Tuesday December 24, 2013 - 03:22:53 GMT
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FX Thoughts for the Day - www.fxthoughts.com
Morning Briefing : 24-Dec-2013 -0321 GMT
Dow (16294.61, +0.45%) is showing the intent to reach 16700-800, the next possible target zone as it closed above the 13 year old resistance line of 16200. The holiday tomorrow and half a session today may produce muted price action now.
Dax (9488.82, +0.94%) has managed to end the week above 6225 and the weekly candle signals a move towards a new high near 9600. Exercise a bit of caution here in this area of 9500-9650 for any sign of weakness though the trend remains firmly up.
Nikkei (15990.64, +0.76%) has made a new 6 year high today at 16030. It is facing the strongest resistance now, the 13 & 18 year old supply zone of 16000-100 above which a multi-month bull market will be signaled. It requires at least a weekly closing above 16100, though a monthly closing would be a better signal.
Shanghai (2101.63, +0.57%) has crossed 2095 and is going to face the resistance at 2115 now. This is the first pause in its downtrend after the false breakout above 2250 levels. Unless 2165-75 is taken out, the bears will continue to dominate.
Nifty (6284.50, +0.16%) hit our resistance zone of 6305-25 repeatedly yesterday but were unable to break above it to finally get pushed back and lose most of its gains. Today, the first hurdle remains the same in 6305-25 and then the 5 year long resistance area of 6350-60 mentioned yesterday. We repeat, a negative close today may create a bearish pattern like the Evening Star but we will get the confirmation of a downtrend only below 6210-30. First sign of weakness will come below 6267.
Gold (1198.36) dipped yesterday while bearishness still prevails. A ranged move with a steady target of 1185 could be expected, while below 1225-1220.
Silver (19.37) is stable with no major movement and may continue so for some time. A fall towards support in the 19.0-18.5 regions could be targeted for.
Copper (3.3150) has risen further and is targeting resistance near 3.33-3.34. Breaking these levels may take it higher towards the crucial resistance zone near 3.39-3.40.
Brent (111.61) may now get into a ranged pattern after its sharp rise recently. A break above 112-112.5 may take it towards 114 and even 116 in the longer term.
Nymex WTI (98.66) has dipped on speculation that the recent increases in price may not be sustainable. Testing the 200-day MA resistance near current levels, the rally has been broken and we may expect a pause now. A consolidation now may give it some time to decide its further move. Also a rise from these levels cannot be negated for now.
Dollar Index (80.5070) has corrected exactly 50% of the last rise from 79.81 to 80.83. This actually makes a strong bullish structure which will be confirmed by a break above 80.80-95. Next target remains at 81.50 and support comes at 80.20-30.
Euro (1.3684) has managed to hold on to the support level of 1.36-1.3620 to keep the bullish hopes alive so far. It came back from our resistance at 1.37-1.3710 for the second time, also the 50% retracement level of the entire fall from 1.3811 to 1.3625 in as many sessions above which 1.3750 remains to be the strongest hurdle.
Dollar-Yen (104.32) has closed above the range of 101.50-104 at a new 5-year high. It signals a rise towards 105.50 and even 109 in the next few weeks. Any weakness will emerge only below 102.50.
The Euro-Yen Cross (142.76) remains stuck in the range of 140.90-142.90 for the last 6-7 sessions. It must break beyond this range to get a directional move and participants should keep in a wait and watch mode till then.
The Pound (1.6351) got tremendous buying pressure from the 1.62-1.63 area exactly in line with our expectation and hit a new 2 year high at 1.6484. As long as it stays above 1.62, more rallies may emerge towards 1.65-1.6550, above which the next hurdle comes at 1.6740-50.
The Aussie (0.8917) was rejected from our resistance area around 0.8975-0.90 which it must cross and sustain above to trigger any hope for a possible move towards 0.91-0.92. Till then the downside remains open.
Dollar Rupee (61.95) may open flat to negative near 61.85-90 today on the back of stronger emerging market currencies like Brazilian Real and South African Rand. If it can break and stay above 62.01, then we may expect a retracement of this entire fall and see 62.15-22. If weakness returns again, it would be from those levels. Support remains at 61.60-70. Stay cautious and watchful.
The US 10Yr (2.93%) is up near the resistance at2.95%. It is consolidating for now in the range of 2.85%-3.00%. The 5Yr (1.68%) has remained stable while the 30Yr (3.85%) is up slightly. The US Durable Goods data coming out today may impact the further movement of the yields.
The Spanish 10Yr (4.19%) and the Italian 10Yr (4.17%) rose on news that the domestic banks may reduce their holdings of securities before the ECB reviews their Balance Sheets next year.
The German 10Yr (1.88%) remained stable. The German – US 10Yr differential (-1.06%) fell. It is currently moving in a range of -1.1% to -1.00%. The German – US 2Yr spread (-0.15%) is just at the support zone near -0.18%. We may see it bounce from here to -0.1%. The Japan 10Yr (0.67%) dipped slightly. The US-Japan 10Yr spread (2.24%) is up and targeting 2.30%.
The Indian 10Yr GOI yield (8.81%) is up. We expect it to remain in a range of 8.75%-9.00% for the next few days.
13:30 GMT or 19:00 IST US Durable Goods Orders
...Expected 1.70 % ...Previous -1.62 %
15:00 GMT or 20:30 IST US New Home Sales
...Expected 449 K ...Previous 444 K
US Personal Income
... Previous -0.08 % ...Expected 0.40 % ...Actual 0.21 %
US PCE Price Index M/M
...Previous 0.38 % ...Expected 0.50% ...Actual 0.54%
...Previous 0.30 % ...Expected 0.10% ...Actual 0.30%
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