Tuesday April 29, 2014 - 03:23:32 GMT
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FX Thoughts for the Day - www.fxthoughts.com
Morning Briefing : 29-Apr-2014 -0322 GMT
The Dow (16448.74, +0.53%) has tested 16300 as expected before bouncing as it finished the 10th week of trading in the range of 16000-16600. The bulls still need a new high above 16650 to confirm the resumption of the uptrend.
The Dax (9446.36, +0.48%) dropped lower once again after failing to break above our resistance of 9720. This rangebound movement inside the broad range of 9050-9720 may continue for some more time before a breakout.
In the Asia-pac, Shanghai (2006.47, +0.15%) broke below our support of 2050-35 and may reach the 1985-75 levels once again. The 2035-50 area is going to act as a good resistance now above which 2080 stands as the trend decider zone.
The Nikkei (14288.23, +0.00%) has reached close to our target zone of 14200 with the risk of falling further to 14000-13900 after facing selling pressure from the strong resistance of 14675-700 with the Yen weakening a bit more. The trend remains weak below 14675-700. But a break above 14700 will take it higher to 15000. Bias is neutral now.
Regarding the Nifty (6761.25, -0.32), the strength will return on a break above 6820 only and till then buyers may remain subdued. In this pause mode, we may get another 40-60 point rise first before any major fall comes. As mentioned earlier, we keep watching the support area of 6740-20.This sharper correction has brought the possibility of a sideways move between 6650-6850 for the next few days.
Gold (1295.47) came off from 1306.4 but is trading within crucial levels of 1295-1310 while within the overall downtrend. A break above 1310 may trigger a sharp rise to 1400 else it may target 1280 on the downside.
Silver (19.54) remains ranged and is currently trading near crucial levels. It may rise to 20-20.5 while above 19 but a break below 19-18.5 may trigger a sharp fall to 16.5-16.
Copper (3.1080) came off slightly from channel resistance near 3.139 on the daily but while above 3, it may target 3.15-3.17 in the near term.
Brent (108.25) fell sharply on news that Libya prepared to resume oil exports and supplies from Indonesia and Malaysia seems threatening. If the fall continues it may target 106.5 on the downside from where it may again rise towards 110-112.
Nymex WTI (100.88) is stable for now, testing crucial support near 100.76 and if this holds we may see a rise targeting 104-105 in the near term. But a break below 100 (if seen) may push it to 98-96. Note it is in an uptrend since Janí14.
Dollar Index (79.6560) is stuck in the narrow range of 79.50-80.00 for the last two weeks and the broad range of 79.25-80.50 may remain in force for some more time. Only on a break above 80.55-60, the trend will reverse from down to up. A break above 80.15 would be an initial sign of strength.
The Euro (1.3860) is trading inside 1.3785-1.3880 for the last two weeks and this narrow range may break this week giving birth to a trending move towards either 1.3755 on the lower end or 1.4000-30 on the upper end.
Dollar-Yen (102.50) is testing the resistance of 102.75 above which further rise to 103.00-40 is possible. It has managed to hold above 101.50-20 so far to remain in the 10 week long broad range of 101-104. We keep watching the long term support at 101.00-100.50 for major moves.
The Euro-Yen Cross (142.08) has broken out from the range of 140.00-142.00 for a major directional move and may now reach 143.00-25 initially and then 144.00-145.50 canít be ruled out.
Pound (1.6813) is trading inside the narrow range of 1.6750-1.6870 just like the other major currencies. To reach 1.7000-50 in the next 1-2 weeks, it must break above 1.6870. The short term momentum remains intact above 1.6730-1.6695.
Aussie (0.9238) is falling in line with our expectation as it remains in a weak state and may face selling pressure on all rallies now till it manages to break above 0.9380-0.9400. Major supports are at 0.9160-30.
Dollar-Rupee (60.6450) bounced from our support of 60.40. The strength in Euro & other EM currencies may make Dollar Rupee retest the support area once again and if 60.40 remains unbroken, then the bounce may extend to 60.80-90. But a break of 60.40 may push it down further to 60.20. The probability of either occurrence stands at 50%.
The US 10Yr yield (2.71%) has risen above 2.70% and can target 2.85% in the near term if it breaks above 2.75%. The US 5Yr yield (1.75%) also saw a slight rise and the 10-5Yr yield spread rose to 0.96%. The two day FOMC Meeting will conclude tomorrow and they are expected to keep the main policy rates unchanged and cut the bond purchases by another $10 Billion.
The German-US 2Yr spread (-0.26%) and the 10Yr spread (-1.22%) remained stable yesterday while the Euro (1.3860) rose to test the resistance near the upper limit of our range of 1.3785 - 1.3865. The German 10Yr yield (1.50%) rose and is testing resistance at current levels. It is vulnerable to a fall to 1.45% while below 1.50%. A break above 1.50% can take it higher towards 1.60%.
The US-Japan 10Yr spread (2.11%) bounced from the support near 2.06% as expected moving in perfect co relation with the Dollar-Yen (102.50) which also saw a bounce. The Japan 10Yr yield (0.61%) is testing resistance at current levels. A break above the current resistance can take it towards 0.65%. The Japanese markets are closed today. We have the BOJ Meeting tomorrow and it is expected that the BOJ will keep its main policy rates unchanged.
The Indo- US 10Yr spread (6.18%) dropped after the bounce from the support near 6.15%. The Indian 10Yr GOI yield (8.86%) also dropped. It can maintain a range of 8.75% - 9.00%. A break beyond this range will give us further direction.
8:30 GMT or 14:00 IST UK GDP
...Expected 0.90 % ...Previous 0.68 %
9:00 GMT or 14:30 IST EU Biz Climate
...Expected 103.00 ...Previous 102.40
13:00 GMT or 18:30 IST US Case Schiller
...Expected 13.00 % ...Previous 13.24 %
14:00 GMT or 19:30 IST US Cons Conf
...Expected 83.00 ...Previous 82.30
No major data release yesterday.