Friday June 21, 2013 - 03:36:15 GMT
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FX Thoughts for the Day - www.fxthoughts.com
Morning Briefing : 21-Jun-2013 -0334 GMT
The Dow looks more bearish than the others in the near term. That said, Equities are coming closer to long-term Supports. Do not expect a protracted Bear market. The adjustment to the "taper" could ease off in a few days.
Dow (14758.32, -2.34%, -353.87) succumbs. Can fall further to 14600 as suggested yesterday. More bearish target would be 14000, if not 13500. Even the DAX (7928.48, -328%, -268.60) fell strongly yesterday, but may have Support available near 7800.
Nikkei (12870.31, -1.11%, -144.27) is down again today, but appears strangely consolidative on the charts. Not bullish of course, but not very bearish either. The Shanghai (2067, -0.80%) has seen a sharp decline over yesterday and today, but trades near a crucial Support now. It is Oversold but could be in danger of falling towards 1850 if the Suppor is broken.
All of the rest of Asia-Pac is in the red, of course. However, the Nifty (5655.90) is at a crucial Support now. If this does not hold, then the next target on the downside would be 5500.
Gold (1288) has declined sharply. Look for 1240 initially and then 1150 in the coming weeks. Silver (19.80) has broken below 20 and should target 18.00 now.
Brent (102.45) failed to rise past 106 and has fallen, as warned yesterday. Target in 101.00-100.50 in the near term now, before a bounce/ stabilisation.
Copper (3.08) has a crucial horizontal Support near current levels. This needs to hold if the metal has to rebound. Else, the overall downtrend could accelerate targeting 2.75/ 2.65.
The Dollar (Index 81.66) gained a goodish bit yesterday, but could stabilise a bit today. It could rise back to 84 in the coming weeks, though.
The Euro (1.3250) fell to as low as 1.3161 yesterday. It is seeing a relief rally but could be vulnerable to a fall towards 1.3000 in the next couple of weeks. Continues to trades sideways between 1.30-34 in the medium term, though.
The Pound (1.5520) has bounced off the important 21-day MA Support (1.5414) after yesterday's decline. Looks a little less bearish than the Euro, with the EURGBP (0.8535) coming back below 0.8550 after rising to 0.8590 the day before.
Dollar-Yen (97.21) rose to as high as 98.29 yesterday. Might be well Supported above 96.00. Might not rise past 98 easily either, though. The Euro-Yen (128.74) also looks consolidative now, after bouncing from 124.96 over the last few days.
The Aussie (0.9232) has bounced off 0.9175, the 38.2% retracement of the rise from 0.6007 (2008) to 1.1080 (2011), as warned/ suggested yesterday. There is a need for some correction/ consolidation, but with both Gold and China continuing to look weak, it cannot be said that the Aussie will not fall further.
The R-currencies continue to look weak, but could be reaching crucial Supports against the Dollar another 1.5-2.5% from current levels. We have to see how the Rupee (59.57) reacts now, given the RBI's intervention yesterday and fact that Nifty is near a crucial Support.
The US 10-Yr yield (2.42%) trades higher than yesterday morning and has good chances of rising further towards 2.60-70%. That said, we also see good chances that it will not rise past 2.75% in the current upmove from the 1.67% levels seen in Sep-12. Maybe the first important bout of global adjustment to the "taper" will start easing off.
The German-US 10-Yr Spread (-0.76%) has moved up a bit from levels near -0.85% yesterday. The BIG question confronting the world in the longer term is whether it now needs to get ready to face the end of the low/ zero interest rate era?
The Japanese 10-Yr (0.87%) can move up a bit more towards 0.90-95% before stabilising/ falling a bit. The market will be watching for the next BOJ Meeting on 11-July. The Japanese Upper House elections on 21-July will also be something to watch for as an endorsement/ rejection of "Abenomics".
12:30 GMT or 18:00 IST CA Inflation Y/Y
...Expected 0.90 % ...Previous 0.40 %
US FOMC Meeting
...Actual < 0.25 % ...Previous < 0.25 %
...Actual < 0.25 % ...Previous < 0.25%
US Philifed Index
...Actual 12.5 ... Previous -5.2
US Existing Home Sales (Mln)
...Actual 5.18 Mln ...Previous 4.97 Mln
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