Thursday April 3, 2014 - 03:24:24 GMT
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FX Thoughts for the Day - www.fxthoughts.com
Morning Briefing : 03-Apr-2014 -0324 GMT
The global markets are in a consolidation mode after the good rise in the last session. The Chinese government announcing stimulus and the expectation of ECB keeping the rates unchanged today may keep the positive sentiment going.
The Dow (16573, +0.24%) has tested exactly the life high at 16588 and expected to break above by tomorrow to signal the beginning of the rise to 17000 or more..
The Dax (9623.36, +0.20%) is stalling near our interim resistance zone of 9600-9650 before it can reach 9700-9900. A failure to firmly break above 9650 may generate weakness and it may return 9400-9350 levels.
The Shanghai (2058.62, -0.02%) remains in a consolidation mode. Weakness will be confirmed below 2030-20 and strength will be confirmed above 2080-85 only.
Nikkei (15076.46, +0.87%) has broken above 15000 in a show of weakening bearish momentum and may extend the rise to 15450-500 now.
Nifty (6752.55, +0.47%) continues its rally with intermittent small corrections and has already achieved our initial target of 6750-60. We keep watching the supports of 6675-60 but the rally may reach our next target 6810 now, above which higher targets will come into consideration.
Gold (1291.486) gained a bit and is trading above 1285. But does this indicate the end of the fall from 1366? We need to wait and watch. It is testing crucial support near current levels on the weekly line charts and if this holds could see a bounce to 1300-1325 in the coming weeks.
Silver (19.922) has bounced from 19.5-19.6 levels after 4-sessions of ranged movement. While above 19.6 it may target 20.5 eventually. However, for now we cannot negate a fall to 19.5-19 if it breaks below 19.6.
Copper (3. 0247) has been ranged in the 3.00-3.08 region in the last 3-4 sessions trying to rise towards 3.15 in the near term but the bearish pressure still seems to prevail. Need to wait for a few more sessions to decide its further direction.
Brent (104.68) dropped further breaking crucial support on the weekly charts as the Libyan rebels said they had a deal to reopen oil ports. It needs to recover immediately else could face the danger of falling towards 102. The downward break in channel could be a signal for an upcoming bearish trend but we need to wait for some confirmation.
Nymex WTI (99.25) trades lower and may test support near 98.23. Crucial support on the weekly charts at current levels.
Dollar Index (80.23) is testing the upper end of the tight range of 79.90-80.35 but remains firmly on course to its way to 80.50-75 after this correction ends. Staying above 79.70-65, the strength remains intact.
The Euro (1.3759) has faced rejection from our resistance zone of 1.3810-50 and the bearish momentum may intensify on a break below 1.3700-1.3675. The next important support comes at 1.3600.
In Dollar-Yen (103.95) is testing the upper end of the 10-week long range of 101-104 and sustaining above 103.75-45 may extend the rise to 105.
The Euro-Yen Cross (143.04) has broken above 142 and looks on its way to 144-145 now keeping in line with our bullish stance.
Pound (1.6650) has achieved our initial target of 1.6650 after resuming the medium term uptrend. Now a further rise to 1.67-1.6750 may be expected with the major support coming at 1.6520-1.6500.
Aussie (0.9224) is in a mild correction after breaking above 0.92 to signal a medium term rise to 0.9380-0.94. This correction now should be limited to 0.9150-0.91.
Dollar-Rupee (59.90) is finding some short covering in the region of 59.70-60 and sustaining above 59.90 tomorrow, may try to extend the bounce to 60.20-25. Our bias remains negative till Dollar Rupee manages to break above 60.50-75.
The US 10 Yr (2.80%) and 5Yr (1.79%) have both risen above earlier crucial resistance zones as expected and we may see a further rise towards 2.90% and 1.85% respectively if they remain above 2.75% and 1.75%. The 30Yr (3.64%) has also seen a rise. We may also see the US yield curve steepening after several days of flattening.
The German-US 10yr spread (-1.22%) has dropped further taking the Euro (1.3759) down with it. The German 10Yr (1.62%) has moved above 1.60%. The ECB Meeting due today evening and it is expected that they will keep the interest rates unchanged. The fear of deflation and talks of negative interest rates is again in the air.
The US-Japan 10Yr spread (2.15%) is trending up along with the Dollar -Yen (103.95). The close co-relation may take it higher to 2.25-2.30%. The Japan 10 Yr (0.65%) is trading at our resistance zone of 0.65%-0.67%. and can target 0.70% if it manages to break above the resistance at current levels. With the 10-5Yr yield differential (0.44%) rising steadily, the rise in the 10Yr looks possible.
The India-US 10Yr spread (6.19%) has come up as expected and may test the resistance near 6.25%. The 10Yr GOI (8.96%) broke above 8.85% yesterday after the RBI decided to maintain status quo. With the India-US 10YR spread widening we may see the 10Yr GOI go up to 9.10%.
0:30 GMT or 6:00 IST Australia Trade Balance
...Expected 0.82 AUD Bln ...Previous 1.39 AUD Bln ...Actual 1.20 AUD Bln
9:00 GMT or 14:30 IST EU Retail Sales
...Expected -0.30 % ...Previous 1.56 %
11:45 GMT or 17:15 IST ECB Meeting
...Expected 0.25 % ...Previous 0.25 %
12:30 GMT or 18:00 IST US Trade Balance
...Expected -38.30 $ Bln ...Previous -39.10 $ Bln
...Expected 0.30 % ...Previous 0.30 % ...Actual 0.20 %
US ADP Emp
...Expected 192 K ...Previous 178 K ...Actual 191 K
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