Wednesday August 7, 2013 - 03:39:38 GMT
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FX Thoughts for the Day - www.fxthoughts.com
Morning Briefing : 07-Aug-2013 -0337 GMT
Equities down globally.
The Dow (15518.74, -0.60%) has broken support at 15600 as the US trade deficit narrowed 22% to $32.4 bln yesterday. It needs to rise past 15600 again to move up towards 16000 again. Failure to rise past 15600 will negate our bullishness.
Nikkei (14125.14, -1.92%) is trading lower but long-term support at 13600 is holding well. Still, a further dip towards 14000 could be seen before a fresh rise towards 14900. Shanghai (2052.59, -0.38%) is down, but still above 2050, which could be turning into a decent Support. While this sustains, it may rise towards 2100.
Nifty (5542.25) has fallen sharply after a high yesterday at 5664.9 breaking the earlier support near 5650. This is a very significant break and could push the market lower in the coming weeks.
Gold bearish, Crude at crossroads. Copper could be disruptive either way.
Gold (1277) has broken below 1285 and may now fall towards 1250. The failure to rise past 1300 may have reinforced the overall downtrend. Silver (19.45) remains in a downtrend and may accelerate its fall towards 18.50. But, a break below 19.15 is needed to confirm that. Else, we may see sideways movement between 19.15-20.50 for a few days. If so, the Gold-Silver ratio (65.71) could correct down towards 63.90.
Nymex WTI Crude (105.42) has lost ground yesterday. It could be making a Double Top targeting 102-100. But a break below 104.50 is needed to confirm. Brent Crude (108.05) also trades lower, near the lower end of its 108-110 consolidation range. Needs to bounce from 108 today in order to keep chances of 115 alive. Break 108 would turn the market around, targeting 104-103 in coming days.
Copper (3.1580) is finding Resistance at 3.20. It is still at a crucial long-term crossroad. Needs to break above 3.20 to avoid danger of a fall below 3.00. Continue to watch this one. Could be disruptive either way.
Yen strong, Aussie up on short-covering.
The Euro (1.3293) trades slightly higher compared to yesterday. Crucial Resistance seen at 1.3330. We continue to see chances of fall towards 1.31 within a 1.3330-3050 range. The Pound (1.5327) found some Resistance at 1.54 yesterday. If Support near 1.53 holds, it could as well move up towards 1.55 instead of falling towards our earlier target of 1.51. Need to take a fresh call on this.
Dollar-Yen (97.45) has fallen further, breaking below 98.00 decisively yesterday. In danger now of a further dip towards 96.50. Need to see if that will hold or break. The Dollar could be in danger of losing it some of its yield advantage against the Yen. See the Interest rate section below..
The Aussie (0.8958) has seen further short-covering yesterday. Intra-day Resistance at 0.90 today. Crucial mid-term Resistance at 0.91. It seems to be finding some Support at 0.8880 on the 100-mth MA. Will the overall downtrend continue or will some Shorts be shaken out of the market?
Dollar-Rupee closed lower near 60.77 yesterday on later hour RBI intervention after it saw a high near 61.79. Support seen at 60.25 for the week. Other R-currencies remain weak and are weakening further. Expect Buyers on dips to 60.25.
The US-Japan 10-Yr Spread (1.86%) has come up test a crucial long-term trend Resistance and could come off if the Japan 10-Yr (0.76%) declines further. Watch this one.
The US 10-Yr (2.64%) continues to trade below 2.75% but has chances of rising to test 2.75%
Indian Call Rate and 10-Yr Yield have dipped yesterday.
14:00 GMT or 19:30 IST CA PMI
...Expected 56.30 ...Previous 55.30
Australia Trade Balance
...Actual 0.60 $Bln ... Previous 0.51 $Bln
...Actual 2.50 % ...Previous 2.75 %
US Trade Balance
...Actual -34.2 $ Bln ... Previous -44.1 $ Bln
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