Monday March 29, 2010 - 03:44:18 GMT
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FX Thoughts for the Day - www.fxthoughts.com
Morning Briefing : 29-Mar-2010 - 0336 GMT
The Dow (10850.36) and the Nasdaq (2395.13) rose over 1% last week. The Dow is likely to test the Resistance at 11000. The US equity indices have risen for 4 weeks consecutively (the maximum since August '09) on signs of economic recovery. US Personal Income, an important data release today, out of the US will be closely watched. The NFP numbers would be released by the end of this week. The Q4 '09 final GDP numbers had come in a tad lower than expected at 5.6% (vis-a-vis 5.9%)
Last week, the Nikkei (10939.13) rose 1.6%. The Shanghai (3108.27) and the Sensex (17610.09) were comparatively flat last week. The Sensex which has been creeping over the last couple of weeks, may target 18000 this week.
Today, the Asian indices are trading mostly higher except for the Nikkei. The Nikkei is trading 0.5% lower today, but the Shanghai is up nearly 2%. The Hang Seng (21193.26), too, is trading 0.7% higher.
Crude (80.42) is continuing to remain pressured on the downside although it is holding above 80 over the last few weeks. The revised lower GDP data released on Friday and increasing inventory levels are keeping the price lower. A strong break below 80 might see 78-77.50 on the downside.
Gold (1104.40) has bounced back sharply from Friday's low of 1088.50 taking support from weaker dollar and is now trading above 1100. Technically speaking as seen from the charts, the outlook is mixed as the Daily Candle chart shows a break above the Neckline of the Head and Shoulder pattern but on the line chart the price is still below the Neckline Resistance. We will have to wait and watch to get a clear idea about the further direction of move. To see the Gold Candle and Line charts click on the following links:
Better news on Greece (IMF will come to the rescue if Greece is uable to raise money from the market to meets its debt obligations) has led to some recovery in the Euro, as per our expectations. Important Resistance seen near 1.3470-90, though as the Dollar continues to see overall all-round gains. Dollar-Yen (92.65) has risen well in a potential trend reversal last week and might target 95 this week. Euro-Yen (124.45) has also seen a strong rise but may find Range Resistance at 125.25.
The Pound (1.4910) continues to look weak despite the bounce in the Euro, but might surprise with a rise this week. Dollar-Swiss (1.0680) continues to be ranged betwen 1.0555 and 1.0755, as the action takes place in the Euro-Dollar and Euro-Swiss arenas.
The Aussie (0.9075) is giving mixed signals. It might bounce if it manages to remain above 0.8955, but might see a sizeable dip if the Support breaks. It may either benefit from Yen weakness or might suffer on US Dollar strength. Dollar-Won trades near 1139, a little lower than last week's high near 1148, and might dip back towards 1129 unless it bounces soon. The USD-SGD (1.4025) has come off a bit from last week's high near 1.4079, but retains an overall upward trend. Dollar-Rupee had fallen to 45.22 on Friday, on higher Dollar supply, but has a crucial Support at 45.09 today.
3M USD LIBOR was set at 0.29%. The US Treasury yields have risen sharply last week. The 2Y and 10Y yields have risen 9 and 17 bps to quote at 1.06% and 3.86% respectively. The yields on US Treasuries are on a rise over the last 3-4 weeks as the concerns that the US may lose its AAA rating looms large.
09:00 GMT EU Biz Climate
...Expected 97.4...Previous 97.4
12:30 GMT US Feb Personal Income
...Expected 0.1%...Previous 0.1%
12:30 GMT US Feb PCE Price Index M/M
...Expected 0.4%...Previous 0.5%
US GDP Q4 '09 (Pre)
...Actual 5.6%...Previous 5.9%
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