Thursday February 6, 2014 - 04:10:52 GMT
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FX Thoughts for the Day - www.fxthoughts.com
Morning Briefing : 06-Feb-2014 -0408 GMT
Most of the markets remain unchanged but in a bearish consolidation pattern and may resume the downtrend by today or tomorrow.
Dow (15445.24, +0.47%) continued its pause mode for the second day before the Jobs data but 15650-700 may resist any bounce for now. It has shown the first sign of losing momentum since the 2009 bottom and opens the door towards 14700-900 initially with short rallies interrupting the fall. Equality with the 2011 correction gives a medium term target of 14100-13900 but even 13400 might be in cards now.
Nikkei (14196.65, +0.11%), in a confirmed bear market now, is testing our support of 14000 now. All rallies till 14850-15100 will face selling pressure. Below 14000, our targets of 13700 and 13200 may be achieved quickly.
Shanghai (2033.08, -0.27%) remains closed till 6th February. 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 (9116.32, -0.13%) is making a Triangle pattern with high possibilities of resuming the fall again towards 8950-8850 any moment now. At the higher levels, the bears are waiting at 9300-60.
Nifty (6022.40, +0.36%) may face hard challenge in the higher levels of 6050-75 as the sectoral indices like BankNifty and CNX IT gets closer to their respective major resistances of 10300-400 and 9760-85. The price action there may determine the direction for the rest of the week. Please note that the structural damage is extensive and may not be repaired in 2-3 daysí rally.
Gold (1255.73) came off sharply from the crucial resistance near 1274.40. It is ranged for now and may consolidate in the 1250-1274 regions. A break above 1274.42 could take it higher to 1295-1300 in the coming weeks. Silver (19.917) has risen and targets 20-20.5 in the near term.
Copper (3.1990) is trading above the support near 3.1775 and may target 3.35 in the near term if it rises past 3.25. Rise could be slow with some ranged movements in the 3.19-3.25 regions.
Brent (106.25) is trying hard to remain above 106 and may consolidate within 105-106.5 for some time before we see an eventual rise past 107.
Nymex WTI (97.56) remains ranged with high fluctuation in the 96.2-98.25 region and has come off from the 50-day MA. A rise past 98-98.25 may take it higher towards 100-102 in the near term.
The Dollar Index (81.04) has not been able to break the higher end of the 3 month long range of 79.70-81.50 in a repeat show of the same movie though remaining in a short term uptrend inside the broader range. A successful break above 81.50 may take it to 81.85-90 and then 82.50-60. The US Jobs data tonight may provide a directional move.
The Euro (1.3517) is trading inside a Bearish Flag pattern as it tests the resistance zone of 1.3540-75 now and fall towards 1.33-1.31 if it breaks below 1.35 now. The bearish momentum may increase below 1.35 while any possible bounce may face good selling pressure.
Dollar-Yen (101.47) is firmly trading below the bull market defining support level of 101.50-101.90 to signal the bear market. Staying below 102.50-103.50, we may see a journey towards 98 in the coming days.
The Euro-Yen Cross (137.31) achieved our second target of 137 too and got closer to the major support of 135. No sign of strength is visible yet and all rallies may face good selling pressure. A failure to break above 138 may bring immediate fall.
Pound (1.6309) is moving sideways with no strength visible and may fall further to 1.6175-1.62. A break of 1.6170 would open a huge downside.
The Aussie (0.8968) has bounced back sharply from our support zone of 08680-0.87 which was mentioned repeatedly in this space. It is signaling a bigger rally now, which will be fully confirmed on a break above 0.90-0.91.
Dollar-Rupee (62.57) may open lower near 62.35-40 today. The bullish possibilities survive till 62.26-34 which would require a break above 62.81 later. Below 62.26, Dollar Rupee may turn weak and may fall to 62.10 and then 61.70.
The US 10Yr (2.67%) rose yesterday. It is trading in the sideways range of 2.50% to 2.80%. It can target the support near 2.50% on the downside.
The German 10Yr (1.63%) dropped further before the ECB Monetary Policy announcement today and is trading just above the support at current levels. A bounce from the support and we may see it going up to 1.75%-1.80%. With the low Inflation figures markets expect that the ECB may cut its key interest rates to counter the deflation fears.
We also have the BOE Meeting today. The UK 10Yr (2.69%) is trading lower and is expected to maintain the range of 2.65% - 2.75%. There are mixed opinion in the markets as to whether BOE Governor Carney will increase the benchmark interest rates or not.
The Japan 10Yr (0.60%) is stable. A drop to test the support at 0.50% on the downside can be expected if it is unable to move past the upper boundary of our range of 0.60% - 0.65%.The US-Japan 10Yr yield spread (2.06%) is up but the target of 1.95% is still open.
The Indian 10Yr GOI yield (8.71%) rose slightly. It in ranged in between 8.65%-8.85% for now and is expected to remain in that range for the next few days.
0:30 GMT or 06:00 IST Australia Trade Balance
...Expected -0.27 $Bln ...Previous 0.08 $Bln ...Actual 0.47 $Bln
12:00 GMT or 17:30 IST BOE Mtg
... Expected 0.50 % ...Previous 0.50 %
12:45 GMT or 18:15 IST ECB Meeting
...Expected 0.25 % ...Previous 0.25 %
13:30 GMT or 19:00 IST US Trade Balance
...Expected -35.80 $ Bln ...Previous -34.25 $ Bln
15:00 GMT or 20:30 IST CA PMI
...Expected 51.30 ...Previous 46.30
EU Retail Sales
...Expected -0.70 % ...Previous 0.83 % ...Actual -1.50 %
US ADP Emp
...Expected 191 K ...Previous 227 K ...Actual 175 K
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