Monday September 30, 2013 - 03:59:08 GMT
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FX Thoughts for the Day - www.fxthoughts.com
Morning Briefing : 30-Sep-2013 -0356 GMT
Market anticipates a US government shutdown. Some expect it to be prolonged. Dow (15258.24) closed lower Friday and is bearish for a test of 15100. A last minute, midnight compromise (if seen) could lead to a huge rally tomorrow.
For now, Asia-Pac is deep in the red, ranging from -0.54% (Malaysia) to -1.81% (Japan). Only China (2169, +0.44%) is up today. Note that China will be closed for the rest of the week starting tomorrow. The Nikkei (14505) is struggling to break above 14800. Immediate Support at 14400 needs to hold to maintain immediate bullishness. Else, a dip towards 14000 may be seen.
Globally, only Europe seems to be in an undisputed uptrend. The Dax (8661.51) is finding Support above 8600. Asia comes next. But, India continues to have high beta and remains vulnerable to fall in the Dow. The Nifty (5833.20) can dip towards 5800-5750-5700.
Gold (1339.80) climbed as concern on US budget shutdown boosted demand. The overall trend is likely to remain mixed between 1300-70 for some more time. Silver (21.7) continues to consolidate sideways in an overall bearish trend
Copper (3.3145) has risen slightly and is targeting near term resistance near 3.32. If this holds we may see a fall to 3.20.
Brent (107.81) and Nymex WTI (101.66) have fallen on concern of the US Government shutdown. Brent can come down to 105. Nymex has fallen below the support at 102. It can target 100 while below 102.
Dollar trading weak against the Majors. Euro (1.3499) is consolidating sideways in a narrow 1.3450-3565 range for the last few days. Wider range 1.34-36. Possibly bullish, tracking bullish European stocks. Dollar Index (80.278) fell below 81 last week and could test crucial Support at 79.81 this week.
Pound (1.6169) has surprised by rising past 1.61. A break past 1.62 could target 1.6350 in the next 5-10 days. Dollar Yen (97.78) is trading below 98 but could find Support at 97.60-50. Yen has gained against the Euro as well with EURJPY down at 132. If the Support at 97.60-50 holds, there may still be chances that the Yen weakens towards 99 against the Dollar in the coming weeks.
Aussie (0.9301) has seen a corrective fall last week, but is testing crucial Support now and could gain on overall Dollar weakness.
The Rupee has opened weak near 62.90. Watch immediate Resistance at 63.10. If that breaks, we may see 63.65
Ironically, US Treasuries are getting bought as "safe haven" even though there is danger of a US government shutdown tomorrow and danger of a debt default later in case the debt ceiling is not raised by 17-Oct. The US 10-Yr (2.63%) is on its way to test our secondary target of 2.50%. The overall picture remains bearish for Yields, bullish for the Treasuries, as long as the 10-Yr remains below 3.00%, which it is likely to do.
As mentioned earlier, the debate could swing towards growth disappointment, especially if there is a shutdown in the USA.
The European bond market situation is better overall, with the Spain-Germany 10-Yr Spread (2.85%) remaining in a downtrend. However, the Italian yields (10-Yr 4.42%) has gone up a decent bit recently and needs to be watched.
Although the Indian GOI (8.74% on the 10-Yr) has dipped a bit from 8.89% earlier, Indian interest rates are likely to remain elevated for some time. The 10-Yr may range between 8.25-9.00% (wide) and 8.50-9.00% (narrow) for some time. Although that the Mibor (3-mth 10.08%) has come off from 11.5%, the Mifor (3-mth 10.04%) remains high.
23:15 GMT or 4:45 IST JP PMI
...Actual 52.5...Previous 52.2
12:30 GMT or 18:00 IST CA GDP
...Previous - -0.50 %
UK Cons Conf
...Actual -10 ...Previous -13
EU Biz Climate
...Actual 96.90 ...Previous 98.10
US Personal Income
...Actual 0.40 % ...Previous 0.15 %
US PCE Price Index M/M
...Actual 0.30 % ...Previous 0.16 %
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