Tuesday January 28, 2014 - 03:47:18 GMT
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FX Thoughts for the Day - www.fxthoughts.com
Morning Briefing : 28-Jan-2014 -0344 GMT
The global markets are taking a pause after 2-3 days of sharp fall.
Dow (15837.88,-0.26%) is consolidating near the major support zone of 15500-700 below which we may see the fall extend to 14700-800.
Nikkei (15013.01, +0.05%) hit the lower boundary of a big channel as it finished the second bout of a 1000 points fall in the last 5 weeks to signal the end of the bull market for now. Below 14700-900, it may target 13700 and 13200.
Shanghai (2029.56, -0.18%) is among the better performers in this turmoil as it has already been in a major bear market for while now and has been beaten a lot already much before the other markets came under bear grip. That said, it needs to rise past 2150 to break the longer term downtrend it is trapped in.
The Dax (9349.22, -0.46%) is testing the channel containing the entire rally for the last 6 months at the major support zone of 9300-9350 below which the fall is expected to extend to 9000 or even 8700.
The Nifty (6135.85, -2.09%) touched the lower end of the broader range at 6130-40 after a day of drastic cut. The RBI credit policy announcement today will be closely watched for the next direction but technically, the structure will remain weak despite any possible bounce. All the rallies may face selling pressure now and below 6130-40, we may expect our old target of 6075 first and then 5970 or even 5920.
Commodities are trading low.
Gold (1258.040) came off from the 100-day MA near 1276.5 while within the near term uptrend since 23rd Decí13. Physical demand for the metal seems to weaken in Asia and China which may keep a check on prices near current levels for now. Crucial resistance just above current levels on the line charts may likely take prices further down. A break above 1272-1274 would take it higher to 1280-1300 else we may see a fall towards 1235.
Silver (19.771) is ranged well within the 19.5-20.5 levels. While crucial resistance on the 3-day charts are still there, we may see an eventual fall in prices towards support near 18.5-19.
Copper (3.2650) continues to fall as the impact of the lower China PMI last Friday continues to hold strong. If this continues it may target 3.25-3.20 in the near term.
Brent (106.94) has fallen sharply and is testing 13day MA at current levels. Immediate support coming up near 106 which may take prices higher towards 108.5-110 and even 112-114 in the longer term.
Nymex WTI (95.77) came off sharply from resistance near 97.18 and is currently testing the 50-day MA support near current levels while forming a double bottom on the weekly charts. A break below 95 could take it towards 93 but while above 95 we could see some movement in the 95.5-97 region.
The Dollar Index (80.4740) remains mostly unchanged. It may attempt going higher as long as it stays above 80 and 79.70. Any major move would be expected only beyond the broader range of 79.70-81.50;
The Euro (1.3673) keeps consolidating after testing the major trend decider level of 1.3750. It must break above 1.3750 to extend the rally or else the bears may come down heavily once again.
Dollar-Yen (102.64) has managed to hold above the major support level of 101.50-101.90 so far, below which the end of the bull market will be signaled.
The Euro-Yen Cross (140.34) may extend the weakness further to the major demand zone of 138.60-139 as long as it stays below 141.50.
The Pound (1.6584) is a comparative outperformer and may trade in the range of 1.6350-1.67 for some time more.
The Aussie (0.8765) has bounced from the major support of 0.87 but must go above 0.89 to make it meaningful. Otherwise, it could be in danger of seeing a meltdown towards 0.8500.
Dollar-Rupee (63.10) achieved our target of 63 and rallied higher after taking support from the old resistance turned support level of 62.65. It will keep strong above 63 and 62.65. Upside targets are at 63.65-80. The participants will be closely watching the RBI Credit policy announcement today for further guidance.
The US 10Yr (2.76%) saw a small rise after falling for the last three sessions. It has bounced from immediate support near 1.70%. We may see the yields rising from here if the support holds or it may drop to test support near 2.50%. The consensus is that the FOMC Meeting will continue with its tapering.
The German 10Yr (1.66%) remained unchanged and is testing support at 1.65%. We may see a bounce to 1.75%-1.80% if the support holds. The German-US 10Yr spread (-1.10%) has dropped further to our target of -1.10% and can fall further to -1.15%.
The Japan 10Yr (0.62%) is stable and trading near the lower boundary of our range of 0.60%-0.70%. We may see it targeting support near 0.50% if the fall continues. The US-Japan 10Yr yield spread (2.13%) has dipped further and continues to test the support at current level. We may see a bounce towards 2.25% if the support holds.
The Indian 10Yr GOI yield (8.77%) rose further before the RBI Policy meeting today. With the low Inflation figures in December it is expected that the Central bank will keep the key interest rates unchanged. But the relatively weak Rupee (closing at 63.10 yesterday) may be a worry for the RBI as it could reignite Inflation. Overall, we see very little chances of Interest rates coming down.
5:30 GMT or 11:00 IST RBI Repo Rate
...Previous - 7.75 %
5:30 GMT or 11:00 IST RBI Reverse Repo Rate
...Previous - 6.75 %
5:30 GMT or 11:00 IST RBI CRR
...Previous - 4.00 %
5:30 GMT or 11:00 IST RBI MSF
...Previous - 8.75 % -
9:30 GMT or 15:00 IST UK GDP
...Expected 0.80 % ...Previous 0.78 %
13:30 GMT or 19:00 IST US Durable Goods Orders
...Expected 2.00 % ...Previous 3.45 %
14:00 GMT or 19:30 IST US Case Schiller
...Expected 13.70 % ...Previous 13.62 % -
15:00 GMT or 20:30 IST US Cons Conf
...Expected 78.10 ...Previous 78.10
GER IFO Business Climate
...Expected 110.20 ...Previous 109.50 ...Actual 110.60
GER IFO Business Situations
...Expected 112.20 ...Previous 111.60 ...Actual 112.40
GER IFO Business Expectations
...Expected 108.00 ...Previous 107.40 ...Actual 108.90
US New Home Sales
...Expected 457 K...Previous 445 K ... Actual 414 K
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