Wednesday June 26, 2013 - 03:37:07 GMT
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FX Thoughts for the Day - www.fxthoughts.com
Morning Briefing : 26-Jun-2013 -0334 GMT
A bit of a bounce in the Dow (14760.31, +0.69%, +100.75) following the bounce from 1850 in Shanghai yesterday. But, the Shanghai (1929, -1.54%) is down again today. We see it testing 1875 on a Week Close basis before bouncing properly.
US Durable Goods, New Home Sales, Consumer Confidence and Case Shiller Index were all much better than expected. US Q1 GDP data (Final) is awaited today. The previous reading was 2.40%. Maybe this gets revised upwards to 2.50%. If the Support at 14500 continues to hold on the Dow, we can see a move back up towards 15000.
Asia-Pac indices are mostly in the green today ranging from +0.15% (Malaysia) to +2.2% (Indonesia). Only China, Korea and Japan are down. The Nifty (5609.10) still suffers from bad sentiment though and may still be vulnerable to a dip towards 5490.
Gold (1246.92) has tanked today and is a whisper away from our initial target of 1225. Silver (18.86) also trades lower and is likely to test crucial Bear-Channel Support near 18.50. A bit of a bounce is possible from there.
Brent (101.00) is looking mixed. It has crucial Support in the 100-99 region in the near term, but could be very bearish in case that breaks. We see it holding above Support for now, but have to watch for developments.
Currencies have been consolidative for a couple of days but remain bearish overall against the Dollar.
The Dollar Index (82.71) remains strong, the Euro (1.3065) remains weak. That said, we expect both to continue to trade sideways in a wide range for the coming weeks. We anticipate a range of 1.29-34 for the Euro.
Dollar-Yen (97.77) trades slightly lower but could be bullish towards 99+ while above 97.00. The Euro-Yen Cross (127.75) is in a tight sideways range, but is gearing up for a breakout by next week. The outlook is mixed, tilted towards slight bearishness.
The Pound (1.5413) has crucial Support in the 1.54-53 region, but could be vulnerable to a decline towards 1.52-51 if that breaks. The Aussie (0.9248) is seeing a bit of Short-covering, but remains vulnerable to a further decline while below 0.9300. That said, we note that the market is sitting on huge record Shorts on the Aussie, so the possibility of a short-squeeze may also be there.
The EM and "R" currencies are seeing a bit of consolidation/ pullback. This could keep Dollar-Rupee (59.68) below 60.25 today.
The US 10-Yr (2.59%) has risen again responding to the strong US economic data yesterday. Watch crucial Resistance in the 2.65-70% region. There is a 50% chance that it will hold and produce a dip towards 2.50%, maybe even 2.25%. The 5-Yr Yield (1.48%) has already come up to a crucial tren Resistance and can/ should cool off a bit in the near term.
US Swap Rates have seen a steep rise in the last few weeks, but are likely to cool off for a while now as there will not be too many takers at these levels.
12:30 GMT or 18:00 IST US GDP
...Expected 2.40 % ...Previous 2.40 %
US Durable Goods Orders
...Actual 3.60 % ...Previous 3.46 %
US Case Schiller
...Actual 12.05 % ...Previous 10.85 %
US New Home Sales
...Actual 476 K ...Previous 466 K
US Cons Conf
...Actual 81.4 ...Previous 74.3
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