Tuesday October 8, 2013 - 03:37:52 GMT
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FX Thoughts for the Day - www.fxthoughts.com
Morning Briefing : 08-Oct -2013 -0336 GMT
U.S. stocks fell as lawmakers remained in a deadlock to increase the debt ceiling. Dow (14936.24, -136.34) can target 14900 and then 14750 before rising again. Nasdaq (3770.38, -37.38) may test the support at 3700 if it falls further. We may see it rising to 3850 if the support holds.
Dax (8591.58, -31.39) has also dipped registering a low of 8510.42. We may see it fall below our target of 8500 if it does not correct itself.
The Asia-Pac is mixed. Nikkei (13815.87, -37.45) fell. Very near to our target of 13800. We may see it targeting 13600 to test the support there if it falls below 13800. Shanghai (2175.51, +0.85) has opened marginally higher after a week long holiday. It is currently testing the near term supports at the current levels. We may see it rise to 2225-2250 if the supports hold.
Nifty (5906.15,-1.15) has corrected after registering a low of 5825.85. It can go up to 5950-6000 if it does not fall from here.
Gold (1326.90) trades near 1-week high on concern over implications of the US debt-limit. There is a resistance at the current level which if breaks we can see Gold go up to 1350. Silver (22.41) is up moving past the resistance at 22. We may see it rising to 23.
Copper (3.3025) is ranged for now with a near term support coming near 3.275. It may rise to 3.30-3.35 with the help of the support.
Nymex WTI (103.07) is trading lower a week before the data release that might show a rise in stockpiles over debt limit. It is consolidating for now between 102-104. Brent (109.55) is very near our target of 110. It has the support of the 21 day MA which may help Brent to bounce to 112.
Euro (1.3569) has dipped a bit. It is finding near term support at 1.355 and is also getting supports from yield spreads against the Dollar. Dollar Index (79.981) is trading just above the 200-week MA which wold be a strong support.If this holds we may see a bounce back towards 81.0-81.5
Yen (96.835) strengthened after Obama said he won’t negotiate with Republicans over debt-limit. The Pair has broken resistance near 96.9 and while below 97, it may target another support near 96. Pound (1.60846) strengthens after finance industry showed some optimism and the UK manufacturing improved in the 3rd quarter. It is in an uptrend and faces 21-Day MA support near current levels and may continue to rise towards 1.6140.
Aussie (0.94202) had its biggest 1-day drop against the Yen, AUDJPY (91.209) as US remains deadlock over ending the shutdown and to raise debt-ceiling hampering demand for high yielding assets. Near term support coming up near current levels.
R-currencies are overall weak except the Rupee (61.80) and the Rand (9.9976) which remain stable. There is near-term Resistance in the 62.10-20 region. If that holds, the pair can fall towards 61.05 and even 60.40. Else we could see a rise towards 62.80.
US Yields are getting relatively softer against the G3. The US 10-Yr (2.62%) continues to trace a topping-out pattern targeting 2.5% and lower in the long term. In the near term, there could be chances of seeing a spike towards 2.72-75%.
The German-US 10-Yr (-0.78%) has started moving up again and the corresponding 2-Yr Spread (-0.17%) has Support at -0.20%. This could be supportive of the Euro. JGB yields continue to soften and flatten (10Yr 0.6526%, 5Yr 0.2228%) but the US-JGB Spread also continues to drop. The US-JGB 10-Yr Spread (1.97%) has long broken its uptrend at 2.0%, of course. The 2Yr Spread (-0.25%) has also been coming off from 0.32% in mid-September.
The UK-US 10-Yr Spread (-0.09%) may be finding Support above -0.10% now, after having fallen sharply from +0.14% on 19-September. That could help the GBPUSD (1.6080) move higher after its bounce from the 21-day MA Support on Friday.
However, the near term US yields are rising on concerns of a possible default after 17-Oct. Whether capital will flow into or out of the USA in the event of a default is the big question.
12:30 GMT or 18:00 IST US Trade Balance
...Expected - -0.20 $ Bln ...Previous 0.30 $ Bln
...Actual 0.30 % ...Previous -0.20 %
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