Friday October 18, 2013 - 03:44:55 GMT
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FX Thoughts for the Day - www.fxthoughts.com
Morning Briefing : 18-Oct -2013 -0343 GMT
Dow (15371.65, -2.08) looks bullish as it has corrected most of its intra-day loss yesterday. We are bullish for a rise to 16000. Nasdaq (3863.15, +23.72) is up targeting Resistance at 3875. A further rise to 3950 may also be possible. Dax (8811.98, -34.02) has declined. It is testing a long term resistance at the current levels on the weekly line charts. We may see a fall to 8500 if the resistance holds.
Nikkei (14591.51, +5.00) is up marginally. It is coming up to a resistance on the weekly line charts which if holds we may see it falling to 14000. Shanghai (2193.07, +4.53) is up after the Chinese Q3 GDP came in at 7.8%. There could be trouble for the Shanghai if it does not stage a strong bounce from current levels.
Nifty (6045.85, -43.20) fell yesterday and can target 5900 unless it sees a strong bounce today. Careful.
Gold (1317.60) is up on Dollar weakness and may rise further to 1360-65. Silver (21.789) has support from the 13 and 21-MA on the weekly it can target 22-22.50 if the support holds.
Copper (3.3025) trades undecided with equal chances of rise to 3.35 or fall to 3.25. Needs to be watched carefully. Failure to rise could be anti-growth.
Nymex WTI (100.78) has fallen below the 21-Week MA support after reports showed that Crude stockpiles increased in the US. It may target 99-98 for now. Brent (109.23) has also fallen from the 13-Week MA. It can target 108 for now.
Currencies are all up globally against the US Dollar on decline in the US yields. Dollar Index (79.743) has fallen sharply on decline in yields and on expectation that the Taper will be long delayed. It has reversed its upward movement and could now be breaking the 200-week MA and may see a further decline.
Euro (1.3664) rose sharply against the Dollar but faces resistance near 1.367-1.38. A break could take the Euro up to 1.40.
Pound (1.6146) has jumped up high from a low of 1.593 yesterday. There are chances that it could rise further towards the near term resistance near 1.62. Dollar-Yen (98.03) fell sharply yesterday but has bounced today from the 13-day MA. There are chances that the Yen may strengthen towards 97.11 in the near term.
Aussie (0.9612) had also risen sharply yesterday justfying our bullishness and can target 0.97+.
R-Currencies are all strong as Dollar slumped against major currencies yesterday. The Dollar Rupee (61.23) had come off from resistance at 61.90 as expected and can fall towards 60.80-60.75.
US Yields (5Yr 1.34%, 10Yr 2.60%, 30Yr 3.67%) have dipped further across the Curve and are likely to fall even more as the market is convinced that the QE Taper is not happening anytime soon given the negative impact of the recent US government shutdown on US GDP. The 10Yr could target 2.50% in the near term and possibly 2.0% in the long-term.
It is to be seen how US Mortgage rates react to the fall in Tsy yields. The Mortgage rates were trading higher till yesterday, the 30Yr up from 4.28% from 4.23%. Solid revival of the US Housing market depends crucially on a decline in mortgage rates. It will need to be seen if the FOMC increases its purchase of MBS (mortgage backed securities) in its 30-Oct meeting.
For now, the US yields have dropped against their major counterparts. Even the US-Japan 10-Yr Spread (1.98%) is lower from yesterday's 2.01%. We were expecting this Spread to rise till yesterday, but it could decline if the US yields fall sharply.
12:30 GMT or 18:00 IST CA Inflation Y/Y
...Expected 1.00 % ...Previous 1.10%
EU EA (17) Curr Acct Bal
...Actual 17.70 EUR Bln ...Previous 17.70 EUR Bln
US Housing Starts (Mln)
...Expected 910.00 K ...Previous 891.00 K
US Industrial Production
...Previous - 0.40 %
US Capacity Utilization
...Previous - 77.80 %
US Philifed Index
...Actual 19.8 ...Previous 22.30
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