Thursday December 11, 2014 - 03:30:05 GMT
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FX Thoughts for the Day - www.fxthoughts.com
Morning Briefing : 11-Dec-2014 -0329 GMT
The topping patterns seen in Dow (17,533.15, -1.51%) are coming into effect. The first target of 17,500 has been met. Next targets are at 17,200.
Nikkei (17,221.72, -1.16%) is tracking USDJPY lower. For the day we have bounced from 17,000 levels, a psychologically important level. Dip below 17,000 could potentially accelerate the fall.
Shanghai (2,959.87, +0.68%) bounce has reached 2,962 (a 50% retracement of the fall) against the expected target of 2,980. Given negative outlook developing with US Equities down sharply, this may be near the top - for short term only. We may see Composite drift down from these levels of 2,850 and 2,800. To reiterate, the primary long term trend remains bullish.
For bulls, Dax (9,799.73, +0.06%) reversal near 10,000 is a very bad indicator which portends more falls from here. Dax may have topped out in short term, and immediate target is 9,620. Any ECB QE announcements or leaks will be highly bullish to European equities.
Nifty (8,355.65, +0.18%) took support at 8,320 but could not go 8,376 and front run ahead of 8,400. The immediate bias remains bearish, and we may see a fall to 8,200, and 8,150 in few days.
Gold (1,228.56) although saw a sharp rise on the New York session on Tuesday, fell yesterday as Dollar showed some strength against major currencies. The immediate resistance near 1228-1230 has been successful to not let prices move above being the 50% retracement level of the fall seen since Jun'14. We may expect some sideways movement in the 1225-1230 region before rising higher towards 1250. Near term looks positive.
Silver (17.08) has dropped from just below our first immediate target of 17.296 but with the sharp rises seen in the past few sessions, we may say that indication of initial bull signals are coming in. However confirmation can be made only on a break above 17.26 and further above 18.
Brent (64.73) and Nymex WTI () continues to trade lower and are trading at oversupplied regions.Less possibility of a break below 60 on the downside, if seen may initiate a sharp fall towards 58-55 in the coming weeks.But for now no reversal signs are to be found. Bears are strong.
Copper (2.9140) remains in the 2.95-2.85 region while the overall long term trend is down.
With very limited high-volume days (6-7 days) remaining for 2014, the quarter-end and year-end flows could temporarily dictate market directions. However, itís unlikely that major trends would change going into 2015.
Euro (1.2458) has moved above 1.24 but was rejected at 1.25. These technical bounces are more likely to be time wise than price-wise as the fundamental Euro-factors still remain bearish.
Pound-Dollar's (1.5727) has moved to top of its range. A break on the upside is unlikely for now and not expected. We expect it to maintain the Novemberís range.
Dollar-Yen (118.15) bounced off 117.50 its first important support. For short term trades, we expect 117.50 to break in next few days. However, the longer term trend is bullish and medium term corrections should be an opportunity to buy Dollar-Yen.
Dollar-RUPEE (62.02) has broken above the 62-mark. For the day, we are likely to see it trade between 61.95 and 62.10. 62.20 is the next resistance.
Aussie-Dollar (0.8345) held its supports at 0.83. Expect a break below 0.8200 in next couple of days.
The announcement to choose a new president by Prime Minister Antonis Samaras brough a jump in the Greek 10Yr yield (8.416%) from 7.97%. The Italian 10Yr (2.071%) rose from 2.021% and the Spain 10Yr (1.841%) came up from 1.815%. The German yields on the other hand remained stable at lower rates.
Chinese stocks rise along with the strength in Yuan. The 2Yr (3.390%) and 5Yr (3.622%) yields have also risen from 3.234% and 3.578% respectively.
The US treasury yields have fallen. The 5Yr (1.558%), 10Yr (2.161%) and 30Yr(2.83%) are down from 1.62%, 2.22% and 2.86 % respectively. The 10-5Yr yield differential (0.603%) fell by 1 bps from 0.61% indicating a fall in the 10Yr yield. Overall the US yields are falling and may continue in the near term.
Indian 10-Yr GOI (7.9077%) extends its fall downwards as continued fall in Oil prices help to improve the Indian inflation outlook as lower deficit may pave the way for a sooner rate cut by the RBI. Downside target remains at 7.80%. Rupee showed a 0.2% fall yesterday amidst the falling yield rates. While Dollar continues to strengthen the Rupee may start weakening in the near term.
0:30 GMT or 6:00 IST Australia Labour Force
...Expected 15.20 K ...Previous 13.7 K ...Actual 42.7 K
8:30 GMT or 14:00 IST SNB Meeting
...Expected <0.25 % ...Previous <0.25 %
11:30 GMT or 17:00 IST IN Trade bal
...Previous -13.35 $ Bln
13:30 GMT or 19:00 IST US Retail Sales (MoM)
...Expected 0.1 % ...Previous 0.3 %
CN PPI (YoY)
...Expected -2.30 % ...Previous -2.20 % ...Actual -2.7 %
CN CPI (YoY)
...Expected 1.60 % ...Previous 1.60 % ...Actual 1.4 %
UK Trade Balance
...Expected -9.50 £ (Bln) ...Previous -10.51 £ (Bln) ...Actual -9.62 £ (Bln)
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