Tuesday September 30, 2014 - 04:02:39 GMT
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FX Thoughts for the Day - www.fxthoughts.com
Morning Briefing : 30-Sep-2014 -0401 GMT
With nothing significant in the global market, all eyes are fixed on the RBI meet today. Nothing more than an SLR cut is expected but that will be trendsetter for the rest of the day.
Dow (17071.22, -0.25%) bounced for the 3rd consecutive time from the 16935-50 levels. The highly overlapping nature of the fall suggests it to be a weak correction that may get over soon. Dax (9422.91, -0.71%) achieved our target of 9370 and holding this level, may experience a pause in the downtrend for a day or two.
Shanghai (2361.88, +0.18%) has been testing the recent high of 2365 for the third time in the last 4 sessions. As long as it stays above 2325-15 now, expect it rising towards 2430-50. The Nikkei (16087.85, -1.37%) is dropping on the back of a disappointing industrial output data and the uptrend may get weak below 15900 with the higher targets in a crisis.
Nifty (7958.90, -0.12%) went nowhere just before the RBI meet. The bulls may attempt a genuine reversal now only if they manage to protect 7880-50 today in any dip. A break below 7840 would open further drop to 7770-50.
Gold (1216.92) is trading lower and may see levels of 1210-1200 before bouncing up from there. Ranged moves in the 1200-1225-1300 region is expected in the near term. Silver (17.522) is also trading low and a break below 17.50 may push it to 16.5-16 levels. Overall long term trend is down.
Nymex WTI (94.32) has risen sharply from 92.7 and if this continues may soon test levels of 96-98 by the coming week. But a fall towards 92.5-92.00 cannot be negated just now. The broad 90-95 region persists. For now movements may be restricted within crucial support near 90 and resistance zone of 94-96. A sustained break above 96-98 is a must for any indication of a bullish reversal.
Brent (97.10) is stable and seems to consolidate in the coming sessions. The crucial 95-97 zone is likely to hold for some more time now. Movements have been held well by the 13-day MA as a good resistance for now.
Copper (3.0565) has risen again after making an intra-day low of 3.0125 yesterday and seems to be ranged in the 3.05-3.00 region, unable to decide further direction. Overall the long term trend is down but while above 3.00 we may see some sideways consolidation.
RBI meet is the point of attraction today. With Dollar Index (85.56) in a pause mode, expect a quiet market otherwise.
Euro (1.2692) is trying to hold its ground for some time but unless it manages to break above 1.2715 immediately and 1.2820 later, the same story of vicious bear attacks can run again with the possibility of seeing 1.2550 in the near term and then 1.2250-2050 in 1-2 weeks.
Dollar-Yen (109.26) broke above 109.60 but the expected rally didnít materialize. The bullish momentum will be in question on a break below 109. Till then, the possibility of sharp rises remains on the cards targeting 110.30 and 113. The Euro-Yen Cross (138.70) has achieved our second target of 138.50 too and may try to bounce again if 138.25-137.65 provides support.
The Pound (1.6252) has been forming weekly candles with large shadows for the last 3 weeks, implying high volatility and confusion. The currency may keep trading in 1.6050-1.6525 for the next few days.
Aussie (0.8746) is showing a positive daily candle after a long time, bouncing from exactly our support 0.8710-0.8680 and may take a pause for 1-2 sessions. Immediate resistance comes from 0.8770-0.8835.
Dollar-Rupee (61.5350) tested the last week high of 61.63 and closed just a bit lower. The RBI meet will be the trend decider but if nothing more than an SLR cut takes place, then a flat closing may be expected EOD.
RBI's Monetary Policy today. No rate cut expected, given that food inflation remains high and is unlikely to come down in the very near term. Some people think the SLR may be cut 25-50 bp from the current 22.0%. Might well be possible. See our chart on the main policy rates at http://www.kshitij.com/fundamentals/funcharts/inrbi.shtml
The Indian 10Yr GOI (8.4623%) rose slightly yesterday from 8.44% on Friday. We see chances of further rise towards 8.50-55%. The Indo-US 10Yr Spread (5.94%) has also started moving up and can target 6.05% in the coming days.
ECB Meeting on Thursday. No BOE this time. The ECB continues to fight the European stagnation alone, one had tied behind its back. Still, the German 10Yr (0.96%) could have Support near 0.90%. Need to see if it will bounce from there. Should that happen, it could lead to some serious short-covering in the Euro (1.2691). Also, the German-US 2Yr Spread (-0.64%) is now grazing a downtrend channel Support line and could see some bounce from here. Be careful on this.
The Japanese 10Yr (0.5165%) is in a strong downtrend but might have some Support coming up near 0.4865%.
In the USA, the broad Curve flattening theme continues. The 10-5 Yr Spread (0.72%) is close to the previous low of 0.70%. A break below that is also possible. The 30-10Yr Spread (0.68%) also seems to be breaking its earlier 0.70% Support.
23:05 GMT or 4:35 IST UK Cons Conf
...Expected 0 ...Previous 1
23:30 GMT or 5:00 IST JP Unemp
...Expected 3.8 % ...Previous 3.8 % ...Actual 3.5 %
5:30 GMT or 11:00 IST RBI Repo Rate
...Previous 8.00 %
5:30 GMT or 11:00 IST RBI Reverse Repo Rate
...Previous 7.00 %
5:30 GMT or 11:00 IST RBI CRR
...Previous 4.00 %
5:30 GMT or 11:00 IST RBI MSF
...Previous 9.00 %
9:00 GMT or 14:30 IST EU Unemp
...Expected 11.50 % ...Previous 11.50 %
12:30 GMT or 18:00 IST CA GDP
...Previous 0.30 %
13:00 GMT or 18:30 IST US Case Schiller
...Expected 7.50 % ...Previous 8.08 %
14:00 GMT or 19:30 IST US Cons Conf
...Expected 92.20 ...Previous 92.40
EU Biz Climate
...Expected 100.0 ...Previous 100.6 ...Actual 99.9
US Personal Income
...Expected 0.30 % ...Previous 0.24 % ...Actual 0.32 %
US PCE Price Index M/M
...Expected 0.50 % ...Previous 0.00 % ...Actual 0.48 %