Monday July 22, 2013 - 03:38:43 GMT
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FX Thoughts for the Day - www.fxthoughts.com
Morning Briefing : 22-Jul-2013 -0336 GMT
Divergent moves in Equities.
The Dow (15543.74) ended a consolidative week with minor gains on Friday. We look for an eventual rise towards 15900.
The Nikkei (14587.26) is looking increasingly vulnerable to a fall. A break below 14400 will confirm. If so, look for 14200-13800 in the coming weeks. The Shanghia (1988.58, -0.20%) could be vulnerable to a dip this week unless it manages to clamber up above 2000 soon.
The Nifty (6029.20) has important Support at 6000 and might do better than many other markets. We look for a rise towards 6100.
Commodities, especially Gold, are strong.
Brent (108.43) has support at around 108 in our charts. It seems to be ranging sideways since the last couple of weeks. We remain bullish towards 109 and also towards 110-12 in the near term. However, if it comes down below the 108 mark, there are chances that it could fall to 107-106.80 before correcting itself. NOTE that the Brent-WTI Spread has come down to Zero as Nymex WTI has seen a sharp rise.
Silver (19.82) seem to be moving sideways for the past couple of weeks. We have to see is Resistance at 20.00-25 breaks or not.
Copper (3.1675) is in an uptrend with crucial Support at 3.10. A break above 3.20 is needed to help it sail towards 3.25-30 in the weeks ahead. We remain bullish on this.
Gold (1314.30) proven us wrong. It has risen strongly toay and is trading well above the 1300 levels now. Further rise may be seen now.
General Dollar weakness.
The Euro (1.3158) has built up good Support above 1.3000 last week and should be headed up to 1.33 this week. The Pound (1.5290) is in a good uptrend. A rise past 1.5300 targeting 1.54 looks possible for the week.
Dollar-Yen (99.89) is trading lower on the general Dollar weakness. The inability of Dollar-Yen to rise past 100.90 could make it vulnerable to a fall towards 98.50 this week. The Aussie (0.9222) has been building Support above 0.9150 and can test 0.9270-80 this week, with 0.9300 being very crucial Resistance for the medium/ long-term.
The R-currencies are generally stronger, but the USDRUB (32.388) could see Support coming up near 32.135 this week. There are some chances that further gains might be limited for the R-currencies.
Dollar-Rupee (59.36) could dip on general Dollar weakness but the 59.00-58.90 region is going to be crucial Support.
Yield Spreads narrowing against the Dollar.
The US 10-Yr (2.47%) is trading below 2.50% and may have broken its uptrend since 1.63% (2nd May). Be careful about some chances of a sharp rise towards 2.60%, though, especially in case US Housing data is strong this week.
The 2-Yr German-US Yield Spread (-0.21%) continues to inch up, supporting the Euro. The US-Japan 10-Yr (1.67%) has been coming down from 1.88% over the last month. But, there could be Support coming up near 1.65-63% this week.
The Indo-US 10-Yr Spread (5.49%) could rise towards 5.75% or more this week as the markets actively price in a rate tightening by the RBI next week.
14:00 GMT or 19:30 IST US Existing Home Sales
...Previous 5180 K
CA Inflation Y/Y
...Actual 1.20% ...Previous 0.70 %
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