Wednesday June 12, 2013 - 03:34:53 GMT
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FX Thoughts for the Day - www.fxthoughts.com
Morning Briefing : 12-Jun-2013 -0333 GMT
The Dow (15122.02, -0.76%) saw a deep cut yesterday. As it has been unable to rise past 15400, it could be vulnerable to a fall towards 14750.
The Nikkei (13082, -1.77%) has crashed again. It remains vulnerable to a fall towards 11750 despite the near-term Oversold conditions. Yen strength is not helping the Nikkei.
The Nifty (5788.80) saw a sharp fall yesterday and has chances of falling further towards 5700 also.
Gold (1377.54) has come down towards the lower end of our projected 1365-1425 range. If 1365 is broken, we could see 1350 also on the downside. The Line charts look weaker than the Candles and suggest that the overall downtrend in Gold is likely to persist. Nobody should be holding Longs.
Silver (21.80) trades marginally lower again today. We maintain our targets of 20.70 and even 20..
Brent (102.56) has dropped sharply, which is a surprise for us as we were looking for 106. A further dip towards 101.50-101.00 may be seen now. Long-term Support available between 100-98 though.
The Euro (1.3309) is stronger, as expected, on its way to test 1.34. The Dollar Index (81.16) has broken below the crucial level of 81.35 mentioned yesterday and can now fall further towards 80.20, bringing some relief to the EM currencies. The Pound (1.5645) has also managed to move higher and can make a stab at 1.57 now. The EURGBP (0.8508) rallied yesterday but has dipped back. Support is seen at 0.8490. The Euro seems a better buy.
Dollar-Swiss (0.9250) has been falling shaply for the last 4 weeks. The Swissy has been strengthening against the Euro as well with the EURCHF (1.2311) seeing a low of 1.2236 yesterday compared to the high of 1.2648 on 22-May. Should Dollar-Swiss fall to 0.9000 (can't say if it will/ will not), it will deal a big blow to the overall Dollar strength we saw through May.
The Aussie (0.9451) has recovered a bit from yesterday's low near 0.9325 but remains in an overall downtrend that could target 0.9250 in the medium term. Dollar-Yen (96.46) fell sharply yesterday and but could find some Support near here on the 21-week MA. But, failure to bounce today can push it down towards 95.00-94.50-94.00. The EURJPY (128.44) is finding good Support on the Weekly charts, suggesting further strength for the Euro. That could be bad for the Dollar Index overall.
The R-currencies we look at have all seen a bit of a pullback yesterday, apart from the Malaysian Ringgitt. There can well be chances of seeing Dollar-Rupee (58.39) of dipping to 58.30-25 at least today. There could be chances of seeing 57.90 next week.
The Resistance near 2.20% on the US 10-Yr mentioned over the last couple of days is holding for now. If US data is not very strong over the next few days, we can hope for a dip towards 2.10%, maybe even 2.00%.
The German-US 10-Yr Spread (-0.59%) has climbed back a bit from levels near -0.62% a couple of days ago. The corresponding 2-Yr Spread (-0.13%) is climbing steadily, supporting the Euro.
Japanese Yields have picked up a little yesterday instead of falling after the BOJ Meeting. Suggests the market does not view the BOJ with as much confidence as it reposed in the US Fed and even the European ECB. The overhang of public debt in Japan makes the stimulus effort more difficult.
The Indian 10-Yr GOI (7.32%) has been climbing for the last few days. The market has more or less given up its earlier hopes of an RBI rate cut on 17th June, given the recent weakness in the Rupee, which could feed through into inflation.
5:30 GMT or 11:00 IST IN IIP
...Previous 2.50 %
8:30 GMT or 14:00 IST UK Unemp
...Expected 7.80 % ...Previous 7.80 %
9:00 GMT or 14:30 IST EU IND Prodn (MoM)
...Expected -0.20 % ...Previous 1.01%
9:00 GMT or 14:30 IST EU IND Prodn (YoY)
...Previous - -1.57 %
...Actual <0.10 % ...Previous <0.10 %
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