Monday December 16, 2013 - 03:51:01 GMT
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FX Thoughts for the Day - www.fxthoughts.com
Morning Briefing : 16-Dec-2013 -0350 GMT
Most of the indices are showing signs of weakness and chances of further fall in the next few weeks are strong. Any rallies are expected to face selling pressure now.
Dow (15755.36, +0.10%) is testing the support area of 15650-700, the July-September tops, below which the path to 15500 and 15300 would open. Bulls must hold on to 15650 for another attempt towards 16100-200.
Dax (9006.46, -0.12%) is showing a very weak structure at the end of the week as it lost all the gain made in November. It is close to the support area of 8920-50 below which comes the next target level of 8870. All the rallies till 9200 are expected to face strong selling pressure.
Nikkei (15334.30, -0.45%) looks uncannily similar to Dow when it is noted that both the indices have been pushed back from 13 year old resistances. Currently it is rangebound between 15250 and 1565o. Only beyond this range a meaningful move may materialize.
Shanghai (2186.03, -0.46%) is down for the eighth session. If it manages to find support in the zone of 2155-70, a rise to 2250 can be expected.
Nifty (6168.40, -1.10%) shows the sign of an intermediate top already at place and hence, every rally is expected to be sold till 6230-6300 levels. A break below the support of 6130 will keep the bearish momentum intact. Initial hours today could be mute waiting for the November WPI data.
Gold (1237.16) is trading near the 13-day MA. This if holds may push it towards trend support near 1225-1220. Overall it is in a near term sideways trend. A break below 1220 may put it back to the mid-term down trend. Silver (19.601) is also trading near the 13-day MA and is able to sustain levels above 19 for now. While it is in an overall down trend near term is likely to remain bearish.
Copper (3.3025) is on a steady up move targeting resistance zone of 3.35-3.40 in the near term.
Brent (108.86) is trading higher near the 50-day MA after the sharp fluctuation on Friday. We need to see if it is able rise back to levels above 109 else could see a sharp downward retracement. While below 109, the movement is likely to remain bearish. Nymex WTI (96.54) is testing the 50-day MA at current levels. It seems to form a rounded-top on the daily but this would confirm if it further falls from current levels breaking 96.00. The resistance at 200-day MA is still holding well.
The Forex world is holding its breath as it doesn’t if the Fed will taper the QE this week or not and that has been producing random moves. Dollar Index (80.08) has weakened again and it is expected to remain so as long as it stays below 80.50 levels. Downside remains open for a probable move towards 79.50-75.
Resistance at 1.3825-50 has held well on the Euro (1.3758) but still no weakness is visible as mentioned before. Holding the Friday low of 1.3710, it can well attempt another rise to 1.3825-50.
Dollar-Yen (102.93) has weakened again and is testing its final short term support at 102.80 below which 102-102.15 would be a possibility. The bulls survive as long as they manage to stay above 102.80.
The Euro-Yen Cross (141.51) has risen past 141.20, the 61.8% retracement of the fall from 169.92 (Jul-08) to 94.10 (Jul-12) and could rise further with Support at 141.20 now. Any sign of weakness will come only below 141.20-140.90.
The Pound (1.6299) has dipped but in a grinding manner to test the major long term support of 1.62-1.63. Keep an eye here for follow up buying to materialize and shorts in this zone could be risky. The major uptrend will be threatened only below 1.62.
The Aussie (0.8940) is consolidating inside the Friday range as the China PMI data came weak this morning. Below 0.90-0.9030, the strong bearish momentum will remain intact and Aussie will remain open to more downside.
Dollar Rupee (62.13) may open flat waiting for the November WPI data to provide further clue for the next action. There is a danger of Dollar-Rupee rising further towards 62.50-62.80. BUT, looking at the near-term charts, while the immediate Resistance at 62.25 is holding, we INTEREST RATES
The US 10Yr (2.85%) has remained stable and is targeting the resistance at 2.95%. With the Federal Reserve ready to taper in this week’s FOMC Meeting we may see the yields go up to 3.00%-3.50% if the resistance breaks.
The Japan 10Yr (0.67%) has been stable. The 10 Yr-5 Yr differentials (0.47%) have come up to a resistance and we may see the yields falling from here. The German 10Yr (1.83%) has also remained stable. The German – US 10Yr differential (-0.09%) has started to come off from the resistance at -0.06% and we may see it dip towards -0.15%.
The Indian 10Yr GOI yield (8.91%) rose after the High Inflation and Negative IIP. We may see the rates going above 9.00% before the RBI Meeting this week. It is expected that the RBI will increase the key interest rates. The Indian WPI is expected to come out today. A higher WPI may take the yeilds higher.
23:50 GMT or 5:20 IST JP Tankan Large Manufacturers Index
...Expected 15 ...Previous 12 ...Actual 16
6:30 GMT or 12:00 IST IN WPI
...Previous - 7.00 %
9:00 GMT or 14:30 IST EU EA (17) Curr Acct Bal
...Previous - 13.70 EUR Bln
9:00 GMT or 14:30 IST EU Trade Bal
...Expected 15.20 EUR Bln ...Previous 14.30 EUR Bln
14:00 GMT or 19:30 IST US TICS (Net foreign purch of long-term Sec)
...Expected 31.40 $ Bln ...Previous 25.49 $ Bln
14:15 GMT or 19:45 IST US Industrial Production
...Expected 0.60 % ...Previous -0.14 %
14:15 GMT or 19:45 IST US Capacity Utilization
...Expected 78.50 % ...Previous 78.10 %
US PPI ex Food & Energy (MoM)
...Expected 0.10 % ...Previous 0.16 % ...Actual 0.05%
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