Monday May 12, 2014 - 03:37:26 GMT
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FX Thoughts for the Day - www.fxthoughts.com
Morning Briefing : 12-May-2014 -0337 GMT
The Dow (16583.34) and Dax (9581.45) maintained overall strength on Friday and continue to look consolidative within an overall long-term uptrend. Within that, Resistances are seen in both just a little above current levels.
As mentioned on Friday, the Oriental Indices are relatively far weaker than the Western Indices. The Nikkei (14178, -0.15%) is condoliative/ weak with some chances of dip towards 13900 this week. However, the Shanghai (2047, +1.81%) has seen a good rise from Support at 2000 and may try to rise further towards 2075-2100.
The Nifty (6858.80) had seen a solid rise on Friday but could see some profit-taking at 6910 today ahead of the opinion/exit poll results that will start coming out from the evening today.
Gold and Silver are bearish while Crude and Copper are likely to trade higher.
Gold (1286.736) has bounced a little from just above support near 1280. It is now ranged within 1280-1315 regions and may continue so for some more sessions unless we see a break above 1320. Overall near term looks bearish.
Silver (19.147) is trading just near crucial near-term Support 19.00. A bounce from here may target 20.2-20.5 levels from where it may come off to 19 again while within the longterm downtrend.
Copper (3.0955) has bounced sharply from channel support near 3.05 reaching our earlier target of 3.10 negating the bearish view. It may fall 3.10 towards 3, but if it breaks above 3.10, it my target 3.12-3.13 and even 3.15. The recent rally since from mar’14 is still in force.
WTI (100.05) has come off sharply from channel resistance near 101.17 but is testing support near current levels. A break above101.17 is required to rise further towards 102-103. Movements may range within 100-101 region for now.
Brent (108.21) is trading near support levels and may target higher levels of 109-110 in the coming weeks. But after the movement on Friday there may be a fall towards 107-107.5 before a fresh rise. Near term looks bullish.
The Dollar regained a bit of shine on Friday but may face some resistance to further gains in the near term. The Euro (1.3754) trades well below 1.3780 but immediately crucial Support at 1.3737 needs to break to allow for further decline towards 1.3700-3670. The Pound (1.6850) also saw decent profit-taking from 1.7000 last week and can fall towards 1.6700 only if Support at the current level breaks.
Dollar-Yen (101.98) remains well above important near-term Support at 101.40. Should the EURJPY (140.28) bounce from crucial long-term Support at 139.94 this week, the Dollar-Yen too might be able to climb and remain above 102.27. The overall picture vacillates between sideways range and bullishness with longer-term Support at 100.90.
The Aussie (0.9362) remains strong overall and in a broad uptrend since 0.8660 (Jan-14), but could see a consolidative dip towards 0.9260 unless it manages to break above 0.9400 early this week.
Smaller currencies (BRL, RUB, ZAR, SGD etc) may all weaken a bit against the Dollar this week. Dollar-Rupee (60.0450 on Friday) faces crucial Resistance at 60.10-15. A break above that could slowly take it higher.
The supports have held well for the US yield spreads as the 30-10Yr spread (0.83%) and 30-5Yr (1.83%) remained up after the bounce on Thursday. And also the supports for the 30Yr (3.47%) and 10Yr (2.64%) and 5Yr (1.64%) have held as the yields saw a slight rise. We may see the US yield curve steeping in the coming months if the supports continue to hold.
The Euro (1.3754) has dropped further and can now test support near 1.37. But the German – US 2Yr differential (-0.23%) continues to trade higher. The German 10Yr (1.46%) has come up above 1.45% but may still target 1.40% if it is unable to maintain this rise.
The Japan 10-5Yr yield spread (0.42%) is testing support at current levels and we may see a bounce from here taking the yields higher. The US-Japan 10Yr yield differential (2.03%) has risen slightly as the Dollar-Yen (101.98) trades higher.
The Indian 10Yr GOI (8.74%) has dipped further and is vulnerable to a fall towards 8.60% while below 8.80%. The IIP and the CPI data will be released today. We need to wait and see how the markets react to it.to a fall towards 8.60% while below 8.80%.
12:00 GMT or 17:30 IST IN IIP (Mar'14)
...Previous -1.90 %
12:00 GMT or 17:30 IST IN CPI (Apr'14)
...Previous - 8.31 %
CN PPI (YoY)
...Expected -1.80 % ...Previous -2.30 % ...Actual -2.0 %
CN CPI (YoY)
...Expected 2.10 % ...Previous 2.40 % ...Actual 1.80 %
UK Trade Balance
...Expected -9.00 £ Bln ...Previous -8.75 £ Bln ...Actual -8.48 £ Bln
CA Labour Force
...Expected 14.90 K ...Previous 42.90 K ...Actual -28.90 K