Monday December 15, 2014 - 03:26:14 GMT
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FX Thoughts for the Day - www.fxthoughts.com
Morning Briefing : 15-Dec-2014 -0324 GMT
Equities across the board had their worst weeks in several months. The technical configurations are deteriorating rapidly and focus now entirely shifts to Wednesday's FOMC meeting in anticipation of dovish signals. If FOMC decides to hold on their stance to rising rates in 2015, we could see much steeper fall across the board by the end of this week.
Dow (17,280.83 -1.79%) saw its worst day of many months. Dow has taken support at 7,200 (our second target). It may hold the 17200 support until FOMC meet.
Abe's landslide win has no effect on Nikkei (17,136.90, -1.35%) or Yen which are largely tracking the flows and global cues on inflation. The almost imminent sales tax increase's contribution to inflation is now predicated by low fuel costs. It remains to be seen how BOJ tackles the low inflation environment again. This will be a key risk going forward.
Shanghai (2,906.27, -1.08%) movements post its peak has been textbook consistent. We now expect it to target 2,650 this week or coming week. The pattern is void if it breaks above 2,960.
Dax (9,594.73, -2.72%) saw its worst day since August. It has achieved the first target of 9,600. The next targets are 9,400 and 9,250. 9,200-9000 is a critical band of support, a break of which will lead to much larger downturn possibly up to 8,100.
Nifty (8,224.10, -0.83%) is likely to fall further as global markets turn worse. The profit booking and hedging will could get worse in coming weeks. For the day the targets expected are 8,200 and 8,150.
Gold (1217.64) has been trading lower within the crucial 1238-1213 region. The resistance near 1238 has held well for now but a break below 1213-1210 may again become bearish for the metal.
Silver (16.866) has been pushed by the resistance near 17.3 and while that holds we may see some downward movement. For now a fall below 16.5 is not expected and we may soon see a bounce upwards.
Brent (61.91) and Nymex WTI (57.54) both continue to extend their fall downward. Bears are still around with no signal of any reversal.
Copper (2.9455) has risen a bit but while below 2.95 the bias is on the downside ranging between 2.95 and 2.90. A break above 2.95 may take it higher to 3. long term trend is down.
Euro (1.2447) has repeatedly failed at its 200 moving average on hourly charts and has been rejected near 1.2500 several times now. 1.2380 is the crucial support on downside. This might trade sideways until FOMC. The larger trend remains down.
Pound-Dollar's (1.5708) was unable to break above 1.5750, its range top. We now look for a test of 1.5600 in short term. Below 1.5600, the targets are 1.5500.
Landslide victory for Abenomics's hardly gave Dollar-Yen (118.72) a 100-pip rally. This indicates the changed circumstances and the possible cap of upsides due to profit booking. The lower oil prices are a concern and going forward inflation numbers will be keenly watched.
Dollar-RUPEE (62.29) rose sharply last week, and broke above 62.35 a critical pivot for uptrend. We expect the uptrend to continue to 63 in short term.
Aussie-Dollar (0.8210) is retesting its support and long held target of 0.8200. The larger down trend is likely to continue and Aussie is expected to weaken substantially in 2015.
The sharp decline in the oil markets may have a strong impact on the debt market.The UK Gilts dropped sharply on further decline of the oil prices.The 5Yr yield (1.214%), the 10Yr (1.82%) and the 30 Yr (2.547%) have all fallen from 1.306%, 1.911% and 2.640% respectively.
The Russian 10Yr yield (12.92%) has been rising after the central bank raised rates from 9.5% to 10.5% last week. Rouble (58.214) continues to weaken while Dollar strengthend against major currencies.
The Us 5Yr(1.517%), 10 Yr(2.090%) and 30Yr (2.745%) have fallen from 1.590%, 2.158% and 2.81% seen last week.Overall the US yields are falling and may continue in the near term.
Indian 10Yr GOI yield (7.83%) has fallen further and is targeting our expected levels of 7.8% from where it may see a short bounce towards 8%. Longer term trend remains up.
23:50 GMT or 5:20 IST JP Tankan Large Manufacturers Index
...Expected 13 ...Previous 13 ...Actual 12
6:30 GMT or 12:00 IST IN WPI
...Previous 1.8 %
14:15 GMT or 19:45 IST US Industrial Production
...Expected 0.80 % ...Previous -0.1 %
14:15 GMT or 19:45 IST US Capacity Utilization
...Expected 79.4 % ...Previous 78.9 %
21:00 GMT or 2:30 IST US TICS (Net foreign purch of long-term Sec)
...Expected 72.80 $ Bln ...Previous 164.30 $ Bln
CN Retail Sales
...Expected 11.5 % ...Previous 11.5 % ...Actual 11.7 %
CN Ind Prodn
...Expected 7.6 % ...Previous 7.7 % ...Actual 7.2 %
EU IND Prodn (MoM)
...Expected 0.2 % ...Previous 0.5 % ...Actual 0.1 %
...Previous 2.5 % ...Actual -4.2 %
...Previous 5.52 ...Actual 4.4
US PPI ex Food & Energy (MoM)
...Expected 0.10 % ...Previous 0.3 % ...Actual 0.00 %
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