Thursday January 23, 2014 - 03:27:26 GMT
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FX Thoughts for the Day - www.fxthoughts.com
Morning Briefing : 23-Jan-2014 -0326 GMT
Dow (16373.34, -0.25%) consolidation may be over by today or tomorrow and the next phase of rally may unfold on a break above 16530. The Inverse Head & Shoulder pattern visible on the daily chart gives a target of 16800, nicely coinciding with the long term projection band of 16800-17600 we have been watching.
Dax (9720.11, -0.10%) continues its sideways movement in the narrow range of 9650-9800 with the uptrend intact. Staying above 9350-400, the target of 9950 remains open.
Nikkei (15833.16, +0.08%) is getting rejected from the strong resistance 16000 to keep the bulls on their toes. A failure to close above 16000 may drag it to 15400-500 or lower again.
Shanghai (2040.76, -0.54%) 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 (6338.95, +0.40%) must break above 6345-60 to rally towards 6500-6600, otherwise we may see a gradual fall to 6200-6250 again. We may discard the bullish scenario below 6200. Weakness returns below 6280.
Metals are trading low and may test near term supports while the Oil market trades higher.
Gold (1234.77) has fallen while long-term downtrend still persists. It may test crucial support in the 1225-1200 regions for now which if holds could take the prices higher towards 1280.
Silver (19.797) has also fallen as the Resistance in the 20.30-50 region holds, stretching the sideways movement within the broad 19-20.5 region. It may now test crucial support within 19-18.5 from where it may bounce back towards 20.5.
Copper (3.3225) dropped as the China Flash manufacturing PMI came out lower than expected. It may now test Support near 3.30 from where it may bounce back towards 3.35. While below 3.40 a rally upwards is not very likely.
Brent (107.990) rose sharply bouncing from the 13-day MA support. While above 107, we may see a rise towards 109-110. Else it may consolidate for a while in the 107-108 region before rising further. Overall the long term uptrend persists.
Nymex WTI (96.52) rose sharply making a three week high of 96.89 since 3nd January 2014. We may now expect a rise towards 97-98 and even 102 in the long term.
Dollar Index (81.22) is struggling near the major supply zone of 81.50 and could fall towards 80.90 again unless it breaks above 81.50 soon. The overlapping structure of the rally from 79.70 doesn’t look very strong till now.
Euro (1.3550) is making a Bear Flag and may fall towards 1.34-1.33 on a break below 1.3500-30. Upside looks limited to 1.3600 for the moment as the trend remains firmly down.
Dollar-Yen (104.58) has bounced back from our support zone of 103.65-104 to reassert the longer term uptrend. The rally may target 107 now above the major resistance of 105.40-60.
The Euro-Yen Cross (141.69) has reached 142 in line with our expectation but in a very laborious manner. The structure remains weak and further upside looks limited to 143-143.30. A break below 140 may drag it to 138.50-140.
The Pound (1.6569) is hitting the upper end of the band at 1.66. A firm move above 1.6600-50 would signal the long term uptrend reasserting itself and targets of 1.6750 & 1.69 would open.
The Aussie (0.8804) has been rejected from our resistance of 0.89. Now only a move beyond the range of 0.87 and 0.89 would determine the next broader movement.
Dollar Rupee (61.82) may open higher today near 61.95-62. It found support at the old supply zone turned demand zone of 61.70-75 yesterday. As long as it stays above 61.65-75, we may expect higher levels. Having said that, any failure to rally above 62.01 and 62.08 would bring the weakness back.
The US 10Yr (2.86%) rose a little yesterday. Charts show that it is testing support at current levels and if that holds we may see a bounce from here towards 3.00%.
The German 10Yr (1.76%) also rose. It is moving in a sideways trend between 1.70% and 1.85% and can target support near 1.65%-1.70%. The German-US 10Yr spread (-1.12%) fell further towards our target of -1.20%.
The Japan 10Yr (0.68%) has been rising over the last 2 days. It can target the resistance near 0.72%-0.73%. The US-Japan 10Yr yield spread (2.17%) has dropped and can target 2.10%.
The Indian 10Yr GOI yield (8.60%) rose yesterday after falling since 27th December 2013 from 8.96%. In a near term downtrend it can target 8.50%-8.45% but if this sudden rise holds we may see it rising up to 8.70%-8.75%.
9:00 GMT or 14:30 IST Euro Area Monthly Balance of Payments
... Previous - 21.80 EUR Bln
15:00 GMT or 20:30 IST US Existing Home Sales
...Expected 4990 K ...Previous 4900 K
...Expected 0.50 % ...Previous 1.20 % ...Actual 0.80%
...Previous <0.10 % ...Actual <0.10 % ...Previous <0.10 %
UK BOE Minutes
...Expected 0-0-9 % ...Previous 0-0-9 % ...Actual 0-0-9 %
...Expected 7.30 % ...Previous 7.40 % ...Actual 7.10 %
...Expected 1.00 % ...Previous 1.00 % ...Actual 1.00 %
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