Friday January 17, 2014 - 03:24:29 GMT
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FX Thoughts for the Day - www.fxthoughts.com
Morning Briefing : 17-Jan-2014 -0323 GMT
Dow (16417.01, -0.39%) corrected a bit but the strength should return from 16340-70 and would be confirmed above 16530. 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 (9717.71, -0.17%) broke above the 3 week old range of 9350-9650 and quickly reached our 9750 levels to consolidate there for a day. Next target would be 9950 above 9750-9800. Support is at 9350 and 9200 levels.
Nikkei (15653.64, -0.59%) is correcting from our resistance area of 16000-150. It must break above this zone to confirm strength and extend the rally. The targets of 15150-200 open below the support of 15400.
Shanghai (2004.60, -0.94%) 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 (6318.90, -0.03%) spent the day in a narrow range between 6300 and 6350 before closing flat. We keep watching 6358 as a break above that would signal a rally towards 6385 and then 6450-75. Supports are at 6275-85. 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.
Commodities are overall mixed.
Gold(1243.80)remains stable and may continue to remain so for few more sessions within 1250. A rally upwards cannot be ensured unless we see a sustained rise past 1250.
Silver (20.158) is also stable with no major movement yesterday. It has been testing the 13-day MA in the past three sessions but is not able to break 20.5 which seems to be a crucial resistance.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 19.5-19 on the downside.
Copper (3.3370) has risen in line with our expectation targeting resistance near 3.40. Need to see it these levels break taking the prices higher towards 3.50.
Brent (105.48) has dipped and is trading low. Immediate support coming up near 104.8-105 from where it may bounce back towards the 106-108 region.Overall the longterm trend remains up.
Nymex WTI (94.15) is stable. It may consolidate for a few sessions now. Immediate resistance coming at 94.86, which if holds may push the prices back to 93. Else we may see it targeting the next resistance zone of 95.92-96.98.
Dollar Index (80.96) 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 (1.3614) is trading near the lower boundary of a Bear Flag pattern. It had 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 (104.24) corrected a bit from 105. Longer term uptrend back in force? In that case, the strength should be back from 103.65-104 and then the rally may target 107 now above 105.40-60.
The Euro-Yen Cross (141.93) is correcting exactly from the major supply zone at 143-143.30 in line with our expectation. The bears were expected to return at this level. Bulls must break above this zone to continue the rally. Otherwise, another drop to 141.40 or 140.50 would remain on the cards.
The Pound (1.6331) 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 (0.8806) made a new 3 year low at 0.8777 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) may open flat today. It neither broke above the resistance of 61.70-75 nor below the support at 61.40-42 yesterday. 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 (2.84%) fell before the release of the Housing Starts and Industrial Production data. It is expected that the Housing Starts will decline the Industrial production will be slow. The 5Yr (1.64%) and the 30Yr (3.77%) also fell in line with the 10Yr yields.
The German 10Yr (1.78%) fell after the slow growth of inflation in the Euro Area. The German-US 2Yr spread (-0.18%) is stable and in the support zone of -28%-0.30%. The UK 10Yr (2.81%) also fell saw a rise and is ranged between 2.75%-3.00%.
The Japan 10Yr (0.66%) remained unchanged. The US-Japan 10Yr Differential (2.17%) fell with the fall in US Yields.
The Indian 10Yr GOI yield (8.61%) also fell further with the low Inflation data. With the inflation coming in lower it is speculated that the RBI will refrain from increasing the borrowing costs later this month.
13:30 GMT or 19:00 IST US Housing Starts (Mln)
...Expected 990 K ...Previous 1091 K
14:15 GMT or 19:45 IST US Industrial Production
...Expected 0.40 % ...Previous 1.10 %
14:15 GMT or 19:45 IST US Capacity Utilization
...Expected 79.20 % ...Previous 79.0 %
Australia Labour Force
...Expected 10.30 K ...Previous 15.4 K ...Actual -22.60 K
EU CPI (YoY)
...Expected 0.80 % ...Previous 0.85 % ...Actual 0.86 %
US Core CPI (MoM)
...Expected 0.10 % ...Previous 0.16 % ...Actual 0.11%
US TICS (Net foreign purch of long-term Sec)
...Expected 42.30 $ Bln ...Previous 28.70 $ Bln ...Actual -29.30 $ Bln
US Philifed Index
...Expected 8.80 ...Previous 7.00 ...Actual 9.40
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