Thursday January 16, 2014 - 03:23:12 GMT
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FX Thoughts for the Day - www.fxthoughts.com
Morning Briefing : 16-Jan-2014 -0323 GMT
Dow (16481.94, +0.66%) bounced from 16240 creating a Bullish Harami pattern. 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 too as a lot of projections converge there. Initial sign of weakness will come only below 16050-100.
Dax (9733.81, +2.03%) broke above the 3 week old range of 9350-9650 and quickly reached our 9750 levels. Next target would be 9950 above 9750-9800. Support is at 9350 and 9200 levels.
Nikkei (15880.10, +0.85%) has bounced from the immediate support of 15400 mentioned yesterday. The targets of 15150-200 open below the support of 15400. Strength will return above 16000-150.
Shanghai (2022.21, -0.06%) is getting resisted at 2030 yet again, which remains a sign of danger for the bulls. Now the drop can extend below 2000 as long as it stays below 2030. Only above 2030, bulls can take it to 2055-60.
Nifty (6320.90, +1.27%) movement today will depend a bit on the TCS result as that is a heavyweight and able to influence the entire IT sector. Above 6325, the only resistance remains at 6358, the last swing high. A break above that would signal a rally towards 6450-75. Ideally, we would like a dip again towards 6200 from the current levels before any big rally. It would give Nifty far more structural strength but if it keeps rallying without any dip, we must expect higher levels.
Gold (1240.00) is trading just above crucial support zone of 1235-1239.50. No major movement yesterday, but the bears are trying hard to push the prices down. We may see ranged movements between 1225 and 1250 for now. A rally upwards cannot be ensured unless we see a sustained rise past 1250. The US Dollar strength may help it to hold on to its current levels for some time.
Silver (20.159) is stable with no major movement. A rise above 20.5-20.65 is needed to ensure a rise towards 21.5. While below 20.5 we could see some ranged movements above 19 on the downside.
Copper (3.3570) has risen sharply from support near 3.30 as expected. The improvement in the global economy is expected to bring in more demand for the Copper in the near term which may boost the prices. We may expect further rise towards 3.40.
Brent (105.99) fluctuated highly between crucial resistance and support levels of 106.81-105.06 and has managed to break the 106 level. Prices are expected to reduce further on expansion of oil production in Libya. Immediate support coming up near 104.8-105.
Nymex WTI (94.42) shot up sharply as the Crude stockpiles fell to the lowest level since March 2012 in the US. If this rise sustains, we may see levels of 96-98 in the near term. But negation of a fall from here cannot be committed just now. Need to see if it breaks immediate resistance at 94.86 to target 95.92-96.98. Overall it is in an uptrend.
Dollar Index (80.99) has bounced from the support zone of 80.30-50 towards the immediate resistance at 81.05-20. Strength will return above 81.20. The bias remains bullish as long as it stays above 80.30-50. From a broader perspective, the Dollar index keeps trading in a contracting range within 79-81.50 for nearly 3 months now and only a break of that range would give any real direction.
Euro (1.3617) got rejected from the major supply zone of 1.3660-90 and found support at our support area of 1.3550-70 to remain rangebound. Only a rally above 1.3725-65 may mitigate the immediate weakness.
Dollar-Yen (104.84) extended the bounce from 102.85 to keep their hopes alive. Longer term uptrend back in force? In that case, the rally may target 107 now above 105.40-60.
The Euro-Yen Cross (142.75) has bounced back sharply from 140.50 after finishing exactly 5 waves. Now it faces the major supply zone at 143-143.30. The bears are expected to return at this level. Bulls must sustain above this zone to continue the rally.
The Pound (1.6365) is in the 3rd week of sideways trade between 1.66 and 1.63. Good Support at 1.63 now. Can rise again towards 1.6600 within overall uptrend from 1.4800 (Jul-13). Where it will go after that will have to be seen.
The Aussie (0.8810) made a new 3 year low in a single day of the possibility being discussed in this space. It had failed to stay above 0.90 and broke down below 0.8950-60 to signal the termination of the bounce. Now any rally towards 0.8950-90 is expected to be sold into. Now the last hope for the bulls would be the major long term support area of 0.87-0.8720.
Dollar Rupee (61.54) neither broke above the resistance of 61.70-75 nor below the support at 61.40-42. The bulls managed to protect 61.40 and keep their hopes still alive. But the trend remains firmly down and the weakness persists as long as it stays below 61.70-75 and the possibility of a retest of the major support zone of 60.80-61.20 remains open. Above 61.70-75, resistance comes at 62.
The US 10Yr (2.89%) rose after a good PPI data. The good economic reports are signs that the economy is improving. We may see the yield ranged between 2.75%-3.00% in the near term. The 5Yr (1.67%) and the 30Yr (3.82%) also saw a rise.
The German 10Yr (1.82%) remained stable. The German-US 2Yr spread (-0.17%) has risen from the support zone of -0.28%-0.30%. The UK 10Yr (2.86%) saw a rise and is ranged between 2.75%-3.00%.
The Japan 10Yr (0.66%) remains unchanged as Dollar-Yen continues to get stronger. The US-Japan 10Yr Differential (2.23%) increased with the increase in US Yields.
The Indian 10Yr GOI yield (8.64%) fell after the WPI came out at 6.16%, much lower than expected. The lower Inflation in December will play a huge role in the RBI Policy later this month. We can expect that the RBI won’t make any changes in the interest rates after the low inflation.
0:30 GMT or 06:00 IST Australia Labour Force
...Expected 10.30 K ...Previous 15.4 K ...Actual -22.60 K
10:00 GMT or 15:30 IST EU CPI (YoY)
...Expected 0.80 % ...Previous 0.85 %
13:30 GMT or 19:00 IST US Core CPI (MoM)
...Expected 0.10 % ...Previous 0.16 %
14:00 GMT or 19:30 IST US TICS (Net foreign purch of long-term Sec)
...Expected 42.30 $ Bln ...Previous 35.44 $ Bln
15:00 GMT or 20:30 IST US Philifed Index
...Expected 8.80 ...Previous 7.00
6:30 GMT or 12:00 IST IN WPI
...Previous 7.52 % ...Actual 6.16 %
10:00 GMT or 15:30 IST EU Trade Bal
...Expected 16.70 EUR Bln ...Previous 14.50 EUR Bln ...Actual 16.00 EUR Bln
13:30 GMT or 19:00 IST US PPI ex Food & Energy (MoM)
...Expected 0.10 % ...Previous 0.05 % ...Actual 0.27 %
US Debt Ceiling
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