Thursday December 18, 2014 - 03:26:36 GMT
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FX Thoughts for the Day - www.fxthoughts.com
Morning Briefing : 18-Dec-2014 -0327 GMT
The FED's statement and later press conference were more hawkish than expected. The only relief was that the rate hike in 2015 is likely to be lower than initially expected. Dollar gained across the board while equities also rallied.
Dow (17,356.87, +1.69%) gained on the FED's possibility of rate hikes to lesser than earlier expected. Technically, Dow has bounced off its 16,900-17,100 support zone and hence may retrace to its resistance at 17,500 and crucial 17,600.
Nikkei (17,243.99, +2.52%) crossed above psychological 17,000-mark as USDJPY bounced from its support levels. For short term, 17,300 is the resistance. Trend will be weak as long as it trades below 17,500.
Shanghai (3054.06, -0.21%) looks like poised for a failure on short term charts. The resistance around 3,058 is holding better than expected. For short term, Shanghai may is a good sell with strict stop of 3,092 for targets between 2,700 and 2,600. To reiterate, the long term trend is very bullish and any corrections in short to medium term should be a buying opportunity for long term investors.
Dax (9,544.43, -0.20%) failed to cross 9,700 resistance. Dax was closed by the time of FED's releases and may react higher today.
The positive global cues for Nifty (8,029.80, -0.47%) are likely to be short lived as profit booking continues and EM currencies are likely to depreciate on Dollar strength.
Gold (1197.34) and Silver (16.004)have risen a bit after the FED meeting ended yesterday. The range of 1180-1210 for Gold and 15.5-17.5 for Silver may continue for some more time.
Brent(61.22) and Nymex WTI(56.49) have risen after making a low of 58.5 and 53.62 on Tuesday. Will this be the near term bottom or is there still some room on the downside is difficult to say now but if we see a sustained rise above 60-65 levels we may look for some confirmed reversal signals.
Copper (2.8875) is up slightly and may fluctuate in the 2.85-2.95 region for this week.
Reiteration of FED's hawkishness sent Euro (1.2340) tumbling through its supports. It has broken below 1.2370, the larger trend decider therefore the bullishness we saw with the breakout are void.Euro is now holding above the final support at 1.2315. As long as it trades below 1.2450, the targets are 1.2200.
Pound-Dollar's (1.5585) broke below the range support of 1.5600 but break is not clear. It is back near its range. For confirm the trend down, we need a break below 1.5550 on sustained basis.
Dollar-Yen (118.54) bounced from the support at 115.50, and helped Dollar gain across the board. 119.00 is the resistance on the upside. The short term bias favors downside or range bound moves. The long term trend remains bullish.
Dollar-RUPEE (63.61) is likely to take a breather, and may trade around 63.90-63.30 for sometime. However, much also depends on the profit-booking by FIIs in Indian equities. If we see larger fall, we may see Dollar-Rupee trading in 63.60-63.90 range. The next resistances are 64.20 and 64.50.
Dollar-Ruble (60.75) has made a stunning recovery after falling to the lows of nearly 80. Though Ruble is still down for the month and the week, the markets are much calmer as it recovered.
Aussie-Dollar (0.8139) tested the 0.8100 levels followed by small weak bounce. As mentioned earlier,Aussie is likely to remain bearish well into 2015.
FED wants to hold interest rates for a couple of more meetings before increasing the rates. The US yields have increased a bit. The US 5Yr(1.605%), 10Yr(2.135%) and 30Yr(2.729%) have all risen from 1.15%, 2.063% and 2.694% respectively.
The UK Gilts The UK 5Yr(1.186%) remained stable while the 10Yr(1.759%) dropped from 1.770% and the 30Yr(2.511%) has risen from 2.506%.Overall the 0Yr continues to drop and may continue so for some more sessions.
The Indian 10YR GOI yield has been stable yesterday near 7.9693% and may soon target 8-8.15%in the coming weeks while below 8% there is also a slight possibility of falling back towards 7.8%.
23:05 GMT or 4:35 IST UK Cons Conf
...Expected -1 ...Previous -2
9:00 GMT or 14:30 IST GER IFO Business Climate
...Expected 105.30 ...Previous 104.70
9:00 GMT or 14:30 IST GER IFO Business Situations
...Expected 110.30 ...Previous 110.00
9:00 GMT or 14:30 IST GER IFO Business Expectations
...Expected 100.90 ...Previous 99.70
15:00 GMT or 20:30 IST US Philifed Index
...Expected 26.3 ...Previous 40.80
UK BOE Minutes
...Expected 0-0-9 ...Previous 0-0-9 ...Actual 0-0-9
...Expected 5.9 % ...Previous 6.0 % ...Actual 6.0 %
EU CPI (YoY)
...Expected 0.30 % ...Previous 0.37 % ...Actual 0.28 %
US Core CPI (MoM)
...Expected 0.10 % ...Previous 0.20 % ...Actual 0.10 %
US Current Account Balance
...Expected -98.00 $ Bln ...Previous -98.00 $ Bln ...Actual -100 $ Bln
US FOMC Meeting
...Expected <0.25 % ...Previous <0.25 % ...Actual <0.25 %
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