Tuesday July 30, 2013 - 03:38:35 GMT
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FX Thoughts for the Day - www.fxthoughts.com
Morning Briefing : 30-Jul-2013 -0336 GMT
Equities look weak overall.
The Dow (15521.97) dipped a bit yesterdya but still has Support at 15400. Crucial juncture now. If the Support holds, we could still see a sharp rise. In case of break below 15400, though, there may be a fall towards 15000.
Asia-Pac is overall down. Nikkei (13719) fell sharply yesterday and has seen a low near 13613 today. There are big chances of a Double Top, but there is also Support coming up in the 13600-500 region which needs to break to confirm the Double Top. The Shanghai (2003, +1.38%) has just registered a sharp rise. It needs to rise past 2025 to avoid a fall towards 1950.
The Nifty (5831.65) saw a sharp fall yesterday and is in danger of testing 5750 as the RBI seems ready to keep interest rates high to protect the Rupee.
Brent (107.34) seems to be consolidating. Although there is space towards 106.50-106 in the downside, there is bullishness in our charts. Overall, we still target 109 in the medium term.
Copper (3.097) has worsened since the last day. It needs to hold above 3.08-09 level else we could see a further fall towards 3.0.
Silver (19.78) again couldn't sustain past the 20 mark. The charts indicate that it is trading at the channel resistance level in an overall downtrend. Going by this, we could expect it to range between 19-18.50-18.
Gold (1326.80) seems to be consolidating here. The near term charts are bullish.
Euro (1.3253) is being unable to rise past 1.33 for now. Profit-taking coming in on Longs entered around 1.28. While test of 1.3350-3400 is still possible, that is going to be a strong Resistance to contend with.
The Pound (1.5325) has seen strong profit-taking from 1.5410-13 yesterday, belying our call for a rise towards 1.5450-5500. People are getting worried about higher US yields. Our view is unclear on the Pound now.
Dollar-Yen (98.23) saw a low of 97.63 yesterday. It can still target 96.30 while below 98.80. There is a Double Top in both Dollar-Yen and Nikkei, but there is Support coming up on the Nikkei a little lower. So, maybe Yen strength could be a little limited.
The R-currencies have all weakened over the last few days. Dollar-Rupee (59.42) also rose yesterday. Has opened above 59.55 today. The RBI has made Rupee-defence its stated objective now. Needs to be seen whether it can deliver. Maybe further restrictions on the market in today's RBI Meeting could be forthcoming?
Central Bank meetings one after the other this week.
The US 10-Yr (2.60%) has moved back up, after dipping to 2.55%. This could negate the Bear SHS we were hoping to see and push the yield up to 2.65% instead, spooking a number of markets. All eyes on the FOMC tomorrow. Needs to remain below 2.70-75% at least now to restore calm to the markets. A rise past 2.75% (if seen) could see all hell break loose.
RBI Meeting today. Rupee defence is its stated objective now. Not very healthy for a central bank whose mandate should be inflation and growth. The Indo-US 10-Yr Spread (5.61%) needs to move up to 6.25% to help the Rupee.
BOE and ECB meetings on Thursday.
23:30 GMT or 5:00 IST JP Unemp
...Expected 4.0 % ...Previous 4.1% ...Actual 3.9 %
5:30 GMT or 11:00 IST RBI Repo Rate
...Previous 7.25 %
5:30 GMT or 11:00 IST RBI Reverse Repo Rate
...Previous 7.00 %
5:30 GMT or 11:00 IST RBI CRR
...Previous 4.00 %
9:00 GMT or 14:30 IST EU Biz Climate
...Expected 93.0 % ...Previous 91.3
13:00 GMT or 18:30 IST US Case Schiller
...Expected 12.40 % ...Previous 12.05 %
14:00 GMT or 19:30 IST US Cons Conf
...Expected 81.10 ... Previous 81.40
No major data release yesterday.
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