Monday October 14, 2013 - 03:52:27 GMT
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FX Thoughts for the Day - www.fxthoughts.com
Morning Briefing : 14-Oct -2013 -0350 GMT
A bit of a rise in the Shanghai (2234, +5.73, +0.26%) today following the continued rise in the Dow (15237.11, +0.73%, +111.04) on Friday. But, a number of other Asia-Pac indices are down -0.25% to -0.50%, including Australia and Singapore. The Shanghai faces a crucial Resistance at 2250 and can become very bullish if the Resistance breaks. Target in that case would be 2500. Japan and a few other Asian countries have a holiday today. Even the USA has a holiday.
In India, the Nifty (6096.20) faces a crucial esistance near 6240 but could rise towards 6400 if the Resistance is broken. However, the slight weakness/ profit-taking being seen in Asia might contain the Nifty as well.
Maybe the markets will be cautious ahead of the 17-Oct US budget ceiling deadline. They might rally further if the Republicans cave in.
Commodities are all down except Copper on concern over US debt limit.
Gold (1270.60, +0.19%) has fallen below 1275 and is in a near term down trend. Soem Support is seen at 1250, but if that is broken a further decline to 1225 will be seen. Weakness in Gold refelcts possible rise in Dollar Index. Silver (21.21, -0.25%) has fallen breaking support at 21.5 but another near term support is coming up near 21, which if holds may help it to bounce back to 23.
Copper (3.2680) is rising and is likely to test resistance near 3.2675.
Brent (111.08, -0.18%) has dipped a bit but faces 13-day MA support at current levels, which may take it up towards to 112.5. Nymex WTI (101.77, -0.25%) has also dipped and is targeting support at 100 for now.
Euro (1.3563) has risen and is targeting a rise towards 1.365-1.37, as it seems to be finding support from Yields (see Interest Rates section below). Dollar Index (80.302) has dipped a bit but is overall ranged and may continue to consolidate sideways for now, while above Support at 80.00.
Pound (1.5980) is stable for now as the uptrend support at 1.5900 still holds. It is likely to test near term resistance near 1.604. Dollar Yen (98.27) has come off from the 100day MA and is now testing 21 day MA at current levels. If this holds we may see it rising towards 99.
Aussie (0.9455) seems to be gearing up for a strong rise towards 0.9600. R-Currencies are overall strong. Dollar Rupee (61.07) had also fallen and may now test support near 60.80-60.60 region.
The German-US 2Yr Spread (-0.17%) has bounced off Support at -0.20%. This could help the Euro if the Spread narrows further. The German Yield Curve as a whole is steepening.
The US 10-Yr (2.69%) has Resistance at 2.75% which might hold, if the US debt-default is avoided. Else, we could see a re-test of the previous high near 3.0% before yields come down again. In the bigger picture, unless there is a long drawn out government shutdown leading to liquidity concerns, US yields could be headed lower in the longer term. Janet Yellen is expected to keep rates low to counter the impact of the current shutdown.
The Indo-US 10-Yr Spread (5.79%) is testing a crucial Support now and could rise towards 6.25% if it holds.
:00 GMT or 12:30 IST IN WPI
...Previous - 6.10 %
10:00 GMT or 15:30 IST EU IND Prodn (MoM)
...Expected 0.60 % ...Previous -1.50 %
10:00 GMT or 15:30 IST EU IND Prodn (YoY)
...Expected -2.40 % ...Previous -2.66 %
...Actual 0.60 %...Previous 2.60 %
US PPI ex Food & Energy (MoM)
...Actual -1.3% % ...Previous -1.6 %
US Retail Sales
...Expected 0.68 % ...Previous 0.20 %
CA Labour Force
...Expected 15.30 K ...Previous 59.20 K
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