Tuesday July 16, 2013 - 03:35:10 GMT
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FX Thoughts for the Day - www.fxthoughts.com
Morning Briefing : 16-Jul-2013 -0333 GMT
US Retail Sales (+0.57% M/m) increased much more than we had anticipated. But, the Dow (15484.26, +19.96, +0.13%) has moved up only marginally. But, should it rise past 15500, it may target 15900.
The Asia-Pac indices are mixed though. The Shanghai (2045, -0.72%) is down again, but may still be bullish while above 2000.
The market expects the Nifty (6030.80), which had risen strongly yesterday, to dip today on RBI liquidity tightening measures. We are bullish for 6200-300 in the medium term.
Brent (108.90) is on its way to test our longstanding target of 110. Gold (1280) is steady. Copper (3.1485) has been finding some Resistance at 3.20 but should be able to move up again.
The Euro (1.3072) has found good Support at 1.3000 in line with our hope yesterday. Can look for 1.33 going forward. The Euro displays a good correlation with the 2-Yr Euro-US Yield Spread (-0.21%) which is bouncing from -0.30%. Take a look at the first chart on the following page:
The Pound (1.5110) has also bounced from yesterday's low near 1.5028 and could rise towards 1.53. Dollar-Yen (99.75) has also dipped back below 100. We see sideways range of 99-101 for a few days.
The Aussie (0.9161) remains in a downtrend for now. But, it is putting up a fight just now and could see further strength in case it is able to move up past 0.9200.
The market expects the Rupee (59.90) to strengthen following liquidity tightening measures announced by the RBI overnight. The other R-currencies are also trading slightly stronger, so that could also help the Rupee. The crucial Supports to watch are 59.70 and 59.50.
The US 10-Yr (2.55%) has dipped a bit more. The 10-Yr GOI (7.60%) has moved up a bit and could rise more today. The Indo-US 10-Yr Spread, which was 5.01% yesterday, could move up towards 5.05-5.10% today. This could help the Rupee strengthen towards 59.75-50, maybe even 59.25.
Important inflation data from the UK and Eurozone today.
8:30 GMT or 14:00 IST UK CPI Y/Y
...Expected 3.00 % ...Previous 2.70%
9:00 GMT or 14:30 IST EU Trade Bal
...Expected 10.00 EUR Bln ...Previous 14.90 EUR Bln
10:00 GMT or 15:30 IST EU CPI (YoY)
...Expected 1.60 % ...Previous 1.40 %
12:30 GMT or 18:00 IST US Core CPI (MoM)
...Expected 0.30 % ...Previous 0.10 %
13:00 GMT or 18:30 IST US TICS (Net foreign purch of long-term Sec)
...Expected 14.30 $ Bln ...Previous -37.34 $ Bln
13:15 GMT or 18:45 IST US Industrial Production
...Expected 0.30 % ...Previous 0.00 %
13:15 GMT or 18:45 IST US Capacity Utilization
...Expected 77.90 % ...Previous 77.60 %
...Actual 4.86% ...Previous 4.70 %
US Retail Sales
...Actual 0.57 %...Previous 0.68 %
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