Tuesday March 4, 2014 - 03:29:56 GMT
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FX Thoughts for the Day - www.fxthoughts.com
Morning Briefing : 04-Mar-2014 -0329 GMT
The global equity markets suffered from a bout of profit-taking yesterday in a knee-jerk reaction to the Ukraine situation but seems to be recovering today.
Most Asian markets are trading in the positive territory today, though not in a big way. Nikkei (14698.52, +0.32%) is trading above the resistance of 14600 and staying above 14600-500, may try to extend it higher towards 15000-200 now. Shanghai (2062.81, -0.60%) is consolidating a bit after the sharp rally from 2015-20 to 2080. After the consolidation, it may rise higher towards 2100-2110.
Nifty (6221.45, -0.88%) came down to test the support of 6210-15 in sync with the other markets. We have to see if 6210 holds in the early trading which may produce a bounce again to 6270-6300 but a break below 6210 would drag it down to 6160-70.
Dow (16168.03, -0.94%) corrected most in over a month after facing resistance at 16400. The selling pressure was not sufficient to call it a major reversal yet but we will be watching the price action at the supports of 16000 and 15600-700 to ascertain the real strength.
Gold (1350.60) stretches its rally targeting 1400 as the Ukraine turmoil raises demand for the metal. May see a little pause near 1361.86-1362 levels but overall would remain bullish.
Silver (21.479) is stuck near the 21.5 levels after coming off from 21.72 yesterday. May remain a little ranged near 21.5 levels for some time before resuming its rally towards resistance near 22-22.20.
Copper (3.1695) has fallen further strongly hit by the weak Yuan and the not so good Chinese data negating all bullish expectations. There is now danger of a fall to 3.15-3.10 levels if it does not rise back to 3.20 and above in a few sessions.
Brent (111.24) fluctuated highly making an intra-day high of 112.39 but came off from there to close below 111.3 levels It is testing resistance near 111.28-30 above which it may target 112.5. In the longer term we may expect 114 levels.
Nymex WTI (104.89) has risen further above 104.4 targeting 106 in the near term. Overall trend remains up.
Dollar Index (80.14) has bounced from the old support zone of 79.80-70 as expected and it may attempt to rise to 80.45-50 again. Keep an eye on 79.70 for any major downmove as a break below 79.70 may drag it down to 79.10-78.90.
The Euro (1.3727) has failed to break above our major resistance of 1.3850 to weaken and this failure keeps it rangebound between 1.3850-1.3650. Major support comes at 1.3550-75.
Dollar-Yen (101.61) remains stuck in the broader range of 101-103 as the bulls manage to hold the support of 101.15 mentioned before. A sustained move above 101.60-70 may produce further rise towards 102.50-103.
The Euro-Yen Cross (139.48) reached our target of 141 before retreating to consolidate between 138.80-141.30 once again which may continue for some more time.
Pound (1.6648) is in a correction of its major uptrend 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 (0.8941) 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. It may bounce towards 0.90 once again holding above 0.89.
Dollar-Rupee (62.04) held above our support zone of 61.80-70 to keep the possibility of a rally to 62.40 alive. It must break above 62.17-22 to confirm the strength and rise further towards 62.45-50.
The German-US 10Yr Spread has actually dipped to -1.06% instead of moving up towards -0.90% as the German 10Yr (1.55%) has fallen rather than the US 10Yr. This suggests, safe-haven money may be moving into Bunds rather than Bonds.
The US-Japan 10Yr spread (2.03%) has come down further. We have to see whether we get a follow-through break below 2.0% or not. A break below 2.0% could target 1.95-90% if it happens and could keep Dollar-Yen (101.60) pressured.
All eyes on ECB tomorrrow. Our feeling is that since Draghi has already done a lot of the "whatever it takes" to save the Euro from oblivion, he may not want to trigger a rise past 1.3850-3900 especially if Yellen is dovish.
3:30 GMT or 9:00 IST RBA Meeting
...Expected 2.50 % ...Previous 2.50 %
...Previous 46.70 ...Actual 48.6
IN Manufacturing PMI
...Previous 51.40 ...Expected 53.20 ...Actual 52.50
...Expected 57.20 ...Previous 56.10 ...Actual 57.60
...Expected 53.2 ...Previous 53.0 ...Actual 53.2
...Expected 56.90 ...Previous 56.60 ...Actual 56.90
US Personal Income
...Expected 0.20 % ...Previous -0.04 % ...Actual 0.31%
US PCE Price Index M/M
...Expected 0.1 % ...Previous 0.06 % ...Actual 0.41%
US Manufacturing ISM
...Expected 52.30 ...Previous 51.30 ...Actual 53.2
...Actual 48.5 ..Previous 48.3 ...Expected 48.5
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