Monday November 3, 2014 - 04:07:25 GMT
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FX Thoughts for the Day - www.fxthoughts.com
Morning Briefing : 03-Nov-2014 -0406 GMT
Global equity markets surged after the announcements of Japanese stimulus and better than expected US GDP numbers showing a QoQ rise of 3.5%.
Dow (17390, +1.13%) has made a fresh highs, and this trend is likely to continue as long it holds above 17,100 levels. Some resistance is expected at 17,500 levels.
Nikkei (16413, 4.83%) had a spectacular surge post-BOJ announcements and made new highs. This trend is likely to continue. Japan has an holiday today, however the Nikkei futures in Globex were last trading at 17,015 levels, indicating a rise of 600 points since the Japan's market close on Friday.
Dax (9326.87, +2.33%) has broken above the resistances. Though the long term bearish pattern is not invalidated, the short term trend is positive above 9300 levels. Dax would look to test 9600 levels from here.
Shanghai (2,431.55, +0.44%) continues its rally. Resistances are at 2,455 and 2,470 levels.
Nifty (8,322.20, +1.87%) surged on global cues and increased FII inflows. We are likely to see a move to 8500 levels.
Gold (1167.48) bears are on unstoppable roll now. Descending Triangle pattern break down on a longer term chart is clearer now. Next move could be a deep downfall towards 1155. But, itís prudent to be open for an intraday counter wave to 1190-1200 before it starts moving down on stronger note.
Silver (15.975) has reached our down side target of 16. Previous two bearish candles (on daily charts) may produce a short lived counter wave against the broader down trend. But, upside is limited till 16.80-16.90. Bears can look for the down side target of 14.60 in coming weeks.
Possibility of a pullback till 85-87 levels in Nymex WTI (80.44) will remain alive while it is trading above 79. No change in broader bearish outlook for the down side target of 75.
Support level of 84 has not been violated yet; being hopeful about a pullback till 88-89 levels in Brent (85.80) is prudent. Longer term bearish momentums can it further down side till 79.
Copper (3.0495) reacted down from its down trending channel resistance 3.10 levels. Keeping the broader bearish outlook intact we think it can again come down till 3.00.
In the current market there is simply no competition to Dollar which added a better than expected GDP growth while almost all economies are struggling. This strength is likely continue.
Euro (1.2476) is making newer lows and the trend remains bearish. 1.2500 and 1.2620 will now act as resistance, followed by 1.2850 and the range of 1.2900-1.3000. 1.2450 and 1.2250 would act as supports.
Pound (1.5966) is holding above its support at 1.5940. In short term, Pound remains bearish below the levels of 1.6000, with a target of 1.5880. In medium term, it is likely to target 1.5720.
Aussie (0.8722) is trading near the bottom of the trading range with an ominous falling gap and a break of trendline. It could well be the start of the fall long expected. The resumption of its medium term downward move will be confirmed on the break of 0.8660
Dollar-Rupee is expected to (61.47) is likely to continue its gradual depreciation to 61.75 over next few days.
Yield advantage remains with the Dollar. The German-US 2Yr Spread (-0.56%) is down further from -0.56%, the German-US 10Yr Spread (-1.50%) is down from -1.45%. Further decline towards -0.60% and -1.55% likely.
The US-Japan 10Yr spread (1.88%) is also rising and can target 2.00% in the coming days. A dip back to 1.95% could be seen from there.
The US Yield Curve itself continues to flatten, as expected, with the 10-5Yr Spread (0.71%) falling well below earlier target of 0.80%. The trend remains bearish, but we could see some more consolidation between 0.70% and 0.80% before a further decline below 0.70% takes place.
Important ECB Meeting this week (Thursday). The market wants to know the ECB's mind and timeline on finally getting on with QE, especially after Japan expanded its stimulus last week.
In India, the 10Yr GOI (8.28%) seems headed towards 8.25% and the Indo-US 10Yr Spread (5.96%) is headed towards 5.85%.
22:30 GMT or 4:00 IST AU PMI
...Previous 46.5 ...Actual 49.4
1:35 GMT or 7:05 IST CN PMI
...Expected 50.40 ...Previous 50.40 ...Actual 50.40
6:30 GMT or 12:00 IST IN PMI
7:30 GMT or 13:00 IST CH PMI
...Expected 51.3 ...Previous 50.4
9:00 GMT or 14:30 IST EU PMI
...Expected 50.7 ...Previous 50.3
9:30 GMT or 15:00 IST UK PMI
...Expected 51.50 ...Previous 51.60
15:00 GMT or 20:30 IST US Manufacturing ISM
...Expected 56.50 ...Previous 56.60
UK Cons Conf
...Expected 0 ...Previous -1 ...Actual -2.0
...Expected <0.10 % ...Previous <0.10 % ...Actual <0.10 %
...Expected 3.60 % ...Previous 3.50 % ...Actual 3.60 %
...Expected 0.20 % ...Previous -0.10 % ...Actual 0.20 %
EU CPI (YoY)
...Expected 0.40 % ...Previous 0.31 % ...Actual 0.43 %
...Expected 11.5 % ...Previous 11.50 % ...Actual 11.5 %
US Personal Income
...Expected 0.30 % ...Previous 0.34 % ...Actual 0.15 %
US PCE Price Index M/M
...Expected 0.40 % ...Previous 0.49 % ...Actual -0.16 %