Wednesday May 8, 2013 - 03:27:02 GMT
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FX Thoughts for the Day - www.fxthoughts.com
Morning Briefing : 08-May-2013 -0325 GMT
All the equity markets across the developed world are at fresh life time highs. We feel the emerging markets to join the party as this the place where positive alpha can be generated in coming days.
Dow Jones (15,056.20, +87.31, +0.58%) has traded firm yesterday and closed above 15000 for the first time. We expect the index to continue the uptrend and any dip to 14900 will be a good buying opportunity.
Dax (8,181.78, +69.70, +0.86%) too closed higher yesterday and ended the day on a stable note. Like the Dow and the Nikkei, the Dax too is at fresh highs and any dip to 7850-7925 can reinforce good buying for the longer term.
Nikkei (14376.30, +196.06, +1.38%) seems to be on a dream run. After having rallied close to 400 points yesterday is up by another 190 odd points. The index is at 5 year high and can only look to move higher from here. Howvere after such a huge rally we cannot rule out a few days of consolidation. Supports come in at 13900.
Nifty (6043.55, +72.50, +1.21%) pleasently surprised us with a big move on the upside and closed the day higher. Nifty traded the day with strength and breached the critical resistance above 6030 during the good part of the day and closed above it. The area around 6060-6100 is important for the Nifty to surpass on the upside to continue the momentum forward. We expect 5950 to be a good support for the index.
Shanghai (2,244.59, +9.05, +0.40%) is trading with a positive bias and look to target 2275 on the upside in the shorter time frame. Supports look to come in at 2225.
Gold (1452) has come down to the level of 1450 as we had expected. Now we can expect the yellow metal to stay weak and retest 1415-1420 going forward. 1470 will be a very strong supply area for Gold.
Brent (104.22) has retreated a bit after having touched our target of 106 yesterday. Technically the Brent can consolidate sideways and we expect it to trade between 102-105 in the next few trading sessions.
Silver (23.9550) has bounced back above 23.90 after having broken 23.80 in trade. We feel Silver to remain weak as long as it trades below 24.20.
Copper (3.3060) has come back to life after better than expected macro data across the globe. A short term bottom seems to have been put in place for Copper and we expect it to touch 3.45 in coming days. Supports look likely to come in around 3.25.
The Euro (1.3088) is trading around 1.3080 after having attempted a move over 1.31 on better than expected earnings from European Banks. With equity markets hitting new highs We expect Euro to trade strong between 1.3050-1.3250 and attempt to move higher.
Dollar-Swiss (0.9399) is inching close to our target of 0.94. We see the currency pair closing in on a resistance zone of 0.9430. So a trading range between 0.9350-0.9430 is a more realistic scenario with chances of a dip to 0.9350 in coming days.
Dollar-Yen (98.97) has been holding on to 99 and looks good for a move on the upside on the back of strong rally in Japanese Equities. We expect it to target 100 on the upside. Supports come in at 98.
The Euro-Yen (129.58) is trading below 130 after having attempted to break past 130. We maintain our bullish stance on the currency pair and view it to touch 134 in coming days on a close above 130. Supports come in at 127.80.
The Pound (1.5478) has moved lower and has achieved our target of 1.5480. The Pound is currently perched at at very important support zone and therefore a few days of sideways move is quite likely.
The Aussie (1.0174) has cracked down in trade as expected and has broken below 1.02. With the Reserve Bank of Australia loweing its main rate by a quarter percentage point to 2.75, we expect the Aussie to stay weak in coming days we view the Aussie to remain weak going forward. However in the absolute shorter time frame the market is approaching an oversold zone. So a move up to 1.0225 cannot be ruled out.
The Singapore Dollar (1.2312) has closed above 1.23 levels and looks likely to target 1.2375 in coming days.
Dollar-Rupee has closed lower yesterday at 54.135/145. We expect it remain rangebound between 53.90-54.30 in the next few trading session.
The USA-10-Yr (1.7814,+0.02) is looking steady. We feel the world's largest economy is back in its path of growth and long term investment scenario is slowly picking up. confidence is slowly back and some more good data on the macroeconomic front is likley possible in coming days.
The German-US 10-Yr Spread (-0.51%) looks likely to move back to -0.5% or slightly lower in coming days. The US-Japan 10-Yr Spread (1.18%) looks good for a move to 1.2%. This suggests the Dollar could weaken against the Euro and strenghthen against the Yen. We have to see how this plays out.
The Reserve Bank of Australia has lowered its main rate by a quarter percentage point to 2.75 percent yesterday,a day after European Central Bank President Mario Draghi said further cuts in rates are possible following a reduction to an all time low last week.
No major data release today.
Australia Trade Balance
...Actual 0.31 $Bln ...Previous -0.11 $Bln
...Actual 2.75 % ...Previous 3.00 %
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