the 2170-2175 levels and is trading higher by 36 points aided by rise in industrial metals. We feel 2225 is a short term reistance for the Shanghai.
Gold (1472.20) bounced back yesterday instead of falling further, making us rethink our bearishness in the near term. A further rise towards 1500 may have to be allowed for. Support stands at 1425.
Brent Crude (102.63) has also bounced back,within its range of 98-103.
SIver (23.96) also bounced a bit yesterday, but continues to look weak overall. As mentioned yesterday, the Gold/ Siver ratio (61.29) continues to look bullish and suggests weakness for Silver.
Copper (3.1045) is also trading higher like all other commodities. However, unless 3.15 is surpassed in trade the range of 3.05 to 3.15 will likely holdin coming days.
The Euro (1.3075) fell sharply as Draghi suggested the Eurozone could go in for negative deposit rates also to force them to lend to businesses. This has been a blow to the Euro and a test of 1.30 is possible. We are not sure whether deeper decline below 1.30 will take place. Dollar-Swiss (0.9343) has moved up yesterday from a low of 0.9250. As we've been saying we can see a period of sideways trade betwee 0.9200-9500 on this pair.
Dollar-Yen (97.98) has bounced from 97.00, increasing chances of consolidation between 97-100. The Euro-Yen Cross (128.12) dropped from 130 alongwith the Euro yesterday and may be ranged between 127.50-130.00 for a while now.
The Pound (1.5532) trades relatively weak and has chances of dipping further towards 1.5490-50 while below 1.5600. The Aussie (1.0269) had fallen to 1.0222 yesterday, but has bounced a bit from there. There could be chances of rising towards 1.03 if it manages to remains above 1.0250-20 today given that Gold (1476) has bounced back and could test 1500.
The Singapore Dollar (1.2349) has weakened over the last two days as the rate has bounced from 1.2300. The Brazilian Real (2.0088) continues to trade relatively weak/ undecided. Dollar-Rupee (53.8050) had bounced from 53.60 yesterday and could rise towards 54.20-25 today on Euro weakness and chances of profit-taking on the Sensex/ Nifty.
The ECB shook up the markets yesterday with talk of a negative deposit rate. The feeling one gets is that there are a lot of surprises in Europe, unlike the steadiness in the USA. The Germany-USA 10-Yr (-0.46%) has come off sharply from the -0.41% seen the day before.
The Spanish and Italian 10-Yr (4.04% and 3.76% respectively) have fallen further, but the Euro is unable to take advantage of this just now.
The RBI Meeting is due today. Hopes of a lower interest rate environment have been tempered by the RBI's macroeconomic report yesterday. The market still hopes for a 25bp cut, but might be inclined towards bearishness. The 10-Yr GOI (7.73%)chart remains in a long-term downtrend, however, with good Resistance near 7.87%.
1:30 GMT or 7:00 IST AU PPI
...Expected 0.30 % ...Previous 0.20 %
5:30 GMT or 11:00 IST RBI Repo Rate
...Previous 7.50 %
5:30 GMT or 11:00 IST RBI Reverse Repo Rate
...Previous 7.00 %
5:30 GMT or 11:00 IST RBI CRR
...Previous 4.00 %
12:30 GMT or 18:00 IST US NFP
...Expected 155 K ...Previous 88.0 K
12:30 GMT or 18:00 IST US Unemployment Rate
...Expected 7.60 % ...Previous 7.60 %
...Actual 46.70 ...Previous 46.50
...Actual 0.50 % ...Previous 0.75 %
US Trade Balance
...Actual -38.8 $ Bln ...Previous -43.6 $ Bln
...Actual 50.2 ...Previous 48.30
...Actual 51.0 ...Previous 52.00
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