Wednesday January 22, 2014 - 03:36:57 GMT
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FX Thoughts for the Day - www.fxthoughts.com
Morning Briefing : 22-Jan-2014 -0335 GMT
Dow (16414.44, -0.27%) continues its consolidation in the band of 16200-500 for the 7th session. The broader uptrend will be reasserted on a break above 16530, in which case we can target 16800-17600 as a lot of projections converge there. Initial sign of weakness comes only below 16050-100.
Dax (9730.12, +0.15%) broke above the 3 week old range of 9350-9650 and quickly reached our 9750-9800 levels to consolidate there. Next target would be 9950 above 9750-9800. Support is at 9350 and 9200 levels.
Nikkei (15830.79, +1.21%) has corrected from our 16000-150 resistance area and could fall further towards 15150-200 unless it manages to climb above 16150 again. Watch immediate Support at 15400 for confirmation either way.
Shanghai (2035.65, +1.36%) broke above the resistance of 2030 and may retest the major supply zone of 2060-80 now. The medium term trend remains down and the longer term target could be as low as 1750-1850 unless short-covering is seen at 1950.
Nifty (6313.80, +0.16%) ended the day nearly flat after trading sideways for the entire session. If the bulls manage to break 6345-60 this time, the strength of any rally towards 6500-6600 will be much stronger. We may discard this bullish scenario below 6200. Weakness returns below 6240.
Gold (1241.918) has found Resistance at 1258 as the long-term downtrend since 1750 (Dec-12) still persists. A rise past 1280 is needed to break this downtrend. For now, while below 1280, the market may again test crucial Supports at 1225-1200. If that holds, there could be a threat to the downtrend in the longer term.
Silver (19.927) has also found Resistance in the 20.30-50 region, continuing the sideways movement within the 20.49-19 region. A rise past 20.5-20.65 would take it higher to the crucial resistance zone of 22.95-23.0 from where we could see a short term fall, back to 22.5. Like Gold, watch crucial Support at 19.00-18.50. This needs to hold for Silver to gather strength for the longer term.
Copper (3.3520) is finding Support at 3.33 within a near-term uptrend targeting 3.41-42. A break above 3.42, if seen, may take the prices much higher towards 3.50.
Brent (106.35) registered an intra-day high of 108 yesterday but could not sustain those levels. This may indicate near term bearishness. But there is strong Support in the 106-105 region. While that holds, we could see an eventual rise towards 108-110.
Nymex WTI (95.310) shot up from an intra-day low of 94.05 yesterday and is testing the 50-day MA just above current levels. The overall bounce from 91 over the last 7 days is gathering steam and we may now expect a target of 97-98 and even 101-102 in the longer run.
Dollar Index (81.08) is struggling near the major supply zone of 81.50 now as it remains in an uptrend 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 (1.3565) is in a feeble bounce from 1.35 and it may extend to1.3620-30 at most, but selling pressure may come at the higher levels any time. Below 1.35, the drop may extend to 1.333-1.34. The trend remains firmly down.
Dollar-Yen (104.36) has bounced back from our support zone of 103.65-104 to reassert the longer term uptrend. The rally may target 107 now above 105.40-60.
The Euro-Yen Cross (141.58) has bounced from our target support zone of 140.30-50. It may reach 142-142.15 and 143-143.30 above that. The drop may extend below 140 towards 138.50-140.
The Pound (1.6482) is in the 5th 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 (0.8855) has bounced from our major long term support at 0.87-0.8720 and if it can stay above 0.89 now, the bounce can extend to 0.9050-0.91.
Dollar Rupee (61.90) may open higher today near 62.05-10. It broke above the major supply zone of 61.70-75 and almost reached our initial target of 61.95 in the same day. It may reach our next target of 62.10 today and may extend the rally further towards 62.25-30.
The US 10Yr (2.84%) remained unchanged yesterday after falling from 3.04% since 1st January 2014. It is now testing support in a near term uptrend at current levels and we may see a bounce from here targeting 3.00%.
The German 10Yr (1.74%) also remained unchanged yesterday. The yield has fallen from 1.95% on 3rd January 2014 and we can now see it targeting a trend support near 1.65%-1.70%. The German-US 10Yr spread (-1.10%) fell from a resistance near -1.00% and can target -1.20% in a long term downtrend.
The Japan 10Yr (0.67%) has seen a rise of 1 basis point since yesterday. The 10Yr yield curve is ranged between 0.75% to 0.50%. The US-Japan 10Yr yield spread (2.15%) has been consolidating and can target 2.10%. The BOJ Meeting got concluded today and there was no change in the key interest rates.
The Indian 10Yr GOI yield (8.55%) has been falling since 27th December 2013 from 8.96%. We may now see it targeting 8.50%-8.45%.
1:30 GMT or 7:00 IST AU CPI
...Expected 0.50 % ...Previous 1.20 % ...Actual 0.80%
3:00 GMT or 8:30 IST BOJ Meeting
...Previous <0.10 % ...Actual <0.10 %
9:30 GMT or 15:00 IST UK BOE Minutes
...Expected 0-0-9 % ...Previous 0-0-9 %
9:30 GMT or 15:00 IST UK Unemp
...Expected 7.30 % ...Previous 7.40 %
15:00 GMT or 20:30 IST BOC Meeting
...Expected 1.00 % ...Previous 1.00 %
No major data release yesterday.
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