Thursday June 13, 2013 - 03:38:31 GMT
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FX Thoughts for the Day - www.fxthoughts.com
Morning Briefing : 13-Jun-2013 -0334 GMT
Dow (14995.23, -126.79, -0.84%) loses more overnight. The CBOE VIX (18.59) has moved out of benign territory and could be headed into dangerous territory. There is some Support near current levels on the Weekly Candles, but if that is broken we could see a fall towards our target of 14750.
The market seems to be changing gears, bracing for a world with higher interest rates, led by the US Fed. Today's US Retail Sales will be important. Expectation is for a +0.4% increase M/m. We think the longer term trend suggests chances of stagnation. Take a look at
Huge cut in the Nikkei (12602, -687.46, -5.17%). The direction is no surprise for us as we are targeting 11750, but the speed is disturbing nevertheless. The rest of Asia is also a deep red sea, ranging from -0.82% (New Zealand) to -3.16% (China, which is playing catch-up after a 3-day holiday).
The Nifty (5760.20) is likely to target 5630 in the circumstance.
Commodity markets may enter a quiet sideways range for some days, as the action is in Equities (falling) and Currencies.
Gold (1393) has bounced back within our 1365-1425 range. Look for a rise towards 1410 by next week. Brent (103.32) has also bounced back, surprising us again. This suggests the market is likely to enter an extended sideways range between 100-106.
The Dollar Index (80.72) has fallen further as the Euro (1.3359) has risen, targeting 1.34. As mentioned earlier, there is Resistance near 1.34 on the Euro and it can translate into Support near 80.20, the target we've been mentioning for a couple of days now. The Pound (1.5685) has surprised by holding onto gains. It is testing crucial 200-day MA Resistance (1.5700) now. A break (maybe false) is possible, yielding a rise towards 1.5750-5800.
Dollar-Yen (94.69) has sliced through the 21-week MA (96.56). It is headed towards our bearish target of 94.00 now. Volatility in stocks and currencies is very high indeed. The Aussie (0.9458) is trying to stabilise a bit given its Oversold situation, but remains bearish overall targeting 0.9250 in the medium term.
The R-currencies all gained a bit yesterday, but could weaken again today. To be noted is that even the Yuan (6.1397) has also been weakening (much less than the other currencies of course) from a level of 6.12 on 27-May. The USDCNY has Support at 6.1285 and has Resistance at 6.1480 for this week now.
Dollar-Rupee fell to 57.75 yesterday, but could bounce back on weakness in the EM currencies. The best we can hope for in terms of Rupee strength in the near term is 57.45-35. Note that the Dollar is not Overbought now.
The US 10-Yr (2.20%) continues to flirt with crucial Resistance at 2.20%. This needs to hold to produce a pullback towards 2.00, but the market seems to be very afraid of the Fed's taper caper. Pray for a bad US Retail Sales tonight.
0:30 GMT or 6:00 IST Australia Labour Force
...Expected -9.80 K ...Previous 50.10 K
12:30 GMT or 18:00 IST US Retail Sales
...Expected 0.40 % ...Previous 0.00 %
...Actual 2.00%...Previous 2.50 %
...Actual 7.80 % ...Previous 7.80 %
EU IND Prodn (MoM)
...Actual 0.40 % ...Previous 1.01%
EU IND Prodn (YoY)
...Actual -0.59...Previous - -1.67 %
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