Friday February 14, 2014 - 03:25:10 GMT
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FX Thoughts for the Day - www.fxthoughts.com
Morning Briefing : 14-Feb-2014 -0324 GMT
Dow (16027.59, +0.40%) has risen close to our resistance zone of 16100-200. If it manages to break and stay above 16100-200 now, then the expected resumption of downtrend may get negated. Right now it is not clear if the current rally is a new upmove or just a correction of the last fall.
Nikkei (14570.24, +0.24%) as expected, faced selling pressure exactly from our major supply zone of 14850-15100 as it remains in a bear market. Bulls may attempt a fight back from the 14430 or 14310 area.
Shanghai (2101.43, +0.14%) is struggling near our resistance of 2120-30 above which it may rally towards 2165-85. Bears may attempt once again to push it down from 2120-30.
Dax (9596.77, +0.60%) broke above our resistance of 9300-80 and reached our upper limit of 9500-50. There is a fair chance that the bears may attempt to return here at 9620-50 but the clarity will come in the next couple of sessions.
Nifty (6001.10, -1.36%) has confirmed the resumption of its downtrend. It may open higher today on the back of global cues but that might be taken as a selling opportunity by the major participants. 6030-55 is a strong resistance now above which the major area of 6100-10 still remains.
Gold (1304.943) and Silver (20.705) are both rallying upwards and have risen above the upper level of crucial resistance zones of 1300 and 20.5 respectively. The rise in Silver has been relatively sharper bringing down the Gold/Silver ratio to 62.996. While the rally continues Gold may target 1325 (while above 1302.80) and Silver may move towards 20.98-21.5.
Copper (3.2535) has risen slightly but remains ranged for now. It is testing support on the weekly charts and may rise targeting 3.30-3.35 in the coming weeks.
Brent (108.65) has bounced from support near 107.64 and has managed to avoid a fall below 107.60. But if it does not rise in the next few sessions, it may fall towards 107. We may see movement within 108.017-108.92 regions in the next few sessions.
Nymex WTI (100.41) has paused after its recent rise from 97.1and is trading sideways. It may remain ranged within the broad 99-101.5 for sometime before a major move. Overall it is in an uptrend for the last 1-month.
The lack of strength in the Dollar Index (80.2750) was mentioned yesterday and it has dropped to the support of 80.15-20 now, below which testing the major support of 79.60-70 is possible. The bulls must act right here right now to keep it range bound at the higher trajectory and take it higher towards 80.75-80.
The Euro (1.3677) is testing our short term trend decider level of 1.3690 for the second consecutive day. If Euro manages to break above 1.3690 and 1.3750 soon, it may rally quickly towards 1.38-1.39. Failing to break above 1.3690 would invite the bears.
Dollar-Yen (102.10) bounce has stalled near 102.50 above which it may extend it to103.50 but the resumption of downtrend may have resumed but the old demand zone of 101.60-70 is providing support for now. Below 101.60-70, we may see 101.20-100.75 or lower again.
The Euro-Yen Cross (139.57) has achieved our next target of 140.35-40 and now it has to break and stay above 140.40 to rise further towards 142. Otherwise it may correct to 138 before any more rally. It has bounced from a major monthly trendline support at 136.20 to break above 138 to negate any immediate fall.
Pound (1.6652) has signaled the next phase of the major uptrend has resumed and now it may reach 1.6750-1.7050. All the dips till 1.6460-10 may be bought into.
The Aussie (0.9009) faced sharp rejection from our major resistance of 0.91 and bounced from 0.8925 levels in line with our expectation but the strength still remains suspect. Below 0.8925-0.89 it may reach 0.8830-0.8730.
Dollar-Rupee (62.42) may open lower near 62.25-30 today. Holding above 62.25-15, the strength remains intact for further rally. Below 62.15, the support of 62.05-62 may be retested.
The US 10Yr (2.74%) remained unchanged after a weak Retail Sales data yesterday testing resistance at current levels. A break above it and we may see it going up to 3.00%. The 10-5 Yr differential (1.23%) is in a near term uptrend suggesting a rise in the 10Yr yields.
The Political uncertainty in Italy affected all the European markets and all major European yields dropped. The German 10Yr (1.67%) dropped and the 10-5Yr yield differential (1.0101%) is up and trading just above the support at 0.99%-1.00%. The German-US 10Yr differential (-1.02%) has moved up but a fall to the support near -1.10% cannot be negated. The UK 10Yr (2.79%) also declined. The 10-5 Yr differential (1.10%) has been pushed back from the resistance at 1.13% suggesting a drop in the 10Yr yields.
The Japan 10Yr (0.59%) fell below 0.60% after trading in the 0.60% - 0.62% range for almost 3 weeks. The US-Japan 10Yr spread (2.14%) is trading just at the support near 2.14%and can target 2.20%.
The Indian 10Yr GOI yield (8.86%) rose further yesterday. The Indian market reacted more to the falling Industrial Production rather than the improved CPI. The 10Yr rose with the rise in Dollar –Rupee and we can expect the yields to go above 9.00% if Rupee weakens further.
1:30 GMT or 07:00 IST CN PPI (YoY)
...Previous -1.40 % ...Actual -1.6 %
1:30 GMT or 07:00 IST CN CPI (YoY)
...Previous 2.50 % ...Actual 2.50 %
6:30 GMT or 12:00 IST IN WPI
...Previous 6.16 %
10:00 GMT or 15:30 IST EU GDP
...Expected 0.20 % ...Previous 0.10 %
10:00 GMT or 15:30 IST EU Trade Bal
...Previous - 16.00 EUR Bln
14:15 GMT or 19:45 IST US Industrial Production
...Expected 0.20 % ...Previous 0.30
14:15 GMT or 19:45 IST US Capacity Utilization
...Expected 79.4 % ...Previous 79.20 %
Australia Labour Force
...Expected 15.30 K ...Previous -22.98 K ...Actual -3.66 K
US Retail Sales
...Expected 0.20 % ...Previous 0.28 % ...Actual -0.01 %
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