Thursday January 2, 2014 - 03:21:59 GMT
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FX Thoughts for the Day - www.fxthoughts.com
Morning Briefing : 02-Jan-2014 -0321 GMT
Dow (16576.66, +0.44%) is very close to our target zone of 16700-800, after it closed above the 13 year old resistance line of 16200. The trend remains firmly up but we would keep an eye on the broader band of 16800-17600 as a lot of projections converge there. Initial sign of weakness will come only below 16300.
Dax (9552.16, -0.39%) has nearly met our target of 9600 in just two days of mentioning it on this space. We repeat, exercise a bit of caution here in this area of 9600-9650 for any sign of weakness though the trend remains firmly up.
Nikkei (16291.31, +0.69%) has finished the year with the biggest gain in the last 40 years. It continues its rally after the classic Dow theory signal of a new bull market appeared finishing its 20 year long bear market. From that perspective, the next major dip would be an excellent opportunity for long-term investing in Japan for the next few years. In the short term, weakness would come only below the zone of 15950-16000.
Shanghai (2105.47, -0.50%) has faced rejection from our resistance at 2115 and come down. Below 2068, the fall will continue. Unless 2165-75 is taken out, the bears will continue to dominate on every rally. There is a fair chance that the broader range of 2030-2250 may continue for a few months more.
Nifty (6291.10, -0.36%) keeps trading between the 5 year resistance zone of 6350-60 on the upside and 6260 on the downside. The BankNifty shows the same sideways mode and more weakness. Strength would return only on a close above 6350-60. Weakness would be confirmed below 6290 and then 6260-70.
Gold (1221.91) has bounced back sharply from the 1203 levels. A break above 1225 may take it to 1250. But while below 1225 we may expect a little consolidation before a fresh rise.
Silver (20.007) has risen sharply as expected. It may now target 21-21.5 in the near term while in an uptrend.
Copper (3.3985) is in an overall down trend and is trading in the crucial resistance zone of 3.39-3.40 now. Need to watch if this resistance is strong enough to push it back towards 3.35. A break above 3.40 may take it higher to 114 in the coming weeks.
Brent (110.97) fell sharply but fluctuated highly bouncing back from support near 110.40 while maintaining the long term uptrend. We could expect a move within the range 110.5-112.5.
Nymex WTI (98.61) had fallen further and is testing crucial support near current levels from where we may expect a bounce. Overall the trend remains up.
Dollar Index (80.122) is yet to break any of the overhead resistances and as a result, is pushed by the bears at every opportunity. It is close to the short term support area of 79.85-95, below which the weakness may take it towards 79.65 and then 79. Holding 79.85-95, it may make another attempt to break 80.65-95.
Euro (1.3766) had rallied sharply to test the long term resistance zone of 1.39-1.3920 and faced a subsequent sharp rejection. Now it has again come close to the immediate resistance area of 1.3830-60. As long as Euro fails to close above this zone and then 1.39-1.320, it will remain under pressure. Major supports come at 1.3720 and 1.3650 now.
Dollar-Yen (105.25) has taken a bit of pause immediately after it achieved our first target of 105.50 making a new 5-year high at 105.41. The bullish momentum remains fully strong above 104 and the next target of 109 remains open. Any sign of weakness will be seen only below 103.50 and 102.50.
The Euro-Yen Cross (144.87) reached our first target of 144.60 after it broke out of the range of 140.90-142.90 on the upside and produced another fast move as expected. Now the 4 day consolidation may be at the point of ending and the next move may be on the cards. In that respect, the level to watch would be 144.40, holding which it may give an immediate spurt. Next targets remain at 147.60 and 149. Supports come at 143.90-143.50.
The Pound (1.6582) keeps making new 2 year highs and is getting closer to the 4 year high of 1.6750. As long as it stays above 1.62-1.63, more rallies may emerge towards 1.6740-50. Some negative divergences are visible implying a lack of bullish momentum, but that will come into play only below 1.6370.
The Aussie (0.8919) bounced back sharply from 0.8833. Earlier, it 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 towards 0.87-0.8750.
Dollar Rupee (61.90) may open flat near 61.85-90 today. It has spent the fourth consecutive session inside the narrow range of 61.80-62.16, after failing once again to break above our resistance zone of 62.16-20. Last week’s range was a mere 40 paisa and yesterday it came down to 17 paisa. Keeping this range contraction in mind, we can expect bigger moves only beyond 61.65-70 on the downside and 62.20/62.45 on the upside now.
The US 10Yr (3.03%) moved past the resistance to achieve our long held target of 3.00% before the markets closed for the New Year on Tuesday. A rise to 3.05% or higher can be expected. The 5Yr (1.74%) has also moved past the resistance and can now target 2.00%. The 30Yr (3.97%) has also risen along with the 10Yr and 5Yr and with the current rise in rates we may expect it to target 4.00% and above.
German 10 Yr (1.92%) is testing the resistance near 2.01%. A break above 2.01% and we may it targeting the long term resistance zone of 2.03%-2.04%. The Japanese 10 Yr (0.73%) has remained stable after the rise past 0.70%. We may see the yields targeting 0.80% if the Yen continues to weaken.
The Indian 10Yr GOI yield (8.84%) dipped as the rupee remained comatose in the first day of the New Year. It is still moving in the range of 8.75%-9.00%. We expect it to show some movement once the Rupee comes out of the comatose state now that the holiday season is over.
22:30 GMT or 4:00 IST AU PMI
...Previous - 47.70
5:00 GMT or 10:30 IST IN Manufacturing PMI
...Previous - 51.30
8:30 GMT or 14:00 IST CH PMI
...Previous - 56.50
9:00 GMT or 14:30 IST EU PMI
...Previous - 51.60
9:30 GMT or 15:00 IST UK PMI
...Previous - 58.40
No major data release yesterday.
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