Wednesday November 27, 2013 - 03:41:11 GMT
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KSHITIJ.COM - Morning Briefing!
Equities are strong on balance, but with a tinge of caution.
The Nikkei (15476.50, -0.25%) is seeing another day pf profit-taking as it is coming closer to the 2013 high of 15900 levels. The uptrend remains intact as long as it stays above 15200. Shanghai (2198,+0.50%) is trading near resistance at current levels. If this holds we may see a fall towards 2000. A break in this resistance would signal a fresh rise upwards.
The Dow (16072.80, +0.05%) is consolidating near the major resistance area of 16100-150 before going towards 16500-600. As long as it manages to stay above 15830-900, the bullish momentum remains intact. The danger of a profit-taking decline towards 15500 will be there unless there is a clear break above 16100.
The Dax (9290.07, +0.88%) has spent a flat session similar to the US market. It needs to break the Monday range of 9250-9325 to make a trending move again.
The Nifty (6059.10, -0.92) is still trading inside the range of Monday and next directional move would come only beyond that. Bullish hopes survive till 6030-35. 6170 remains the trigger for the signal of a new high. Major supports come at 5970 and 5910.
Gold (1245.29) has dipped a bit. The path of least resistance targets 1225-1200 while below 1250. Silver (19.912) has also dipped. Our earlier target of 18.5 is still expected. The Gold-Silver ratio (62.5023) may see some consolidation for sometime now.
Copper (3.2080) has dipped a bit. It is likely to continue to be ranged sideways in the 3.1-3.3 region for the next several weeks.
Brent (110.93) is trying to break Resistance near 112. Failure may see a fall 109-108. But, a break above 112 could be very bullish, taking the market up to 116. Beware. Nymex WTI (93.36) has dipped from the 13-day MA on news that the US supplies have advanced. It shows some sideways move for now and may continue so for some time in the 93-96 levels. We see good long-term Support in the 92-91 region.
Euro (1.3563) defended the level of 1.3520 quite well to keep the bullish hopes alive and tested the upper boundary of the range at 1.3580. This 6 day high must be breached before reaching 1.3645-80 zones. Support remains at 1.3520.
Dollar Index (80.69) remains in the contracting mode and has tested both ends of its inside range at 80.60 and 81.05. The broader range remains in 80.50-81.30. The overlapping nature of the last few sessions points to the contraction being just a correction of the last rally.
Dollar Yen (101.37) has taken support in the zone of 101.10-20 in line with our expectation and as a result, turns out to be a shallow correction for now showing the strength of the bulls. Still they would need to keep it above 101.70-90 for further rally and a new high.
EURJPY (137.52) continues its consolidation in a narrow range between 137.10 and 137.75. It needs to get above the major resistance area of 138.35-75 to assert further bullishness or else the risk of testing 136.90-136.50 or even a reversal remains on the cards.
Pound (1.6202) is consolidating near the 2013 high of 1.6260. It needs a weekly closing above 1.6260-1.63 to trigger a major rally. On the other hand, a break below 1.6130 would be an initial signal for the sellers at that level trying to push it down from this zone.
Aussie (0.9113) has been falling relentlessly and reached out target of 0.91 too. Holding 0.9060-80, it can try to bounce but below 0.92, the bears will keep their pressure and search for lower targets.
Dollar Rupee (62.50) may open flat near 62.45-50 today. The upside remains capped to 63.10-25 and the lower range looks limited to 62.25 for today. Any signal for initial strength would come only above 62.70-85.
The US 10Yr (2.71%) trades just above the crucial 2.70% Support. If this holds, we can see a sharp rise towards 2.80%. Failure to bounce could open up chances of eventual dip towards 2.65%. Yields in Germany (10Yr 1.69%) and Japan (10Yr 0.60%) have also moved down a bit alongwith US Yields such that the the yield spread has moved in favour of the Dollar by 1-2bp in each case. The overall picture suggests chances of the yield spread moving further in favour of the Dollar in the coming days/ weeks, but we need to see the US 10Yr bounce from 2.70% for that.
US Swap Costs continue to decline with the 2Yr Swap Cost being only 5.82 bp now as the market makes the distinction (as desired by the Fed) between imminent Tapering and interest rates that can stay low for an extended period of time.
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