Tuesday June 18, 2013 - 03:37:00 GMT
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FX Thoughts for the Day - www.fxthoughts.com
Morning Briefing : 18-Jun-2013 -0334 GMT
Good rise in the Dow (15179.85, +073%, +109.67). Surprising resilience. Seems to be avoiding a fall to 14800-600 as Support at 15000 is holding well. Still, there will be danger of a fall unless there is a rise past 15300.
The Nikkei (12942.67, -0.69%, -90.45) is down a bit after the strong rise yesterday. See sideways consolidation between 12400-13200 for some days now before fresh direction emerges. Overall threat of fall to 11700 remains. Asia-Pac is mixed, ranging from -0.97% (Australia) to +1.49% (Indonesia). The Shanghai (2145, -0.52%) remains bearish while below 2175.
The Nifty (5850.05) rose past 5825 yesterday, which is good. A break above 5900 is needed for proper bullishness. Maybe that will come (if it does) only after the FOMC announcement tomorrow.
Gold (1383.80) remains quiet and ranged. Silver (21.89) is slightly lower than yesterday. We remain bearish.
Brent (105.56) has retreated a bit from yesterday's level of 105.75. But it now has chances of moving up towards 108 while above 104. The Brent-WTI Spread (7.69) is at its lowest level since 2011, but could fall some more towards 6. The WTI (98.05) has been moving up sharply over the last several days and could be headed towards 100 while above 96 now. The rise in Crude prices is an encouraging sign amidst talk of continued global slowdown.
Currency markets are generally quiet waiting for the FOMC decision on QE tomorrow.
The Euro (1.3355) and Pound (1.5705) remain strong. The Euro targets 1.3425 but the Pound has retreated from a high near 1.3775. So, there could be limits to the Pound's rise in the 1.3775-3800 region. Dollar-Yen (94.75) is consolidating a bit after the sharp fall of the last 4 weeks, but remains vulnerable to a further decline towards 92.30.
The Aussie (0.9511) has started falling back after the recovery to 0.9665 last week. It needs to rise past 0.9700 in order to avoid a fall towards 0.92 but is creating doubts as to whether it has the strength.
The Dollar is gaining against the R-currencies again, especially against the Real. As a result, the Rupee (57.8650) may move up to 58.25 today.
The US 10-Yr (2.18%) has moved up again ahead of the FOMC tomorrow. There is still some hope of a dip towards 2.00 while below 2.25%, but the Fed-speak tomorrow is going to be super-crucial.
The German-US 10-Yr Spread (-0.66%) has come down to a long-term Support drawn from 2006. Take a look at the last chart on the following page:
A bounce from this level is possible and would suggest that US yields might not rise too much just yet. Watch this one closely.
The RBI left rates unchanged yesterday, as expected.The 10-Yr GOI (7.26%) has come off a bit from 7.34% though. Rupee remains weak.
8:30 GMT or 14:00 IST UK CPI Y/Y
...Expected2.60 % ...Previous 2.40 %
12:30 GMT or 18:00 IST US Core CPI (MoM)
...Expected 0.20 % ...Previous 0.08 %
12:30 GMT or 18:00 IST US Housing Starts
...Expected 950 (Mln) K ...Previous 853 (Mln) K
RBI Repo Rate
...Actual 7.25 % ...Previous 7.25 %
RBI Reverse Repo Rate
...Actual 7.00 % ...Previous 7.00 %
...Actual 4.00 % ...Previous 4.00 %
IN Trade bal
....Actual -20.1 $ Bln ...Previous -17.79 $ Bln
EU Trade Bal
...Actual 14.90 EUR Bln ...Previous 22.90 EUR Bln
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