Thursday December 5, 2013 - 03:36:59 GMT
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FX Thoughts for the Day - www.fxthoughts.com
Morning Briefing : 05-Dec-2013 -0336 GMT
Equities remain flat to negative overall.
The Dow (15889.77, -0.16%) found support near 15800, the area we were watching. The reasons for the bulls to worried were mentioned before as Dow was not being able to sustain at the higher levels of 16100-200. If the index manages to hold on 15800 it can rally again, as mentioned before. The late recovery from the lows to close flat gives the bulls a chance. On the other hand, a close below 15800 could signal a drop towards 15500 or even lower.
The Dax (9140.63, -0.90%) remained below 9250-80 and fell big for another day retracing in 2 sessions all the gains of the last 12 days – a strong bearish signal. Some short covering may be seen but staying below 9250-80, it can reach 8950-9000 levels. A weekly closing below 9000 could be the signal for the end of this rally and a possible drop to 8500 and 8100.
The Asia-Pac region is trading in negative. The Shanghai (2244.69, -0.31%) is trading flat today but it has finally broken above the major resistance area of 2235-45. If it can sustain and end the week above these levels, it would potentially point to a multi-month major rally. The Nikkei (15365.90, -0.27%) has come below 15500-600 after getting rejected from the 2013 high of 15900 levels. Staying below 15600, we may see a move to 15000 or lower.
The Nifty (6160.95, -0.66%) is expected to open with a big gap up on the news of the Assembly Elections exit poll. The opening hour would be crucial today to see if Nifty manages to open above 6230 and if any selling pressure comes taking opportunity of this rise. In the absence of any gap sellers, it can turn out to be a trending day taking Nifty to 6270. Supports to be watched come at 6150-60 and 6125.This is a time for news based events and for the next 3 sessions, everything other than the political news may turn out to be irrelevant. We would not like to commit ourselves till next Monday, when the market would open after the actual Assembly Elections results.
Gold (1238.61) fluctuated in the 1250-1213 region but was unable to break above 1250. We may see some ranged moves within this region while the overall trend remains downward.
Silver (19.614) came off from the 13-Day MA. We are bearish on our earlier target of 18.5.
Copper (3.2235) has dipped after the sharp rise yesterday. Its near term movement could be within the 3.15-3.25 range. A break above 3.25 may indicate further rise towards 3.30-3.35.
Brent (111.68) has fallen from 112 levels and may remain ranged for now. A break above 112.5 may target 114 in the coming weeks. Nymex WTI (97.43) has held the upper levels which signal further gains. It has bounced from the trend support and may now target 98.5.
Euro (1.3585) has been trading sideways in the range of 1.3520-1.3625. It tested both the ends of the range in the 3 times in as many days. A significant move may come only on a break of this range. The structure still remains weak as it is making a Rising Wedge now. If Euro manages to go above 1.3620-30, it may go make its final rally to 1.3650-70 and then fall sharply. This scenario would be confirmed by a break below 1.3540. This bearish scenario would be invalidated by a sustained move above 1.3675.
Dollar Index (80.61) is stuck in the sideways range of 80.50-81 and unless 81.15 on the upside or 80.35-50 on the downside is broken, it may keep trading in this range. We continue watching the resistance area of 81.10-15 as only a break above that would confirm the end of the correction for the Dollar.
Dollar Yen (102.27) has seen some profit booking but demand is visible in the lower end too. If 101.65 remain intact, then it may consolidate in a broad sideways range of 101.60-103.60. The sign of a deeper correction to 101-101.15 would come only below 101.60.
EURJPY (138.87) found support yesterday on our support of 138.30 and extended its trading range to 138.30-140. Like the other pairs, it may make a significant move only beyond this range.
Pound (1.6377) is consolidating after a huge rally. But any real weakness will be signaled only on a move below 1.63 and 1.6230. Till then all the dips could be bought. The long term targets of 1.67-1.70 remain intact.
Aussie (0.9037) reached 0.90 and as long as it stays below 0.9065, the probability of reaching 0.8930 remains higher, where the bulls can try something. All rallies will face selling pressure till 0.9170-0.92 is crossed.
Dollar Rupee (62.36) may open with a big gap down near 61.70-75. This is a news based event and for these 3 sessions till Monday, the markets may dance to the tune of any kind of political news and speculations. If no buying pressure is seen in the opening hour, then we may see 61.50-65 or even lower. In the case of a weak opening, the resistances would be at 61.90 and 62.10-15.
The US 10Yr (2.84%) saw a sharp rise after the ADP Employment data came out more than expected, thereby increasing talks that the Federal reserve will reduce its bond purchases this month itself. Another clear indicator will be the Non Farm Payrolls which will come out at the end of the week.
The ECB and the BOE meetings are being held today and their interest rate decisions will be eagerly watched. The German 10Yr (1.81%) saw a rise ahead of the ECB Meeting. The Japanese 10Yr (0.62%) has remained stable. It has come up to a resistance near current levels and we may see it dipping from here.
The BOC interest rate decision came out yesterday and it has made no changes to its Interest rates.
The Indian 10Yr (8.77%) rose slightly yesterday and is expected to trade at these levels for the next few days.
DATA TODAY0:30 GMT or 6:00 IST Australia Trade Balance
...Expected -0.38 $Bln ...Previous -0.27 $Bln ...Actual -0.53 $Bln
12:00 GMT or 17:30 IST BOE Mtg
...Expected 0.50 % ...Previous 0.50 %
12:45 GMT or 18:15 IST ECB Meeting
...Expected 0.25 % ...Previous 0.25 %
13:30 GMT or 19:00 IST US GDP
...Expected 3.10 % ...Previous 2.80 %
15:00 GMT or 20:30 IST CA PMI
...Expected 60.2 ...Previous 62.8
Delhi Elections - - -
Mizoram Elections - - -
...Expected 0.70 % ...Previous 0.70 % ...Actual 0.60%
...Expected 0.10 % ...Previous 0.10 % ...Actual 0.10%
EU Retail Sales
...Expected 0.20 % ...Previous -0.61 % ...Actual -0.21%
US ADP Emp
...Expected 173 K ...Previous 185 K ...Actual 215K
US Trade Balance
...Expected -40.30 $ Bln ...Previous -42.97 $ Bln ...Actual -40.64 $Bln
...Expected 1.00 % ...Previous 1.00 % ...Actual 1.00%
US New Home Sales (Oct)
...Expected 432 K ...Previous 421 K ...Actual 444 K
US New Home Sales (Sep)
...Expected 427 K ...Previous 421 K ...Actual 354 K
IN Services PMI
...Previous 47.10 ...Actual 47.20
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