Tuesday February 25, 2014 - 03:29:40 GMT
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FX Thoughts for the Day - www.fxthoughts.com
Morning Briefing : 25-Feb-2014 -0328 GMT
Equities as a whole (apart fromt the Shanghai) have risen well enought through February and could see some more upside in this last week of the month. Whether the longer term trend is going to be bullish or bearish may be open to question.
Dow (16207.14, +103.84, +0.64%) has risen well and may well rise further towards 16400. The Nikkei (15053, +216, +1.46%) has also seen a very good rise, but could face some Channel Resistance in the 15100-200 region. The Shanghai (2078) is bouncing from Support at 2050, after having fallen sharply from 2175+ last week. Expect sideways consolidation between 2050-2150 for a while with a bit of an upward bias.
The Dax (9708.94, +51.99, +0.54%) has risen to test important interim Resistance. A rise past 9700-9800, if seen, could take the market up towards 10000.
The Nifty (6186) had risen well yesterday and looks like it could accelerate up towards 6300 in the near term, from where it could again fall towards 6100. While we would have done better if we had caught the rise from 6000 through February, we need to see a strong break above 6300-400 in order to consider long-term bullish scenarios.
Overall commodities are all in a near term uptrend.
Gold (1333.74) has risen targeting 1340-50 and even 1400 in the longer run. Overall it is in an uptrend.
Silver (21.85) seems to be rising eventually with little movements. It may target 22.50-23 in the near term while support near 21.48 holds.
Copper (3.2625) bounced from support at 3.226 yesterday which may take it higher to 3.35. However, a fall to 3.25-3.20 cannot be negated until it shows sustained movements above 3.25. Movements may continue to range within 3.20-3.32 for a few sessions while below 3.30.
Brent (110.48) has been fluctuating in the 110.8-108 region and may continue so while below 111.28-30. But the larger view may target 111.28-112 in the coming sessions. Above 112, a rise to 114 may be possible.
Nymex WTI (102.42) is ranged for now within crucial levels of 101.9-103.29. While resistance near 103.29 holds it could move sideways within 103.29-101.5 for sometime, before rising further to 104.
Dollar Index (80.21) has not managed to break above 80.40-45 which keeps it weak in the short term and may push it towards 80-79.90 once again. Strength will be confirmed only above 80.45.
The Euro (1.3733) is stuck in a range of 1.3685-1.775 with mixed clues and may remain inside for some more time before breaking out and determining the next direction. Remaining above 1.37, the possibility of a sharp rally to 1.3850 remains but a break below 1.3685-75 would bring the weakness back.
Dollar-Yen (102.50) is consolidating in the range of 101.75-102.75 with all rises showing weakness till now. With the medium term downtrend still in force, any rally may face supply pressure at the old resistance zone of 103-103.50. The bearish momentum will return on a break below 101.80-101.40.
The Euro-Yen Cross (140.76), like most other currencies, is rangebound between 140 and 141. It must break above 141-141.25 to reach our target of 142 and even 142.70-143 is possible in that case. Weakness may return on a break below 139-138.80.
Pound (1.6663) has signaled the next phase of the major uptrend has resumed and now it is in a small correction now which may extend to 1.6540-1.65 only if breaks the support of 1.66. It may reach 1.69-1.7050 after the current correction finishes. All the dips till 1.6470-80 may be bought into.
Aussie (0.9019) managed to hold above 0.89 and bounced to 0.9050 in line with our expectation. It remains in a broad range of 0.89-0.91 and only a breakout from this range may give a trending move with a clear direction.
Dollar-Rupee (62.07) may open flat to negative near 62.00-62.05 today. Holding above 61.95-62, it may try to rise towards 62.17-22. But a break below 61.95 may drag it down to the major support zone of 61.80-70. Strength will be back only on a break above 62.20-25. Dollar Rupee may remain in a range of 61.40-62.70 for the next 2-3 weeks.
The US 10Yr (2.74%) is currently trading at the resistance zone of 2.73%-2.75%. With the 10-5Yr yield differential (1.19%) starting to fall we may see the 10Yr consolidating in a sideways range of 2.50%-3.00%.
The German 10Yr (1.68%) rose slightly yesterday but the trend shows that it is consolidating sideways in the range of 1.65%-1.70%. We can expect a rally to the resistance near 2.00% if it is able to bounce from the support at current levels. The German-US 2Yr spread (-0.20%) remained stable and can target -0.10%. The 10Yr spread (-1.07%) also remained stable targeting support near -1.12%.
The Japan 10Yr (0.59%) has remained unchanged. In an overall downtrend it can target the support near 0.53%-0.55%. The US-Japan 10Yr spread (2.14%) remained stable and is in perfect co-relation with USD-JPY. It can target the support near 2.05% before rising to 2.20% from there.
The Indian 10Yr GOI yields (8.88%) rose and broke above 8.85% yesterday. We expect it to maintain the range of 8.75%-9.00% for now.
14:00 GMT or 19:30 IST US Case Schiller
...Expected 13.30 % ...Previous 13.71 %
15:00 GMT or 20:30 IST US Cons Conf
...Expected 80.20 ...Previous 80.70
GER IFO Business Climate
...Previous 110.60 ...Expected 110.60 ...Actual 111.30
GER IFO Business Situations
...Previous 112.40 ...Expected 112.90 ...Actual 114.40
GER IFO Business Expectations
...Previous 108.90 ...Expected 108.20 ...Actual 108.30
EU CPI (YoY)
...Previous 0.86 % ...Expected 0.70 % ...Actual 0.80%