Thursday May 15, 2014 - 03:29:35 GMT
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FX Thoughts for the Day - www.fxthoughts.com
Morning Briefing : 15-May-2014 -0329 GMT
Almost all Equity indices went into a pause mode yesterday with very narrow price movements. The overall trend remains bullish, though. There are some chances that today will also be relatively quiet during the day. Watch EU GDP, EU CPI, US CPI and US Industrial Production today.
The Nifty (7108.75) closed flat yesterday can trade anywhere between 7025-7200 today. Dips may attract Buyers. The Dow (16613.97) saw some profit-taking yesterday, but has strong Support at 16500 within the overall uptrend. The Dax (9754.39) was very very quiet after the strong rise the day before and seems to be gearing up for a rise past 9800 soon. Today's EU GDP and CPI could be a trigger.
The Nikkei (14279, -0.88%) has come down alongwith Dollar-Yen (101.82) within its overall downtrend. The Shanghai (2041) continues to see near term profit-taking but has potential for an eventual rise past 2050 to target 2070-2100. Can find Buyers on dips into the 2035-20 region.
Silver rises on news that the London Silver Market Fixing Ltd will end its Silver price fixing in mid-August while Gold is up on sharp fall in the US equities. Oil prices continue to rise on Ukraine tensions and on declining Cushing inventories.
Gold (1304.36) has risen sharply and need to break 1307 to rise towards 1315-1317 from where we may see some downward correction to 1300. However, a break above 1317 may target 1320. Silver (19.75) has finally risen above the crucial 19.66-19.70 region and if this sustains we may see a rise towards 20.5 in the near term. Overall we may see a short term rally within the long term downtrend.
Copper (3.1470) rose from the channel support and may now head towards 3.20 in the near term. It is in an upward rally since mid Mar’14.
Brent (109.17) is trading near crucial support levels of 109.16 and if this holds we may see a rise to 109.8-110.58 while WTI (102.05) has also risen. WTI may target 103.6-103.7 which if breaks would rise further towards 105. Overall near term looks bullish.
Pound (1.6775) was the big mover yesterday, falling from 1.6875 in a couple of hours to 1.6758, as the wage hike component of the UK Unemployment data came in lower than expected. This is a surprise to us as we were expecting 1.6800 to provide support. A test of deeper Support at 1.6706 is likely now. Need to see if that holds or breaks.
The Euro-Yen (139.72) is falling towards 139.50-25, as expected. This needs to hold in order to keep Dollar-Yen (101.83) above crucial Support at 101.60. If so, we can expect consolidation between 101.60-102.20 for Dollar-Yen for a few days before the next trending move is decided. However, the Euro (1.3720) is likely to remain under pressure with chances of resumption of fall towards 1.3625. Watch interim Support a 1.3670, though. That needs to break to bring up 1.3625.
The Aussie (0.9365) saw profit-taking above 0.9400 yesterday. Failure to rise past 0.9400 can, potentially, lead to a dip towards 0.9325.
Dollar-Rupee opens after yesterday's holiday. The NDF market seems to be quoting near 59.50. The fall in US Yields yesterday could pressure Dollar-Rupee lower. A break below 59.40 can lead to a further fall towards 59.00-58.80.
Yields have fallen globally.
The US 5Yr (1.57%) has broken below the support. The 10Yr (2.55%) is testing support while the 30Yr (3.38%) is trading just above support. The US 10-5Yr yield spread (0.98%) has come to test support on the weekly line chart. A rise from here will suggest a bounce for the 10Yr from the support at current levels and a further fall for the 5 Yr. Need to watch out for the US CPI data today for further indication.
The German – US 2Yr differential (-0.28%) has dipped further and the Euro (1.3720) saw a slight up move from the support near 1.37. A bounce from here can take it higher and we may see the yield differential go up. The German 10Yr (1.37%) has fallen below our target level of 1.40% and may now target support near 1.20%.
The US-Japan 10Yr yield differential (1.96%) has fallen further as the Dollar-Yen (101.82) came down to test support near current levels. The Japan 10-5Yr yield spread (0.41%) has fallen below the support thereby a fall in the Japan 10Yr (0.59%). The Japanese economy saw an accelerated growth in the 1st Quarter as the GDP grew at an annual rate of 5.9%.
The Indian Markets were closed yesterday. The 10Yr GOI (8.78%) is trading near 8.80%. A break above 8.80% and we may see it target 8.90%-9.00%. But we need to see how the markets react after the global fall in the Yields.
23:50 GMT or 5:20 IST JP GDP
...Expected 1.0% ...Previous 0.20% ...Actual 1.5 %
6:30 GMT or 12:00 IST IN WPI
...Previous - 5.70 %
9:00 GMT or 14:30 IST EU GDP
...Expected 0.40 % ...Previous 0.20 %
9:00 GMT or 14:30 IST EU CPI (YoY)
...Expected 0.70 % ...Previous 0.47 %
12:30 GMT or 18:00 IST US Core CPI (MoM)
...Expected 0.20 % ...Previous 0.35 %
13:00 GMT or 18:30 IST US TICS (Net foreign purch of long-term Sec)
...Expected 47.30 $ Bln ...Previous 85.74 $ Bln
13:15 GMT or 18:45 IST US Industrial Production
...Expected 0.40 % ...Previous 0.68 %
13:15 GMT or 18:45 IST US Capacity Utilization
...Expected 79.20 % ...Previous 79.20 %
14:00 GMT or 19:30 IST US Philifed Index
...Expected 13.90 ...Previous 16.60
...Expected 6.80 % ...Previous 6.90 % ...Actual 6.80 %
EU IND Prodn (MoM)
...Expected -0.30 % ...Previous 0.20 % ...Actual -0.30 %
EU IND Prodn (YoY)
...Previous 1.71 % ...Expected 1.00 % ...Actual 0.50 %
US PPI ex Food & Energy (MoM)
...Expected 0.20 % ...Previous -0.05 % ...Actual 0.21 %
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