Thursday September 19, 2013 - 03:39:48 GMT
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FX Thoughts for the Day - www.fxthoughts.com
Morning Briefing : 19-Sep-2013 -0336 GMT
So, the Fed did not do the taper. The Dow (15676.94) has predictably closed sharply higher. But, it has not broken the Resistance near 15750. However, the Nasdaq (3783.64) has risen past its earlier long-term trend resistance.
Will the market now worry about global growth prospects? Or will it party afresh on continuing liquidity? Note that the Fed has reduced its forecast for US growth range from 2.3-2.6% to 2.0-2.3%. We certainly live in very interesting times.
Asia-Pac is mostly up, between +0.99% (Malaysia) and +4.31% (Indonesia). South Korea, Taiwan and China are closed. The extra-strong rise in Indonesia suggests that the Nfty (5899.45) could be carried past 6000. If so, the upside target will be 6200.
Commodities have advanced sharply as the Federal Reserve unexpectedly refrained from cutting economic stimulus.
Gold (1364.30) has alternated between strong gains and losses yesterday registering a high of 1366.90 and a low of 1281.80. It is currently trading higher. But, yesterday's price action is abnormal. The trend support on the line chart has held well. We see a resistance at 1375. If this holds it can push the prices back down to 1275. Silver (23.16) has moved past the resistance at 22.25. The charts show an outer resistance at 23.5 which can push the prices back to 21.
Copper (3.3255) has also moved past the resistances at 3.23 and at 3.27. There is an upcoming resistance at 3.39 which may bring down the prices.
Nymex WTI (108.71) has bounced from the crucial long term support moving past the resistance at 107. An upward movement to 110 can be seen. Brent (111.06) is up. A further rise to 113-114 while above 111.
Euro (1.352) has risen sharply as the FED maintains bond purchases at $85 bln. It is trading high for now after breaking resistance at 1.35. It could rise a little more towards 1.36. Dollar Index (80.174) has finally been pushed below 81 now on the QE news. The Dollar has weakened against major currencies including the Euro, Yen (98.261) and the Brazilian Real (2.184) and is trading low.
Pound (1.6134) has risen a long-term resistance. It could pause for a while but trying to sell this rise might be hazardous. Dollar Yen (98.261) has come down sharply but is facing support at current level. There are chances that it could again bounce back to 99 else it could fall further towards 97.
Aussie (0.9503) has also risen maintaining the uptrend. It may rise towards 0.97. Dollar Rupee (63.38) has chances of trading in the range of 62.50-62.0 today.
The US 10-Yr (2.69%) has fallen more than the 2.85-75% we'd suggested yesterday. There are prospects of further fall towards 2.60% with an outside chance of a rally to 2.80% before that. Path of least Resistance says 2.60%, though.
The German-US 2-Yr (-0.10%) has shot up. The US-Japan 10-Yr (2.10%) has broken its uptrend. The UK-US 10-Yr (+0.14%) has skyrocketed, taking the Pound up with it.
Question now will be, will the rest of the world be able to live with relatively higher yields and stronger currencies? Unfortunately, with policy rates near Zero and QE alreasy on, there's no direct way they can push relative yields lower.
7:30 GMT or 13:00 IST SNB Meeting
...Expected < 0.25 % ...Previous < 0.25 %
12:30 GMT or 18:00 IST US Current Account Balance
...Expected -96.00 $ Bln ...Previous -106.00 $ Bln
14:00 GMT or 19:30 IST US Philifed Index
...Expected 10.50 ...Previous 9.3
14:00 GMT or 19:30 IST US Existing Home Sales (Mln)
...Expected 5270 K ...Previous 5390 K
UK BOE Minutes
...Actual 0-0-9 % ...Previous 0-0-9 %
US Housing Starts (Mln)
...Actual 891K ...Previous 883 K
US FOMC Meeting
...Actual < 0.25 % ...Previous < 0.25 %
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