Wednesday June 11, 2014 - 03:30:22 GMT
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FX Thoughts for the Day - www.fxthoughts.com
Morning Briefing : 11-Jun-2014 -0329 GMT
The price action in Dow (16945.92, +0.02%) is somewhat reminiscent of the September 2012 top, warranting caution but if any correction doesn’t emerge from 17000-200 soon, the bulls may push the index up to 17400-600.
The Dax(10028.80, +0.20%) gives its first closing above the 10000 levels and the last correction implies long term bullish strength, implying an impending push up to 10300-400 as long as it stays above 9800-700.
The Nikkei (15028.41, +0.22%) is facing selling pressure near 15200-400 as expected. A correction up to 14700-500 could be healthy for even the bulls. The Shanghai (2051.90, -0.03%) is hitting the upper end of the contracting range 2010-55. Keep an eye on 2055 for early signal but main breakout will take place only above 2080. Note that once again a bad news is not affecting the price, which is a sign of strength.
Nifty (7656.40, +0.02%) closed above 7640 for the second consecutive day but it is yet to break above 7740-60 (rising every day). The major uptrend remains intact for a probable rise towards 8000-8200 and even 8500 would not be impossible but it is yet to be confirmed if the correction from 7680 is finished.
Gold (1262.38) has risen from 1240 levels in the last few sessions and is targeting 1280 in the near term while above 1260-1261. Overall the long term downtrend still persists.
Silver (19.236) has also risen and may target the crucial 19.36 level which if breaks may take it higher towards 19.50-20 in the longer run. Gold-Silver ratio (65.59) came down from levels of 66 as expected but may now bounce back from near current levels. This may indicate a rise in the precious metals for a few sessions now.
Nymex WTI (104.38) made an intra-day high of 105.06 yesterday touching our target range of 105-105.22. It may see a little correction towards 104 before again resuming its rise towards 105.22-105.25. Gold-WTI ratio (12.0858) has been falling since Jan’14 coming near support at 11.8-11.9 levels from where it may bounce back towards 12.5. This signals a rise in Gold against WTI in the near term.
Brent (109.71) seems to whipsaw in the 108-110 region without giving any further direction. We need to wait and watch for a break on either side of the range to determine further moves. For now, near term looks bullish with a target of 111-112.
Copper (3.0570) has risen back from 3.0185 (low of 9th June 2014) but may consolidate a bit in the 3.00-3.10 region while within the longer term downtrend. A danger of a fall towards 2.95 cannot be negated unless a sustained movement above 3 is not seen. However, a break below 2.95 (if seen) could push it down to 2.90 levels.
Only Aussie is strengthening on the back of Chinese equities but all the other majors have weakened considerably against the Dollar.
Euro (1.3525) has corrected nearly all of the latest gain after creating the major bottom at 1.35 which is close to getting retested, contrary to our expectations. We must watch the price action at the support area of 1.3500-3475 now before taking any stance though the bullish view is still not negated fully.
Dollar-Yen (102.30) is trading close to the support area of 101.95-85 but the Dollar bulls need a break above the 9 week long range of 101-103 to resume the rally. The Euro-Yen (138.35) has been pushed down from 140 levels on Euro weakness. Now the traders need a break beyond the contracting range of 138-140.
Pound (1.6744) has failed to break above 1.6850-85 to signal a bullish reversal and is still contained inside the previous week’s range. Keep an eye on 1.6690-40 for support and 1.6850 for resistance.
The Aussie (0.9377) is trading above the major trendline resistance at 0.9365 now in a show of strength but it still needs a break above 0.9410, the last swing high, to confirm the intermediate uptrend.
Dollar-Rupee (59.29) spent a sideways session with the uptrend fully intact. We still wait for a break above 59.45 to confirm the next phase of rally and the major support remains unchanged at 59.00.
German yields (5Yr 0.43%, 10Yr 1.40%) have moved up, within an overall decline. But we do not negate the fall to support at 1.20% on the 10Yr just now as it may fall from levels of 1.43%.
The US 5Yr (1.40%) and the 10Yr (2.49%) have fallen a little and may target lower levels of 1.20% and 2.40% respectively in the near term as the crucial 1.55% and 2.55% levels still holds. The yield differentials are also trading lower.
The 10Yr GOI (8.63%) has fallen further while the Indo-US 10Yr yield spread (5.95%) has risen a little. There is still room for the Indo-US 10yr yield spread to fall towards 5.75% while the trend remains down in the near term.
8:30 GMT or 14:00 IST UK Unemp
...Expected 6.70 % ...Previous 6.80 %
11:30 GMT or 17:00 IST IN Trade Bal (MoM)
...Previous -10.10 $ Bln
No major data release yesterday.