Monday January 13, 2014 - 03:22:39 GMT
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FX Thoughts for the Day - www.fxthoughts.com
Morning Briefing : 13-Jan-2014 -0321 GMT
Dow (16437.05, -0.05%) remains in a shallow sideways corrective mode between 16400 and 16600, making a Bullish Flag. It may again rally above 16570-16600. It was mentioned earlier that any fall till 16100-200 may be just a normal correction. The trend remains up but we have been keeping an eye on the broader band of 16800-17600 as a lot of projections converge there. Initial sign of weakness will come only below 16100.
Dax (9473.24, +0.55%) is consolidating between 9350-9650 for the last 3 weeks. Any major move will come only beyond this range. Resistance is at 9750-800 levels and support is at 9350 and 9200 levels.
Nikkei (15912.06, +0.20%) is closed for today. It was pushed back by the major resistance cluster of 16050-16120 to resume the fall, exactly in line with our expectation. Currently it is finding support at 15700-750, below which the fall will be faster and the targets of 15150-200 will open. Strength will return above 16150.
Shanghai (2014.35, +0.05%) is getting resisted at 2030 now, which is a sign of danger for the bulls. Now the drop can extend below 2000 as long as it stays below 2030.
Nifty (6171.45, +0.05) was stuck in a mere 100 points range last week, and must explode to make a trending move any day now. 6130 got saved on Friday but a failure to hold above 6130 this week would take it fast towards 6075 or even lower. The weekly closing today kept the trend firmly down. Strength returns only above the major resistance zone of 6225-30 and then 6250-70.
Commodities are overall up except the Crude markets where the bears are still dominant.
Gold (1251.707) has risen and is trading above 1250. It is testing crucial resistance on the weekly charts and if it is able to sustain levels above 1250, we may see an eventual rise towards 1275-1300.
Silver (20.228) is also trading higher targeting 20.5. A rise above 20.5-20.65 could take it higher towards 21.5.
Copper (3.3510) has risen breaking the channel resistance. Bulls seem to be strongly acting upon the prices for now. Movement within the broad 3.30-3.40 regions may remain for some more time. Only a break above or below these levels could indicate further movements.
Brent (107.100) is ranged in the 106-108 regions. Note that the bears are still hovering around and may push the prices further down. But while above 106, we may expect consolidation for some time.
Nymex WTI (92.47) is also stable and may target 90 in the coming sessions while below 93.
Dollar Index (80.49) has been hit by the poor US jobs data on Friday and has broken below 80.80-85 to reach 80.55 and lower as expected. Below the support zone of 80.30-50, it can reach the major support of 79.65-85. Bulls must hold 80.30 levels.
Euro (1.3678) has bounced back to the major supply zone of 1.3660-90 once more. The bearish momentum will return only below 1.3550-70. Only a rally above 1.3725-65 may mitigate the immediate weakness.
Dollar-Yen (103.35) crashed exactly from our resistance of 105.40 and broke below 103.50 to confirm the downtrend. Now it can reach 101.50-102.50. Bulls will hope to protect 102.30-102.80.
The Euro-Yen Cross (141.49) has dropped sharply exactly from the strong supply zone of 143.30-70 mentioned yesterday. It was noted that, the selling pressure may return any moment as long as this zone was not convincingly broken above. Any bounce till 143-143.30 is expected to be sold.
The Pound (1.6499) saw good buying pressure once again near the area of 1.63 and bounced. As long as it stays above 1.62-1.63, more rallies may emerge towards 1.6740-50. Before that, it has to cross above the resistance of 1.65-1.6550, failing which the possibility of more falls canít be discarded. It is struggling with this resistance just now.
The Aussie (0.9025) has managed to break above the resistance area of 0.90 at last to signal a possible move towards 0.91-0.92. Weakness will return below 0.8950-60.
Dollar Rupee (61.90) may open gap down at 61.55-65 today on the back of the general Dollar weakness. The supports at 62.60-75 and 62.50 must be watched closely to see if any buying pressure emerges from there, failing which we can see 60.80-61.20. Initial strength will return only above 62. This range of 61.60-62.60 is more than 3 weeks old now, so keep alert for a sharp move anytime now.
The US 10Yr (2.86%) fell sharply after the weak NFP data on Friday. We may now see the yield targeting 2.75% in the near term. The 5Yr (1.74%) and the 30Yr (3.87%) remained stable though.
The German 10 Yr (1.84%) also saw a drop after the ECB said that it wants to keep the interest rates low to support recovery in the economy. The German-US 2Yr spread (-0.24%) fell from the support near 0.18% and is on its way to the support zone of -0.28%-0.30%. The Italian 10Yr (3.91%) and the Spanish 10Yr (3.81%) remained stable. The UK 10Yr (2.87%) also dropped. We may now see it ranged between 2.75%-3.00% for some time.
The Japan 10Yr (0.69%) remained stable even as Dollar-Yen fell. But the US-Japan 10Yr Differential (2.16%) saw a sharp drop and it can target 2.00% due to the fall in the US yields.
The Indian 10Yr GOI yield (8.76%) is close to the lower end of our range of 8.75%-9.00% after the weak IIP data which came out at -2.10%. The WPI Data which was supposed to come out tomorrow will come out today and it will be closely watched.
...Previous 7.52 % ...Actual ...
IN Trade bal
...Previous -9.22 $ Bln ...Actual -10.14 $ Bln
...Expected 0.30 % ...Previous 0.10 % ...Actual 0.10%
...Previous -1.8 % ...Actual -2.10%
...Expected 194 K ...Previous 241 K ...Actual 74 K
US Unemployment Rate
...Expected 7.00 % ...Previous 7.00 % ...Actual 6.70%
CA Labour Force
...Expected 13.30 K ...Previous 21.60 K ...Actual -45.90 K
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