Tuesday November 19, 2013 - 03:46:38 GMT
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FX Thoughts for the Day - www.fxthoughts.com
Morning Briefing : 19-Nov-2013 -0345 GMT
The Dow (15976.02, +14.32, +0.09%) managed to close only marginally higher after spending a good part of the day above 16000 yesterday, but coming off later on. We continue to see 16100 as a super-crucial Resistance that could yet push the market lower. Beyond that 16600 could be another potential bull-trap. Caution is advisable.
Asia-Pac is down today, especially the Nikkei (15054, -110.32, -0.73%) and the Shanghai (2192, - 5.16, 0.23%). The Nikkei is down alongwith Dollar-Yen (99.67), but is likely to resume its rise after the strong bullish break last week. We look for 15600+ in the coming weeks. The Shanghai has good Resistance near 2220-25 though.
The Nifty (6189.00) had moved up well yesterday, but we are not willing to be outright bullish at the moment. A credible break above 16100 on the Dow will help us become more bullish. Till then its "wait and watch"
Commodities are overall down.
Gold (1273.85) fell sharply and is now below the crucial level of 1275. There are can be chances of a rise towards resistance near 1298-1300 only if it breaks above 1275. Near term move is likely to be bearish. Silver (20.256) has also fallen and may target support levels near 18.5 from where it may bounce back towards 21.
Copper (3.1375) has also fallen and it looks bearish in the near term. Support coming up near 3.10 on the daily.
Brent (108.10) has dipped a little but is still above the support at 108. If this holds we may see a bounce back towards 110. Nymex WTI (93.60) is trading low, extending its downward move. It may dip further to 92-91.9 from where we may expect a little upward correction.
Euro (1.3513) has tested the last swing high at 1.3540 levels but still failed to clear the resistance area of 1.3550-65. This failure may enable the bears to push the price down to 1.3420-25 anytime. On the other hand, above 1.3550-65, it can reach 1.3595-1.36.
Dollar Index (80.67) is trying to bounce after retracing exactly 38% of the last rally. For strength, it has to protect 80.55 and cross 81, in which case, it can reach 81.50 or more. Supports exist at 80.30-35. The speech by Ben Bernanke today and the release of the FOMC minutes tomorrow are eagerly awaited by the markets and can keep all the instruments quiet till then.
Dollar-Yen (99.68) is at the most crucial juncture right now. It has made a high of 100.43, very close to the last major swing high of 100.61 after breaking out of a multi-month triangle. It is testing the upper boundary of that triangle now. If it manages to hold 99.50 and bounce , then we can see very strong bullish move towards 101-104 and a lot more. But a sustained move below 99.50 would draw the bears and push it again in the old range.
EURJPY (134.77) got rejected from the old resistance area of 135.50 and found support in the area of 134.50 as mentioned before. A successful break above this zone would take it to 138-138.50. Supports remain at 1.35 and 134.50.
Pound (1.6113) failed to break above the supply zone of 1.6130-60 and got support right at the level of 1.6080 mentioned before. Only a breakout from this range will bring a decisive trending move. Supports are at 1.6045 and 1.60. Major resistance is at 1.62-1.6260.
Aussie (0.9372) could not advance much beyond 0.9420 even after breaking above a Double Bottom pattern which shows the underlying weakness. A failure to go and stay above 0.9420 can drag it down to 0.9270 and lower.
USDINR (63.41) may open near 62.10-15 today. It can be quiet day after the steep fall yesterday and the uncertainty over the Bernanke speech today and the FOMC minutes tomorrow can keep the major participants off the market for a while. A failure to hold 62 in the next few sessions would be the signal for a lot more downside.
The US 10Yr (2.67%) continues to come off from last week's high near 2.76% as the market expects Bernanke to continue to support QE in a speech today, after Yellen said as much last week. There should be chances of seeing 2.50% while below 2.75%. Expect major fireworks in case of a break below 2.50% in which case 2.0% would be the medium term target. But, maybe we are thinking too far ahead at the moment. 2.50% is a decent Support for now.
The 2Yr German-US Spread (-0.18%) and the corresponding 10Yr Spread (-0.98%) have moved up marginally on the dip in the US yields. Even the US-Japan 10Yr spread (2.03%) has moved down, leading to strength in the Yen (99.67) compared to levels near 100.20 yesterday. But, German (10Yr 1.68%) and Japanese yields (0.63%) are also moving down steadily. So, we have to see how much incremental impact the fall in US yields is going to have.
The Indo-US 10Yr Spread (6.35%) continues to climb as the Indian 10Yr (9.02%) continues to rise targeting 9.25%.
Chattisgarh Elections - - -
EU Trade Bal
...Expected 14.30 EUR Bln ...Previous 12.30 EUR Bln ...Actual 14.30 EUR Bln
US TICS (Net foreign purch of long-term Sec)
...Expected 21.30 $ Bln ...Previous -9.8 $ Bln ...Actual 25.58 $ Bln
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