Monday December 1, 2014 - 03:20:05 GMT
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FX Thoughts for the Day - www.fxthoughts.com
Morning Briefing : 01-Dec-2014 -0319 GMT
Dow (17,828.24, +0.49%) has gained 2000 points since mid-October bottom at 15,849. Most of the gains came within 15 days of bottom, and rest of the time we have see small ranges. Caution is a definite must as this might have extended. We will let the market prove the trend that go long or short at these uncertain levels.
Nikkei (17,624.43, +0.95%) is now above 17,500. The next target is 17,700 and 17,900.
Dax (9980.85, +0.06%) dropped to bounce back from the levels of 9,900 to rest the crucial 10,000 levels again. Break above 10,000 will initiate a larger bull run for Dax. The next target on cards, above 10,000, are 10,200 and 10,500.
Shanghai (2,700.68, +0.67%) continues its strong run achieving several levels of targets. The immediate target has been achieved today with the test of 2720 level. The next target is at 2,760.
Nifty (8,588.25, 1.11%) saw another strong weekly close, closing near all time highs. Though the trends remains on the uptrend, serious caution must be exercised at these levels. Indian markets have been best performers globally for 2014, and are most susceptible to profit booking as the year ends.
Overall all commodities are bearish. Metals and Oil markets have opened with a gap down today but may recover in the near term.
Gold (1151.942) opened with a gap down but while above 1130 we may expect the broad 1130-1200 region to hold. Silver (14.94) has also fallen from levels of 16, breaking below the mentioned support near 15.8 but may recover in the next few sessions. Overall the trend is down.
Brent (68.49) is headed sharply downwards targeting support near 67-65 in the near term from where it may bounce upwards. If that bounce from 65 on the downside does not happen a sharp fall towards 60 and lower in the longer term should not be surprising. Nymex WTI(64.75) has also fallen and if this continues may see lower levels of 60-58 in the coming sessions. As said earlier, prices are trading at oversupplied zones and may bounce back anytime soon.
Copper (2.8210) has fallen sharply breaking below our expectation of 2.85. It may fall further towards 2.80 in the near term. View remains bearish.
The rejection of Swiss Gold referendum is short term positive for Euro as SNB can continue its Euro-peg at 1.20.
Euro-Dollar (1.2440) was volatile in thin trades. It took support at 1.2424, a break of 1.2424, would open targets to 1.2400. Below 1.2400, we would see a retest of the lows of 1.2360.
Dollar-Yen (118.94) broke above the 118.50 levels on very thin Friday trades. But it was again rejected at 119 levels. For the day, we will watch how the move develops around 118.80 (Friday's top) and 119 levels.
Pound-Dollar (1.5603) fell sharply to retest the 1.56 support most possibly on the month-end flows. It has taken support at these levels for now. It will be interesting to see the direction the market takes as the volumes return.
Aussie-Dollar (0.8440) dropped sharply to reach the levels 0.8415. The gap down open for the week would be very negative unless Aussie can claw back above 0.8520 this week close. However, this in line with our targets in the range of 0.8200 in medium term.
Dollar-Rupee (62.03) is expected to be on the weaker side on the dollar strength. However, we expect it to be ranged below 62.20, ahead of RBI Meeting tomorrow.
The US 5Yr (1.486%), 10Yr (2.169%) and 30Yr (2.891%) has fallen sharply from 1.528%, 1.20% and 2.92% respectively as expected. The 10Yr is nearing our expected levels of 2.15% and given the overall yields are falling, it may fall to lower levels of 2%. Interest rates may continue to fall.
The German and the Japanese bonds are almost stable with no major changes. The rates my remain lower for a few sessions before rising afresh.
The Indian 10Yr GOI (8.0847%) has fallen sharply on Friday nearing our target of 8%. It may now move up from here back to levels of 8.2-8.5% in the mid-term.
22:30 GMT or 4:00 IST AU PMI
...Previous 49.4 ...Actual 50.1
1:00 GMT or 6:30 IST CN PMI
...Expected 50.50 ...Previous 50.80 ...Actual 50.3
1:35 GMT or 7:05 IST JP PMI
...Expected 52.10 ...Previous 52.10 ...Actual 52.0
6:30 GMT or 12:00 IST IN PMI
7:30 GMT or 13:00 IST CH PMI
...Expected 52.9 ...Previous 55.3
9:00 GMT or 14:30 IST EU PMI
...Expected 50.40 ...Previous 50.60
9:30 GMT or 15:00 IST UK PMI
...Expected 53.1 ...Previous 53.2
UK Cons Conf
...Expected -1 ...Previous -2 ...Actual -2.00
...Expected 3.6 % ...Previous 3.6 % ...Actual 3.50 %
...Expected 11.50 % ...Previous 11.50 % ...Actual 11.50 %
...Previous 5.7 % ...Actual 5.3 %
...Expected 0.40 % ...Previous -0.10 % ...Actual 0.40 %
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