Friday January 31, 2014 - 03:29:18 GMT
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FX Thoughts for the Day - www.fxthoughts.com
Morning Briefing : 31-Jan-2014 -0328 GMT
Most of the Asian markets are closed today on account of the Chinese New Year.
Dow (15848.61, +0.70%) bounced from the major support zone of 15500-700 to keep the long term bulls alive yet but needs to break above 15950 and then 16200 to confirm the strength. Below 15500-700, we may see the fall extend to 14700-800.
Nikkei (15024.38, +0.12%) has signaled the end of its bull market from late 2011 which is yet to be confirmed by Yen. It has failed to break above 15600-700 and testing the final support of 14700-900, below which it may target 13700 and 13200.
Shanghai (2035.01, -0.17%) is closed for today. It 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 2080-90 and then 2150 to break the longer term downtrend it is trapped in.
Dax (9373.48, +0.39%) has taken a pause near 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. To regain strength, it has to break above 9450-600.
Nifty (6073.70, -0.76%) managed a decent pullback from the day low of 6027 to recover some of its loss but clearly it is not enough. The weakness is visible everywhere now and all the rallies may face significant selling pressure, especially near the levels of 6100-10 and 6150-80. The targets of 5970 and 5920 remain open.
Precious metals have declined reacting to the positive US economic data while the oil market remains stable.
Gold (1242.60) has fallen below 1250 but faces support on the weekly charts. If it is unable to rise above 1250 and sustain those levels we may see a fall to 1235.
Silver (19.1550) has also fallen sharply and may test crucial support in the 19-18.5 region.
Copper (3.2220) continues its downfall from 3.42 and has almost come close to our target of 3.20 from where it may bounce back to 3.25-3.30 levels. A break below 3..20 (if seen) would take it further down to 3.10.
Brent (107.86) remained stable with no major movement. It may consolidate in the 106-108.5 regions before an eventual rise towards 108.5.
The Dollar Index (81.07) rose sharply while remaining inside the broader range of 79.70-81.50. But all the rallies and drops inside this contracting range can be ignored as any significant major move would be expected only beyond the broader range of 79.70-81.50.
The Euro (1.3550) accelerated its fall to test the important support zone of 1.35-1.3540 after failing to break above the major trend decider level of 1.3750 in line with our expectation. A break below 1.35 may drag it down to 1.33 and 1.31 fast.
Dollar-Yen (102.18) is consolidating near the bull market defining support level of 101.50-101.90 but for the strength to return, it must break above 103.70-90 and 105.
The Euro-Yen Cross (139.23) was rejected sharply from our resistance of 141.50 to reach our target of 139 as the weak structure mentioned before showed its true color. The fall may extend to 138.45 and 137 below that while remaining below 141.50.
The Pound (1.6480) remains in its own world as a comparative outperformer and may trade in the range of 1.6350-1.67 for some time more.
The Aussie (0.8796) 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 (62.56) has weakened after achieving our target of 62.85 and may trade in the range of 62-63 for a couple of sessions more. 62.90-63.05 will continue to be a major resistance and support may be expected near 62.45-40 initially and then in the 62-61.75 band.
The US 10Yr (2.70%) saw a rise as expected, after falling sharply the day before. The US 10Yr is trading at the support at 2.70% and can bounce from here to go up to 2.80% or higher.
The German 10Yr (1.71%) dipped and is trading just on the support at current levels. A bounce from the support and we may see it going up to 1.75%-1.80%. The German-US 10Yr spread (-0.96%) rose past the resistance near -0.94%. We may see it going up to -1.00%.
The Japan 10Yr (0.62%) remained stable. It has been consolidating in the range of 0.60%-0.65% for the last few sessions. It can drop further to target support near 0.50%. The US-Japan 10Yr yield spread (2.08%) has also remained stable. We may see a bounce towards 2.15% if it is able to recover from here or else a drop to 1.95%.
The Indian 10Yr GOI yield (8.82%) saw a rise and moved past our target of 8.80% as mentioned yesterday. We can expect the yield to go up to 8.90
23:15 GMT or 04:45 IST JP PMI
...Previous 55.20 ...Actual 56.6
23:30 GMT or 05:00 IST JP Unemp
...Expected 3.90 % ...Previous 4.00 % ...Actual 3.70%
0:05 GMT or 05:35 IST UK Cons Conf
...Expected -10 ...Previous -13 - ...Actual -7
0:30 GMT or 06:00 IST AU PPI
...Expected 0.70 % ...Previous 1.30 % ...Actual 0.2%
13:30 GMT or 19:00 IST US Personal Income
...Expected 0.20 % ...Previous 0.21 %
13:30 GMT or 19:00 IST US PCE Price Index M/M
...Expected 0.20 % ...Previous 0.54 %
13:30 GMT or 19:00 IST CA GDP
...Expected 0.20 % ...Previous 0.30 %
US FOMC Meeting
...Expected <0.25 % ...Previous < 0.25 % ...Actual < 0.25 %
CN Final Manfng PMI
...Expected 49.60 ...Previous 50.50 ...Actual 49.50
EU Biz Climate
...Expected 101 ...Previous 100 ...Actual 100.90
...Expected 3.20 % ...Previous 4.10 % ...Actual 3.20%.
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