Friday March 7, 2014 - 03:41:45 GMT
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FX Thoughts for the Day - www.fxthoughts.com
Morning Briefing : 07-Mar-2014 -0340 GMT
The Nifty is rallying hard on electoral expectations and improving domestic fundamentals even when the global markets are consolidating after some sharp rally.
Nikkei (15220.05, +0.56%) reached our target resistance of 15200-300 in a jiffy and may turn range bound once again inside the broader range of 14600-15300.
Shanghai (2062.74, +0.15%) is testing the upper end of the range of 2030-2075. Staying above 2080, it may try to rally further to 2095-2115.
Nifty (6401.15, +1.15%) firmly closed above 6340-60 to open a rally towards our broader target resistance of 6500. The bullish momentum remains intact above 6340-60.
Dow (16421.89, +0.38%) is consolidating near the old resistance of 16400 and it requires a successful break above 16400-600 to rise towards 17000 soon.
Gold (1349.29) is trading higher and seems to be ranged since the past 3-days. While above 1324.44 we expect an eventual rise to 1360. Silver (21.52) has shown a rise after being ranged for the last 5-sessions. A sustained move above 21.5 could take it higher to 22-22.2 while support in the 21-21.5 region holds well.
Copper (3.2105) remains ranged while support near 3.20 holds for now. We are bullish in the near term targeting 3.25-3.30.
Brent (108.30) rose above support near 108 and while this holds we may see an eventual rise to 109-110 in the near term.
Nymex WTI (101.71) fell further to 100-day MA near 100.16 but bounced up from there to 101.99 levels. Currently testing resistance near 102, if it breaks above, could rise further to 103.00-30 levels.
ECB kept the rate unchanged and expressed hope of inflation rising in the coming days. This boosted Euro considerably and Dollar weakened against most currencies.
Dollar Index (79.66) is trading below the support zone of 79.80-70 and the door to 79.10-78.60 or even 78 has opened now. Every corrective rally till 80.30 may face selling pressure. The long term trend may get severely bearish below 79.10.
The Euro (1.3860) is trading in the major resistance band of 1.3850-85 and if it manages to break above this, it can rise further to 1.3950-1.4050. Above 1.4050-1.41, the long term trend will turn firmly bullish. But, the Bund-Bond Yield Spread is not supportive. So, this needs to be watched.
Dollar-Yen (102.97) has reached our second target of 103 and but still remains stuck in the broader range of 101-103. The bulls have to break this range and break above 103.50 for momentum.
The Euro-Yen Cross (142.71) broke out of the range of 138.80-141.30 to reach 143. The long term uptrend may have resumed and it may rise further towards 145.50-146 now.
Pound (1.6719) has bounced back from 1.6640 as expected and the rise may extend to 1.68. It 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 (0.9087) has broken out of the range of 0.89-0.91 on the upside and opened the possibility of a rally towards 0.93 or even more. Support comes at 0.9050 now.
Dollar-Rupee (61.11) crashed beyond our support of 61.50-30 to reach 61.10 and may extend the drop to the 3-month low of 60.80 in the opening hours. If the bulls canít manage a bounce from the 60.90-80 zone, we may see further drop to 60.60-50.
The US 10Yr (2.73%) has moved well above 2.70% and as such the 2.60-2.80% range we've been talking about has good chances of coming through. The market awaits the US NFP today. Expecation is near 149-151K. A number below this could be taken badly as it would force people to reasses their growth outlook.
The 10Yr Bund-Bond Spread (-1.1%) has moved a little lower, but the Euro (1.3860) is trading higher on Draghi's assesment that growth could bring deflation fears down. He upped the forecast for 2014 growth to 1.2% from 1.1% earlier. The 10Yr US-Japan Spread (2.11%) has increased and looks like it can rise further. This would provide continuing support to Dollar-Yen (102.96).
India's 10Yr GOI (8.79%) has come off a decent bit from the level of 8.92% (27-Feb, last Thursday) on good inflows into the Debt market, possibly based on the stability/ strength of the Rupee. While some more dip to 8.70-65% may be seen, we have to watch whether the yield breaks below 8.60% in a sustained manner. If not, we could see Yields rising again. This one needs to be watched.
13:30 GMT or 19:00 IST US NFP
...Expected 151 K ...Previous 113 K
13:30 GMT or 19:00 IST US Unemployment Rate
...Expected 6.60 % ...Previous 6.60 %
13:30 GMT or 19:00 IST US Trade Balance
...Expected -39.10 $ Bln ...Previous -38.70 $ Bln
13:30 GMT or 19:00 IST CA Labour Force
...Previous - 29.40 K
Australia Trade Balance
...Expected 0.11 Bln ...Previous 0.59 Bln ...Actual 1.43 Bln
...Expected 0.50 % ...Previous 0.50 % ...Actual 0.50 %
...Expected 0.25 % ...Previous 0.25 % ...Actual 0.25 %
...Expected 56.70 ...Previous 56.80 ...Actual 57.2
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